4 Reasons to Patent

Patents are one of a number of tools including trademarks, copyright and trade secrets widely used to protect ‘creations of the mind’. They are a tremendous asset for any organisation because they provide market access, leverage in negotiations, funding and they increase economic and strategic value. This also means that the absence of patents can be detrimental on those dimensions.


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4iP Council developed the original version of this interactive guide in cooperation with eminent academics and experts to share best practice and deepen understanding of the value of patent registration. Original source: 4 Reasons to Patent | 4iP Council

MARKET ACCESS

MARKET ACCESS

Leverage your research and development results

“The investor will want to see your assets... the quality of the team, the technology and the patents. This gives grounds for a discussion on value. This discussion is fair because if the investor puts money in, he or she also takes a risk. Without a patent, anyone could come and copy”. Jacques Lewiner, French physicist and inventor. Nominated for the EPO Inventor of the Year Award 2018.

Patents can be used to support business model extension. If imitation is easy, protecting inventions with IP rights is paramount to safeguard your investments. See the Picote(machine tools) case study.

See the Voltea(electrical machinery, apparatus, energy) case study to learn more about how patents enable risk management surrounding innovation investments.

The Marinomed(biotechnology) case study shows how strong IP protection is a prerequisite in the biopharmaceutical market due to easy imitation to (1) recover high R&D investments &; (2) overcome a long and expensive approval stage.

Manage freedom to operate and reduce the risk of infringing the rights of others

Firms find freedom to operate (FTO) almost as important as protecting their product, according to a survey of the largest Swedish R&D spenders Holgersson & Granstrand, 2017

IP landscaping is used for many purposes, such as input to R&D processes (invention creation), to the R&D strategy (direction of research), FTO analyses and patentability analyses See the Picote(machine tools) case study.

Having put into effect an IP strategy as soon as the company was formed, Skeleton(electrical machinery, apparatus, energy) ensured that the patenting of inventions in the initial stages of R & D was streamlined with early product development. This led to three benefits: 1/ better IP capture; 2/ a better idea of the value of the invention, which is of huge importance at the beginning, where investment is crucial, and 3/ the ability to assess whether the company will be able to use the invention without being dependent on others.

Voltea(electrical machinery, apparatus, energy) acquired a company because of its patents to complement the existing patent portfolio and facilitate FTO. Patents were also used help to manage FTO in the new application markets.

At Webdyn(digital communication), patents secured freedom to operate by facilitating a de facto cross-licensing agreement. Preparation, by carrying out an FTO, can significantly facilitate patent prosecution.

For Micrel(medical technology) incomplete FTO analysis and underdeveloped IP strategy in the past lead to significant loss in UK market share.

At Marinomed(biotechnology) an FTO analysis by an external specialist was conducted before each project start.

Protect your inventions from imitators and free riders

“By protecting my non-spill cup idea with patents, trademarks and insurance, I was able to enforce my rights and secure my position as market leader, reaping the reward for all the years of hard work! Insurance is costly, but for me it was essential... I would have lost everything if I had allowed people to continue infringing. As an inventor, it is important to understand how intellectual property works and to do as much as you can to protect your ideas before you share information.” Mandy Haberman, director and founder of Haberman Products (consumer goods) and UK Female Inventor of the Year 2000. Learn more about Mandy’s experience.

Patents are essential to protect products from imitation and thus premium prices. See the Lithoz(machine tools) case study.

In the Cosmed(medical technology) case study. IP is instrumental in protecting post-sale markets (spare-parts or maintenance services).

In the construction business, where IPRs are traditionally not respected, offensive use of patents (enforcement) becomes a necessity. See the Picote(machine tools) case study.

"Start-ups are volatile with high employee turnover. Founders can be very trusting and it happens quite often that code or ideas get stolen by former co-founders, employees or interns. There is a strong need to protect ideas and related work from employee theft". Didier Tranchier, Angel Investor and Founder and President of ADELIT.

The Fractus(telecommunications) case study shows how a company suffered from patent infringement by its customers. This endangered the existence of the company.

Applying for a patent is more expensive than keeping an invention secret by contractual means. However, not having a patent can prove to be immensely costly, for example if your invention is reverse-engineered, knowledge is leaked, or the invention is patented by someone else. See the EKSPLA(optics) case study for further detail.

At Micrel(medical technology) technology in the early development stage was protected by patents to secure early and continued investments in R&D (protection from imitation).

At Orcan(electrical machinery, apparatus, energy) Technology is based on standard components that require a great deal of technical innovation. Since these components can easily be reverse-engineered patents are essential.

