Patenting inventions can be a valuable way for business owners to control the use of their inventions and make money, but did you know you could lose your patent rights? Complications in the application and use process can create problems that business owners who are not familiar with intellectual property laws struggle to resolve.
Below we discuss what patent rights are and how you can lose them so that you can avoid these scenarios.
What are the patent rights?
A patent is a right that gives you exclusive privilege over a product, process, or method that provides a new way to do something or solves a technical problem. The first step to obtaining patent rights is by submitting an application to the regional or national intellectual Property (IP) office.
In order to obtain a patent, the public must have access to technical information regarding the invention in a patent application.
Patent owners have the right to determine who can or cannot use the patented invention during the protection period. It simply means no one else can distribute, import, commercialize or sell the invention without the owner’s consent.
According to USPTO, the following must be met to qualify for patent protection:
Novelty: The invention must have a new characteristic that is not already known from the pre-existing knowledge known as “prior art”.
Non-obvious: the invention must entail an inventive step known by someone with ordinary technical skills in the relevant field.
Industrial Application: The invention must be practical. It should be useful in an industrial or commercial setting beyond its theoretical purpose.
Patentable subject matter: In many countries, scientific theories, mathematical techniques, plant or animal species, and discoveries of natural substances, are not issued as patents.
Disclosure: One has to disclose the invention in a patent application in a way that is sufficiently clear and complete for a person of ordinary skill in the relevant technical area to reproduce it.
Your Invention’s First Line of Defense
Patent rights give you, the inventor, the exclusive ability to decide how your invention is used commercially. This exclusivity is the shield that protects your product or process from being made, used, sold, or distributed without your consent.
Think of it as a protective bubble that keeps competitors at bay, ensuring that you—and only you—reap the financial and strategic benefits of your invention.
A Strategic Tool for Market Leadership
Having a patent places you at the forefront of the market. It’s not just about legal rights; it’s about establishing yourself as a pioneer in your field. When you hold a patent, your startup is viewed as a leader, an innovator, an entity that’s capable of breaking new ground.
This perception is invaluable, as it sets you apart in a saturated market, giving your products a “premium” tag that can command better prices and customer loyalty.
The Key to Unlocking Investment
In the world of startups, capturing investor interest is as crucial as innovating. Investors are more inclined to put their money into a business that has secured its intellectual property through patents.
Why? Because it reduces their risk. A patent signals that your invention has value, is protected, and holds the potential to deliver a competitive edge. Essentially, it shows that you’re not just creating; you’re also protecting and planning for future profits.
Expand Your Business Reach Through Licensing
Patent rights open up a lucrative path to revenue through licensing. Licensing your patented invention to others can be a steady stream of income without the need for large capital expenditure on manufacturing and marketing.
It’s a strategy that allows you to spread your technological advances while still retaining ultimate control over its use. Licensing can be particularly strategic if your startup wants to quickly expand its market presence without diluting its resources.
Enhancing Your Negotiating Power
With a patent in hand, you have leverage in negotiations, be it in securing funding, forming partnerships, or even in merger and acquisition discussions.
Your patent is a tangible asset that increases your company’s valuation and offers a clear advantage in negotiations, ensuring that you have the upper hand in deals and collaborations.
Future-Proof Your Innovation
Patents are not just about protecting what you’ve already created; they are also about securing the future of your innovation.
With a patent, you can deter others from venturing too close to your unique solution, ensuring that you stay ahead of the curve. It’s about making sure that as your startup grows, your inventions continue to provide a foundational advantage.
The Essence of Patent Rights
At its core, a patent right grants you, the inventor, the exclusive control over your creation. This control means that you decide how your invention is made, used, sold, or distributed across the market.
Exclusive rights are a powerful tool—they allow you to shut the door on competitors who might want to capitalize on your innovation without compensating you.
More Than Just Protection: Strategic Business Asset
Patent rights do more than protect—they empower. Holding a patent elevates your invention from just another idea to a recognized and legally protected asset.
This status can significantly boost your startup’s valuation and attractiveness to investors and partners. Think of your patent as a key that can unlock new business opportunities, from strategic alliances to venture capital funding.
The Lifeline of Your Market Position
In the highly competitive tech industry, being the first to patent an innovative solution can be the lifeline of your startup’s market position. Your patent can act as a barrier, preventing others from entering your market space with a similar product.
This not only secures your place but also enhances your chances of becoming a leader in your sector. It’s about marking your territory in the business landscape and defending it robustly.
