Entrepreneurs often consider securing exclusive rights for their businesses by patenting their inventions. A patent is a powerful business tool and using it to protect technological advancement can be smart. But like most business tools, patents should be pursued with a detailed strategy in mind and within the framework of a sound business plan. This seemingly trite advice is too often ignored.
Not every business needs a patent or should spend to get one. A few statistics confirm that most patents are not useful business tools. Traditionally, no more than three percent of patents make any money. Since 2013, the United States Patent and Trademark Office (USPTO) has received over half a million patent applications each year but has only granted roughly half of them. Of these granted patents, less than one percent have been leveraged through litigation.
A valuable patent starts with a good strategy. A good strategy determines what the patent will cover based on a myriad of inquiries such as who will likely infringe, will the competition design around, or are there viable non-infringing alternatives on the market. That strategy also considers business objectives such as customer retention goals, product development cycle, market share expansion. That strategy should drive every decision during the prosecution of the patent’s application.
This means that the role of the patent in the business informs each decision during the prosecution of the application. Patent litigators often see the results of these prosecution decisions down the road when the patent is involved in a law suit. Most litigators will agree that adopting a coherent and directed strategy during prosecution provides the best likelihood of success during litigation.
Mistakes can be costly. Last year, Eagle Pharmaceuticals lost its patent monopoly over a cancer treatment drug which generated about 30 million dollars in annual revenue. The court found that Eagle’s patent claims did not cover Slayback’s generic version because Slayback used a different solvent. Sadly, even though Eagle was aware of the different solvent and disclosed it in the patent specification, Eagle failed to claim it. With greater consideration of the competition and the manner of infringement, Eagle might not have limited its claims to the one specific solvent which it used in its own formulation.
Patent practitioners should and often do attempt to craft guide posts by learning their client’s strategy. If the client does not have one, the practitioner should develop a strategy in collaboration with the client. If this proves difficult, because the client fails to invest the time or the practitioner prefers not to press the issue, then trouble may come knocking. Patents are an expensive part of a business’s IP portfolio and must be managed according to the objectives and mission of the business. A detailed strategy is a must.