Enhance your reputation

Customers and investors consider it very important for a young company to have strong IP. Company scale-up must then focus on building the IP portfolio. The larger the company, the greater the customers’ expectations for strong IP that will be properly defended. See the Aerogencase study.

Patents are often used for marketing purposes (branding power). See how Skeleton(electrical machinery, apparatus, energy) uses them. (electrical machinery, apparatus, energy)

At EKSPLA(optics) patents played a major role in establishing the companies reputation in the laser industry, making the company more attractive for clients and partners.

IP protection was used for brand creation and the setting of premium prices at Micrel(medical technology).

Orcan(electrical machinery, apparatus, energy) gained early control over a patent portfolio from a university to minimise IP management complexity and to use it as collateral and reputation purposes.

Hold your own in negotiations

"With the right IP tools in place, what worked well for us was over communication and we were able to do this because we had filed patents and protect ourselves from copying. This brought us to the attention of the French national state-owned railway company, SNCF. Collaborations with Enedis, the organisation responsible for the transport of electricity in France, and the German group BayWa followed. The fact that we are working with France Brevets and have a number patents to protect our ideas and, the investments behind them, reassures clients and partners about our stability as a company. Owning patents also makes collaboration more interesting for us: they are a strategic bargaining tool and can be used to generate revenue through licensing". Arnaud de la Fouchardière, CEO, Vitirover.

Click here to find a brief on collecting evidencefor the purposes of enforcing IP rights & an overview on the EU legislation which regulates collection of evidence, together with the most relevant and well-known methods and other important factors to take into account.

At Fractus(telecommunications), successful enforcement actions and litigation in the US allowed the company to establish a precedent for future licensing agreements.

Patents can be used as tools for negotiating with rival companies. When you file a patent application, it is vital to consider not only the countries that you want to target, but also those that are most important for your competitors, even if you do not expect to enter these territories with your products or services. See the Webdyn(digital communication) case study.

Infringement cases are usually settled. Litigation is only a last resort. See the Read about Marinomed's(biotechnology) experience.

NEGOTIATING

NEGOTIATING

Sit at standards development table: enable price negotiation and further protection benefits, impress investors and facilitate valuable relationship building

“If you have a patent that is applicable to the standards, you benefit from a negotiation framework established by the highest court in Europe, that both parties, licensor and licensee, must follow, independently on their size and strength. This eliminates the muscle size effect. Also, if you have a patent essential to a standard, you valorise it immediately. Developing technologies in standards with an ecosystem is also a guarantee for venture capitals (VCs) that you are not living in a dream world,” said Michael Abitbol, Managing Director at radio technology innovator RED Technologies.

Experience of patents has enabled Fractus(telecommunications) to become a member of the Standard Advisory Committee before the European Patent Office.

Monetise your patents through commercialisation (licensing and cross-licensing, sales, joint ventures...): leverage your technology in new markets

Energy Square licenses its patents to develop income streams. See interviewwith France Brevets. (electrical machinery, apparatus, energy)

“(The patent) helped us to be in a good position when we went to licensing which we did in collaboration with Thomson (the company was renamed to Technicolor). Neither Erlangen-Nuremberg University nor Fraunhofer IIS developed-user products to be sold directly. The licensing revenue generated by the mp3 patent has paid for a huge amount of research work at Fraunhofer. It was and still is a steady revenue stream that has generated a large double-digit number of millions of euros. We reinvested this money back into R&D. The intellectual property generated royalties and the royalties generated R&D. At Fraunhofer, hundreds of jobs have been created and people have estimated the job impact of the whole mp3 technology in Germany alone to be thousands of jobs”. Karlheinz Brandenburgof the celebrated mp3 invention team (digital communication).

Netamo has developed a patent porfolio that enables wider collaborations. Their CEO talks here to France Brevetsabout their acquisition by the group Le Grand.

Know what different contracts meanwith this EU IP Helpdesk guide.

This factsheetoffers detail on technology licensing-in for patents and other intellectual property rights.

IP monetisation can be an integral part of a company’s value-creation process. However, it must be supported by a sustained R & D effort, ensuring technical innovation that continually adds value to the technology licences offered to clients. See the Fractus(telecommunications) case study.

Voltea(electrical machinery, apparatus, energy) practiced ex-post licensing through active infringement identification and offering licensing agreements.