From Protection to Profit: Leveraging Patent Rights
Owning a patent isn’t just about keeping competitors at bay; it’s also about exploring potential revenue streams. Licensing your patented invention to others can be a profitable strategy that brings in consistent income without the overhead costs of production and distribution.
Whether you’re a biotech firm or a software startup, licensing can help you scale your technology without scaling your expenses.
Fostering Innovation and Collaboration
When you hold a patent, you signal to the world—and potential collaborators—that you are a serious player in the innovation game. This can lead to joint ventures or partnerships where you can combine resources with other entities to push your invention even further. It’s about creating a synergy where everyone brings something to the table, protected by the clear boundaries set by your patent.
Empowering Negotiations
Having a patent changes the dynamics of business negotiations, providing you with a stronger bargaining position. Whether you’re negotiating supply contracts, forming partnerships, or engaging in licensing discussions, a patent gives you a tangible asset that enhances your negotiating power. It’s not just about what you can offer now, but what your patent could enable in the future.
How Might You Lose Patent Rights?
The creation of patent law was to ensure that the public benefits from inventors’ works. The law, therefore, encourages inventors to patent their work. It is important that inventors patent their inventions as soon as possible.
Even though inventors have strong rights to creating innovations, they may lose them if they don’t pay attention to Patents Law. Once lost, you cannot reclaim the rights. The following are ways that inventors may lose patent rights:
Publication
The patent right of an inventor who describes his invention in a printed publication a year prior to applying for it is not eligible for patent issue.
To protect their rights, inventors should apply for patents within one year after the publication of specific information about an invention. It doesn’t matter if the publication is in the US or somewhere else.
The public sale or use
Patent rights are lost if an invention was into use or on sale within one year of the inventor applying for a patent.
The “on-sale” bar prevents an inventor from waiting too long to obtain patent rights. However, it allows them to test the market and refine their inventions.
Even if one person is aware of the public sale or public use, even though the inventor doesn’t know, the inventor could still lose his patent rights. The invention must be functional and not experimental during the relevant year.
Abandonment
There are many ways that abandonment can happen, but the essence is that the inventor seems to have abandoned the intent to patent and exploit his invention.
Although an inventor might simply declare his intention to abandon the invention, it is more common for the inventor to implicitly abandon the invention by unreasonably delaying or suppressing the patent application, hiding the invention, or concealing it.
This situation does not have a time limit for inventors to file patent applications. The court will conduct a factual analysis to determine whether an unreasonable delay occurred. If the inventor abandoned the invention, the invention belongs to the public.
Judicial invalidation
Two ways courts can strip you of your rights:
- Non-infringement: If a court finds that a patent holder’s claims are not infringed by an accused product or process, the patent holder may lose certain rights to enforce the patent against similar product or process.
- Invalidation: If a court finds that the claims of a patent are invalid, the patent holder will lose their rights to the patent. This can happen if the claims are found to be obvious or if the invention was not novel or non-obvious at the time of filing.
Discovery of new Prior Art
The discovery of prior art is one way you can lose your patent rights. Prior art is evidence that your invention is not original. You can use any type of evidence, from plans to actual products.
You could be facing legal hurdles to enforce your patent, depending on who and when the prior art was discovered.
Maintenance Fees
Failing to maintain your patent can also result in loss. A patent holder has to pay maintenance fees to maintain a patent. You also need to update information such as entity statuses as necessary to keep your rights.
Failure to Monitor the Patent Environment
A common oversight for many inventors and startups is the failure to continuously monitor the patent landscape. New patents are filed every day, and existing patents are updated, which can impact the validity and enforceability of your patent.
If a similar patent is granted that challenges the novelty of your invention, your patent rights could be undermined. Proactive monitoring of patent publications and granted patents can help you anticipate and react to potential challenges against your patent’s validity.
Mismanaging Patent Documentation and Correspondence
Maintaining patent rights isn’t only about the legal battles; it’s also about meticulous management of patent documentation and timely correspondence with patent offices. Missing a response deadline or failing to provide requested documents during patent prosecution can lead to abandonment of the patent application.
This could also happen post-grant if maintenance documents or fees are not properly managed. For startups, it’s advisable to use professional patent management services or dedicated IP management software to keep track of all necessary documentation and deadlines.
Inadequate Enforcement of Patent Rights
Holding a patent and enforcing it are two different things. If you fail to enforce your patent rights against infringers, it can lead to a weakening of those rights over time. This non-enforcement can be interpreted as implicit permission, or a legal waiver, which might eventually lead to losing exclusive rights.
