A patent can also be used in licensing situations. People are often intimidated by the word license. Licenses can be complicated and they can involve extensive obligations on behalf of all the parties.
However, the basic notion of a license that all other notions spring from is really an uncomplicated one. At root, a license is a promise not to sue. That is all. When one company gives another company a license, the first company is merely promising not to sue the second company for using some protected information/technology (e.g. a patented invention). And this promise not to sue can be extremely lucrative.
There are several ways to realize the value of a patent through licensing. The first way is to simply license the technology of the patent to other companies who pay for that right. This method has the advantage that it is generally the patent holder (i.e. you) who is in control of the arrangement. More likely for a small and midsize game company, the patent will be on technology that improves other patented technology.
This opens up the opportunity to enter into a cross-license with the other patent holder. Both parties can benefit because both parties will be agreeing not to sue under their respective patents so that one or both can use both patents to create a super product. This has the potential to lead to increased revenues for both parties.
Finally a patent can be used as defensively against competitors entering your field or asserting patents against you. Whether a competitor is trying to enter into your technological niche or threatening to sue you, having a patent offers some evidence that you have the right to do what you are doing and no one else does.
The patent acts as a symbol of intellectual property sophistication and is a threat that may keep other parties out of your space. Even when a patent is just sitting on the shelf, it is in the public record and may be working for your company in ways you will never fully appreciate. Specifically, other companies may be considering moving into your space, but the discovery of your patent may dissuade them. The other companies know that while the patent can be challenged, the cost of litigation makes it unlikely that it will be.
There are many uses of patents outside of litigation. If understood and used correctly a patent can have value that far exceeds the cost of the prosecution of that patent.
Whether we like it or not, patents absolutely have an important place in the game industry. As the industry continues to mature, that place will grow in importance. Without question there will be more patents in the game industry ten years from now than are currently in the industry. This means it is critical to understand how patents can work for or against your game company. Part of this understanding is knowing that the purpose of patent protection varies based on your company’s goals, resources, and position in the industry.