Now that your company has a patent, it is time to retire and buy that private island, right? Wrong. Metaphorically, the hammer is tough to build and it takes even more strength to swing it.
As discussed earlier, contrary to popular belief, a patent does not give a company the right to do anything. Instead, a patent gives a company the right to prevent others from doing something. Specifically, a patent gives a company the right to prevent others from making, using, selling, or importing a patented invention. Keeping others from practicing an invention usually means litigation or at least the threat of litigation.
Patent litigation is expensive. How expensive? As a general rule, it is fair to say that patent litigation is the most expensive type of intellectual property litigation and one of the most expensive types of litigation in any area of law. It is sometimes jokingly called “The Sport of Kings” among attorneys.
Completing a patent case in the early stages with a quick injunction, summary judgment, or settlement is possible, but rare. Even then, the costs for such action are minimally several hundred thousand dollars. More likely patent litigation budgets range from 1 million to as much as 8 million dollars depending on issues like the number of parties involved in the case, the possibility of appeal, the complexity of the technology, the number of patents, and the market size of the product(s) being attacked.
This budget range makes more sense when we put it in context of recent game industry litigation where damages or threatened damages were more than 90 million dollars. We have had more than one example of that type of case in the last five years. In those instances it makes sense for the plaintiff and defendant to have a large budget to fight over that amount of money. The main point here is that very few companies can truly afford patent litigation. In the game industry, only the most successful hardware manufacturers, developers, and publishers could use patent litigation as a real enforcement mechanism.
So we have gone through this entire discussion, and then told you that you are not going to be able to afford to sue anyone. Does that mean that your patent is totally worthless? No; it means that understanding how to use your patents is that much more important. Without a true understanding of the power of your newly acquired patent, it is nothing more than a pretty piece of paper to hang on the wall. Below, we discuss some ways that patents can be used by most companies.
Financially speaking, a patent is an asset. Because patents are assets, they have financial implications for the companies that own them. It is possible to use patents to secure loans from individuals or financial institutions. Patents usually add value to a company for investment purposes.
If a company is interested in taking a round of investment, public or private, the patents a company owns will be considered in that valuation, almost certainly increasing that valuation. A patent is also an excellent way to set your company apart from the other companies also seeking investment. It can show that you are both dedicated to protecting your intellectual property as well as sophisticated in how you go about doing so.
A patent can also be used as a strong marketing tool. “Protected by U.S. Patent” sends a little shiver of anticipation down the back of the consuming public. “Patent Pending” has a similar effect. It tells the consumer that they will not be able to get this controller or this type of game experience from anyone else. The patent can also be used to set your product apart because no one else will be able to use its particular features (without your permission).
The perception associated with patents is real and should be an important consideration. Therefore, in the eye of the public or potential investors, some may believe your patent protected ODORFRON 2010 must be better than the competitors. Thus the patent can serve to increase interest in your products and be used to charge a premium for those same products.