Startups need to develop a clear strategy for monitoring the market for potential infringements and acting decisively to enforce their rights through cease and desist letters, licensing negotiations, or litigation if necessary.
Technological Evolution and Obsolescence
Technology evolves rapidly, and what is innovative today may become obsolete tomorrow. If your patented invention becomes obsolete, the patent itself might not lose legal standing, but its economic value could diminish significantly, rendering the patent rights practically useless.
To mitigate this, continually innovate and file new patents that cover advancements and iterations of your original invention, keeping your intellectual property portfolio fresh and relevant.
Legal Challenges and Patent Reexaminations
Your patent can be challenged legally by third parties through various post-grant proceedings, such as reexaminations and inter partes reviews.
These challenges can result in amendments to your patent claims or potentially in the invalidation of the patent if the challenger proves that the patent should not have been granted.
To safeguard against this, ensure that your patent applications are as robust as possible, with clear, well-defined claims and a strong showing of novelty and non-obviousness.
Proactive Steps to Maintain Patent Rights
To effectively safeguard your patent rights, remain proactive in all aspects of patent management—from the application process and monitoring the patent landscape to enforcing your rights and staying ahead of technological evolution.
By understanding these risks and planning accordingly, you can maintain the strength and viability of your patent rights, securing your startup’s innovative edge and its market position.
The Perils of Disclosure Before Filing
In the rush to showcase groundbreaking innovations, many startups stumble into the trap of disclosing too much, too soon. Revealing key aspects of your invention before filing a patent can be detrimental.
Public disclosures, presentations at trade shows, or publications on your website before filing can all potentially open the door for competitors to swoop in. This exposure can be viewed as prior art against your own patent application, drastically diminishing your chances of securing patent protection.
The One-Year Grace Period: A Double-Edged Sword
U.S. patent law offers a one-year grace period, which means you have one year from the first public disclosure of your invention to file for a patent. While this can initially seem like a cushion, it’s a double-edged sword. Relying on this grace period can be risky.
Markets move swiftly, and global competitors might not be subject to such leniency in their countries. If you’re contemplating international patents, disclosing before filing in the U.S. can invalidate your patent rights elsewhere. Startups should aim for a ‘file first, disclose later’ strategy to sidestep this peril.
The Dangers of Incomplete or Incorrect Filings
The complexity of patent applications is not to be underestimated. Filing a patent that lacks crucial technical details or contains broad, unsupported claims can lead to rejections or weak patents that are easy to circumvent or challenge.
For startups, where every innovation counts, ensuring that your patent applications are thorough and precise is critical. This might mean investing in skilled patent attorneys who understand the intricate dance of robust patent drafting.
Expiry of Patents Due to Non-Payment of Fees
Patents have a maintenance cost, often overlooked in the budget planning of a burgeoning startup. The U.S. Patent and Trademark Office (USPTO) requires regular maintenance fees to keep your patent active.
Neglecting these fees can lead to the expiration of the patent, leaving your invention unprotected and freely available for anyone to exploit. Automating fee payments or maintaining a diligent calendar can safeguard against such an oversight.
Inadvertent Abandonment of Patent Rights
Sometimes, the actions—or inactions—of a patent holder can lead to what’s termed as ‘abandonment’ of the patent. This could be due to not responding to USPTO communications during the patent prosecution process or failing to adequately enforce your patent against infringers.
In both scenarios, your inactivity could be construed as abandonment, leading to loss of patent protection. Active management and response to patent office actions are paramount to avoid this pitfall.
Legal Overturns Through Litigation
Even after a patent is granted, it’s not immune to challenges. Competitors can—and often do—challenge the validity of a patent through litigation.
If they succeed in proving that the patent should never have been granted, perhaps because the invention was obvious, not novel, or inadequately described, the patent can be invalidated. Thus, a robust defense strategy, backed by a thorough initial patent application, is essential.
What is the purpose of patent rights?
Anyone who invents a product, whether a device or unique technology, should seriously consider applying for a patent at USPTO. Patents have many benefits. Patent rights protect the invention from being copied by anyone else in the United States. The patent rights guarantee that the inventor is the sole owner of the invention and prohibits others from commercializing it. Below are some of the main benefits of patent rights as per WIPO.
Patents increase profits
If you are able to use patent rights correctly, it can bring you millions or even billions of dollars. Your company can set the market price for any technology or device. People perceive companies that are first to market as experts and innovators in their field. This creates brand credibility and loyalty, which will attract buyers who will pay a premium.
