25 Mar 2019, 13:14 — 6 min read
Background: Whether you are an entrepreneur, a startup owner or a private inventor, protecting your innovation and products is very important. A patent provides the legal protection which can prevent the misuse of your creations by rival businesses. GlobalLinker member Shruti Aggarwal explains some important aspects about patents.
“Patents are like fertilizer. Applied wisely and sparingly, they can increase growth. But if you apply too many chemicals, or make patents too strong, then you can leach the land, making growth more difficult.” - Alex Tabarrok (Canadian Economist).
A patent is defined as the privilege provided to the investors that no one can copy their invention. A patent gives its owner the lawful right to exclude others from making, using, selling, and importing their invention for a certain period of time which is usually 20 years. The protection through patent is the most secured way to prevent others from not only copying but also to stand as a competition in the existing market.
A major benefit of patents is how they establish a business or brand in a sector, preventing competitors from extreme similarities. The creation property of patents allows businesses and inventors to own their ideas and inventions.
Types of patents
There are three major types of patents:
1. Design patents – Anyone who creates a new design for a product can apply for a design patent. Examples include beverage bottles (think of the shape of the Coca-Cola container, furniture (such as the kneeling chair), computer icons (such as emojis).
2. Plant patents – Botanists involved in grafting and creating new hybrid plant forms can apply for a plant patent. Examples include the Smooth Angel rose, powdered turmeric (Curcuma longa), drought tolerant corn.
3. Utility patents – This type of patent covers any new, improved and useful process, machine, article of manufacture or composition of matter. . Examples include the little green drink stopper Starbucks gives out with its cups or the hover board type of skateboards.
Importance of patents
Attract more investors – Business after a patent registration, scores a separate identity in the market. This identity not only increases market reputation but also attracts several investors to invest their money. Your success in gaining patents over your work will send a strong signal to investors that you are worth their attention, potentially making it easier to attract funding for further research.
According to an article published in June 2014 by prominent French engineering school, MINES Paris Tech. startups which held a patent were between 2.5 and 3.6 times more likely to be successful within 10 years than those that did not.
Ameliorate business valuation – Patent rights after being circulated makes a similar situation like a chaos, the chaos in the share market for the company’s valuation. For evidence of the powerful impact of patents on market value, you only have to look at Perth-based regenerative medicine firm Orthocell, whose share price rose more than 30% earlier that month in response to the grant of a US patent for their ground-breaking ‘cell factory’ technology.
The competition lead - Even if you are not planning to develop and commercialise your invention, a patent can stop others from creating a product that may compete with your existing portfolio, effectively blocking competitors out of your market and protecting your profitability.
The news that a patent had been granted to Apple for a wearable action camera caused shares in GoPro to drop by 15%. A legit strategy like this might have spared GoPro the pain of Apple’s action camera gambit.
Despite of the importance of patents, there are a number of difficulties that may arise:
For any assistance with filing patents, reach out to me. The stream of our concern is startups, that may fall under any branch of patents.
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.