When is it a good idea to patent your invention?

Most entrepreneurs rush to the USPTO office to patent their inventions with little regard to the value of their patent. With the proliferation of patent applications and the fast speed of inventions, it is worth to ponder whether it is worth to spend thousands of dollars to obtain a patent.

A patent gives the holder the exclusive right to the invention for 20 years. However, enforceability is a key issue to consider. Simply holding a patent does not stop your competitor from using your patent. Applications are often so vague that parties may disagree whether one is infringing or not. To enforce your rights, you may need to take legal action. It is estimated that a typical patent infringement lawsuit costs approximately $1M. Unless you have the funds to back your patent rights, merely holding a patent may not be useful.

Although it is possible to retain legal counsel on contingency, the market value of your patent should at least exceed the anticipated legal costs. If it would cost you$1M to defend a patent with market value of $250,000, it is a net loss situation.

Five questions to ask:

1. How easy it is to design around the patent?
If a competitor can easily design around the patent, then the existence of your patent does not add to the value of your business.

2. What is the product lifecycle?
Whether you are a life science or a technology company influences how valuable your patent is. When lifecycles are short, such as in technology companies, your enjoyment of patent protection is limited to the lifecycle of the technology usefulness.

3. Do I have the funds to protect my patent?
If not, consider getting insurance.

4. What is the market size of the product using my patent?
Even when your patent is infringed, how much value you can recover from the infringer is limited to the units sold of the infringed product. That, of course is limited by how large the potential market is.

5. Are you targeting venture funding?
Venture funds often require patenting your invention. That is because to obtain venture funding there is an implicit assumption that your idea will be worth at least $100M. With that kind of optimism, it would be unwise not to patent your invention.

This is all good for the United States. But how about global protection? Check out “Is My Patent Valid in the World?”