A strong patent can be useful for managing freedom to operate, for example, by means of a cross-licensing agreement. The licence does not always have to be a formal grant; freedom to operate can also be managed by means of a covenant not to sue. See the Webdyn(digital communication) case study.

See Orcan(electrical machinery, apparatus, energy). The partner for whom the invention has the highest business-relevance obtains the patent, which is then cross-licensed. Patenting costs, licensing revenues, but also filing and validation strategy, can then be shared between the partners.

Patents are assets which can enable cooperation, joint-development or the creation of new companies and adjust any uneven balance of trade

Patents are important for (future) research collaboration. See the Lithoz(machine tools) case study.

IPRs plays an important role for (R&D) cooperations with external partners. See the Cosmed(medical technology) case study.

Patents facilitated cooperations which compensated for the company's limited resources at Voltea(electrical machinery, apparatus, energy).

EKSPLA(optics) has a special agreement with its contract manufacturers on joint inventions. If a component is exclusively produced for EKSPLA, it is kept secret, otherwise a joint patent application is filed without any exclusivity clause.

Flexibility in licensing models increases the chances of creating win-win situations for all parties. See the Marinomed(biotechnology) case study.

Orcan case study(electrical machinery, apparatus, energy) participates in open innovation (co-operation with other manufacturers) but avoids joint patent ownership.

FUNDING

FUNDING

Attract investors, increase company value, improve likelihood of success in initial public offering and receive venture capital funds

Customers and investors consider it very important for a young company to have strong IP. Company scale-up must then focus on building the IP portfolio. The larger the company, the greater the customers’ expectations for strong IP that will be properly defended. See the Aerogencase study.

The Lithoz(machine tools) case study shows how patents can be important for investment and (strategic) partnerships.

IP can be a positive signal to financial investors and analysts. See the Cosmed(medical technology) case study.

“I could absolutely not have secured investment for Ewgeco without the patents. They were essential to my business model”. Tanya Ewing, British Female Inventor of the Year, 2008. (electrical machinery, apparatus, energy)

The Skeleton(electrical machinery, apparatus, energy) case study shows how patents are important to raise capital.

IP helps to secure finance from investors by proving the company’s value creation potential and justifying investors’ long term commitment, thus guaranteeing the independence of the company. See the Fractus(telecommunications) case study.

At Voltea(electrical machinery, apparatus, energy) the patent portfolio allowed to attract additional investors in an early stage which facilitated the company's growth.

At Webdyn(digital communication) early patenting proved valuable for marketing purposes and to attract investment.

“The patenting element is essential for us. One of the criteria we have for financing a project is protection of their IP. You have to be unique in some way to be successful but if you are unique, you are not unique for long”. François Cornélis, Former CEO of Petrofina, Chairman of the Essenscia Innovation Circle and Innovation Fund. (electrical machinery, apparatus, energy)

"I could not have commercialised my inventions without patents... It is very hard to convince an investor if you do not have a patent." Jacques Lewiner, French physicist and inventor. Nominated for the EPO Inventor of the Year Award 2018.

For a drug discovery company IP is crucial to attract investors and get funding. See the Marinomed(biotechnology) case study.

Dr Alex von Frankenberg, the Managing Director Germany’s largest seed investor High-Tech Gründerfonds (HTGF) believes that the “strongest value of the patent is often when the company gets sold because acquirers like patents. They perceive a patent portfolio as a real asset.”

Secure patent backed loans

Access grants and subsidies

Benefit from tax incentives

For example, the Irish Knowledge Development Box (KDB)a tax incentive policy tool to encourage innovation by applying reduced rate of corporation tax (6.25% down from 12.5%) payable on such profits arising from qualifying IP assets a resulting from qualifying research and development activities.

Kodak’s patent portfolio was used as collateral to secure a $965 million line of credit that helped keep its doors open during its bankruptcy proceedings. (Source: Stout)

Enterprise Ireland provides a range of Research, Development and Innovation (RD&I) supports to clients  to help them develop novel solutions to address global market opportunities. To complement these Enterprise Ireland has developed a new ‘Intellectual Property (IP) Strategy Offer, targeting SME clients that are existing recipients of EI RD&I support.

EKSPLA(optics) made use of a public funding scheme for financing its international patent portfolio.

Orcan(electrical machinery, apparatus, energy), a university-based business start-up, found patent protection critical for VC and early-stage funding.

STRATEGIC VALUE

STRATEGIC VALUE

Improve your competitive edge

Competitor watches and patent searches are essential components of IP management. Learn more from Aerogen(medical technology).

