It takes a good deal of time, money, and effort to get a patent. Is it worth it? In other words, what is a patent good for?
Quite simply, a person or company that obtains a valid patent and has the means to enforce it has the exclusive right to make, use and sell the invention described in the patent. It can exclude all others from the field and manufacture and sell the invention itself, or license it to others. In effect, the patent provides a potential monopoly on the invention for the length of the patent. No other form of intellectual property -- trade secrets, trademarks or copyrights -- provides such an expansive monopoly.
The potential power of a patent is well illustrated by a famous patent case involving the Kodak and Polaroid corporations. Once upon a time (back in the 1980s), the Kodak Corporation manufactured instant cameras and film. Today, you might be able to find an old Kodak instant camera for sale on EBay, but they are no longer manufactured or sold by Kodak. Why? It’s not because the cameras weren’t successful products -- Kodak sold more than 16 million of them. It’s because of patent law. The Polaroid Corporation, the instant photography pioneer, sued Kodak, claiming its cameras and film infringed on several Polaroid patents. After 15 years of litigation, Polaroid won. Kodak was barred from manufacturing or selling the cameras and film and had to pay almost $900 million in damages to Polaroid.
A Patent -- By Itself -- Won’t Make You Rich
However, before you jump on the patent bandwagon, be aware that obtaining a patent is no guarantee of financial success. It is generally estimated that less than 3% of patented inventions ever earn a dime for their inventors. If you have an invention that people want, such as instant photography, a patent can be enormously beneficial. But, if your invention is worthless, your patent will be too. Of course, the problem is that it’s often impossible to know in advance which inventions will be successful and which will be failures
A Patent Can Help You License Your Invention
if, like most independent inventors, you don’t plan on manufacturing and selling your invention yourself, obtaining a patent can make it easier to license your invention to a manufacturer. Many companies prefer to license patented inventions (or at least those for which a patent application has been filed). Compared to trade secrets which can be lost at any time, patents are a viewed as a “solid” investment, easier to enforce and to value.
If you proceed with the patent application process, you can license your invention before the patent is issued. Sometimes a licensee may condition the license upon the granting of the patent. That is, if the patent does not issue, the license is canceled or the royalties are reduced to reflect only the nonpatentable aspects that have been licensed.
Patents Can Help You Get Money
Obtaining, or at least filing for, patents can also help you obtain financing. Consider the case of the brothers David and Gregory Chudnovsky, both brilliant mathematicians who emigrated from Russia to the U.S. in 1978. Over a period of two decades, they devised a number of computer-related inventions that could have been quite valuable, including a novel switching network. However, they never attempted to patent any of these inventions. They talked to many potential investors about helping to finance the development of their inventions; but, although the investors liked the brothers’ inventions, none were willing to put up any money. They were simply afraid to invest in an unpatented invention. Then, in 1998, the Chudnovskys came up with one of their best ideas yet -- a memory-addressing system that could substantially speed up computer performance and become an industry standard. This time, they decided to go for a patent. They lined up a group of investors who put up the money to hire a patent law firm to file a patent application for their complex invention and then help market it. Their patent issued and they began to actively seek companies for licensure.