This European IP Helpdesk case studyprovides guidance on using IP as a tool to fight against infringers to gain competitive advantage.

IP provides a competitive advantage in public procurement bids. See the Cosmed(medical technology) case study.

Picote's (machine tools) experience shows how innovation is an opportunity for extending existing business models from services to high value products. The old and new business models can be mutually supportive, securing growth in traditional, competitive or even stagnating markets. See the Picote(machine tools) case study.

At Skeleton(electrical machinery, apparatus, energy) patents have been created to protect the company's technology with competitive advantage along the whole value chain (development, production, selling).

The Fractus(telecommunications) patent portfolio allowed the company to successfully implement a turnaround strategy by changing the business model from a contracted engineering and design laboratory to a technology licensing company.

Patents on the core technology allowed Voltea(electrical machinery, apparatus, energy) to expand in new markets with new applications of the core technology.

It is important to have an IP strategy early on, even if your company is not yet in need of formal IP protection. Later changes to your business model, involving targeting new markets or new customers or offering new services or products, may mean you have to make quick adjustments to your IP strategy. These are easier to implement if your company is already aware of its options and how to achieve them. See the EKSPLA(optics) case study.

Patents are crucial for strategic partnerships with large pharmaceutical companies, which usually demand exclusivity. See the Micrel(medical technology) case study.

At Orcan(electrical machinery, apparatus, energy), given that the technology was already established one single patent was not enough and all relevant innovative aspects of the components needed to be protected.

Build an in-house innovation mindset with recognition and reward for inventors and make your company attractive for top talents

IP Training for staff. See the Aerogen (medical technology) case study.

At Lithoz(machine tools) employees are encouraged through an incentive scheme to develop new, patentable ideas.

Picote(machine tools) decided to internalise most of its IP management tasks by employing its patent attorney.

At Skeleton(electrical machinery, apparatus, energy) IP management responsibilities are distributed internally and to external patent agents and employees and specialists are cross-trained with IP competence.

At Fractus(telecommunications) all strategic IP decisions are carried out in-house. Outside partners are used for strategy implementation.

Given the quick expansion of its patent portfolio and the importance of IP, Voltea(electrical machinery, apparatus, energy) needed to adapt internal IP management practices. The company practices active IP capturing, in particular through innovation workshops.

All employees are required to have at least a basic understanding of IP and in-house IP trainings are regularly organised at Marinomed(biotechnology).

Filing for patent protection creates work for the inventors too! They not only have to draft an invention disclosure report, but also contribute to the evaluation of the invention and the drafted patent application. They may also get involved in the patent prosecution process, if the attorney has to respond to the search report and other communications from the patent office during the patent examination procedure. See the Orcan(electrical machinery, apparatus, energy) case study.

Become a valuable partner to important actors in setting up collaborative R&D and technology development effors

Collaborating with universities and research organisations provides an opportunity to perform early-stage research and acquire new skill-sets at a reasonable cost without having to compete for overstretched internal resources. See Aerogen's(medical technology) experience.

The Lithoz(machine tools) case study shows how patents can result from collaboration between company and university.

Read the success story on a Danish inventorwhose wine decanter invention paved the way to a strategic cooperation with a Danish company and resulted in an international success (consumer products).

Skeleton's (electrical machinery, apparatus, energy) experience shows how patents are important for collaboration in technology development.

Fractus(telecommunications) actively defends the IP of SMEs. Its CEO spoke at the EU Parliament about developing a successful IP strategy and the benefits of European SMEs having a European Patent Court and a Unified Patent System.

Patents facilitated participation in EU projects, demonstrating EKSPLA's (optics) technological competence.

Capture the value of strategic R&D investments

Revenues generated from bargaining are reinvested into further R&D. Cystic Fibrosis Foundation Therapeutics sold its Vertex patent royalty stream to Royalty Pharma for $3.3bn, using the revenue to further cystic fibrosis drug development. Source: Royal Pharma

At Skeleton(electrical machinery, apparatus, energy) patents were essential to protect investments in R&D from being jeopardised through imitation / Intelligence from patent information is used for R&D and IP creation purposes.

Applying an R & D - driven approach, first protect the key components of the core technology and get strong patents. There should be a good match between IP and the product, and this needs to be reviewed at each stage of product development. Learn from Voltea(electrical machinery, apparatus, energy).

It is important to perform regular searches in patent databases. In addition to allowing you to monitor your competitors, analysing new prior art can help you find “white spots” in the patent landscape which may reveal opportunities for further innovations. See the Micrel(medical technology) case study.

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