Licensing is another way that a patent can generate revenue. A registered patent grants the owner exclusive rights to use, produce and sell the invention in exchange for royalties and a fee. This is useful if the inventor doesn’t have the resources or doesn’t want to sell the invention. Many American companies exist solely through licensing their technology and product lines. This is very lucrative.
Patents increase company value
Intellectual property can include patents, trademarks, and copyright. Patents are the most important part in many cases, particularly in high-tech industries or consumer products.
It is clear that strong IP portfolios are key to obtaining venture capital. They can provide leverage in business transactions, increase company value in mergers and acquisitions (M&A), as well as provide large amounts to your exit strategy.
Intellectual property lawyers should advise clients regularly on the best way to monetize their patent portfolio. It is essential to do a comprehensive analysis of the situation and develop a multifaceted strategy for patent monetization. Market demand, commercialization potential, and strength of patent applications are some of the factors to consider.
The Patents Obliterate the Competition
Patents are a barrier to entry that prevents others from selling similar products in direct competition with yours. This enables small businesses to compete with large corporations. Even the smallest start-ups may have more market share than large corporations.
A large corporation will typically have a huge advantage over a start-up with an invention, but a patent can help keep large corporations from using your idea.
Attract Investors
It is easier to secure capital investment funding from angel investors or venture capitalists if you have a patent or a patent pending.
You can also pitch your invention without worrying about your idea being stolen. Investors will feel more confident if you have a patent. This gives them confidence in your product and the possibility of monetizing it.
A patent is a must for investors when pitching. Investors will see that your idea is original and that you have invested significant time and money. It can increase your company’s value and give you leverage when negotiating with venture capital investors.
Facilitating Research and Development Collaboration
Patent rights can play a pivotal role in fostering research and development collaborations. Holding a patent can make your startup a more attractive partner for joint ventures and collaborative research projects.
It assures potential partners that your intellectual property is secure, allowing for open sharing of information and co-development efforts without fear of losing proprietary rights.
These collaborations can speed up your development cycles, enhance your product offerings, and open up new market opportunities.
Strengthening Market Position and Exclusivity
The exclusivity granted by patent rights helps maintain and even enhance your position in the market.
With a patent, you can prevent competitors from entering your space with similar products or technologies, which can be especially critical in industries where R&D costs are high and the risk of imitation is significant.
This market exclusivity allows your startup to establish a strong brand identity and consumer loyalty, which are crucial for long-term success.
Increasing Negotiating Power
Patent rights significantly boost your negotiating power, whether in securing funding, forging partnerships, or negotiating supply contracts. With a patent, you have something valuable that others cannot easily replicate, giving you leverage in negotiations.
This leverage can be used to secure better terms in agreements, obtain higher valuation during funding rounds, and command higher prices for licensed technologies.
Supporting Business Expansion and Diversification
A strong patent can serve as the foundation for business expansion into new products, markets, or services. It can provide the confidence needed to invest in new areas, knowing that the core innovations are protected.
Additionally, patents can facilitate easier entry into foreign markets, where IP protection might be a prerequisite for doing business.
They can also open up diversified revenue streams through licensing or selling patent rights to other companies, creating a continuous income source without the need to directly manage production or sales.
Providing a Defense Against Litigation
In the highly competitive business landscapes that many startups operate in, patent rights can also be defensive in nature. Holding patents can deter litigation from competitors by increasing the potential cost and complexity of legal challenges against your company.
Furthermore, in case of infringement disputes, having a patent portfolio can provide the necessary assets to engage in counter-assertions, which can lead to more favorable settlements or cross-licensing agreements.
Leveraging Patent Rights for Strategic Growth
Patent rights are a key element of your business strategy that can influence various facets of your operations and market approach. They are not just protective shields but proactive tools that can drive business growth, foster innovation, and secure a competitive edge.
As a startup founder, integrating patent strategy into your business development plans can significantly enhance your company’s potential and profitability.
Securing a Competitive Moat
Think of your patent as a moat around your castle. In the realm of business, this castle is your market share, and the moat is your patent protection.
By securing a patent, you effectively prevent competitors from crossing into your territory with similar products or innovations. This legal barrier can be crucial for maintaining a competitive edge, allowing your startup to grow and capture the market without immediate threats.
Attracting Investors with Confidence
For many startups, investment capital is the fuel that powers growth. Investors are perpetually scouting for ventures that not only promise great returns but also possess a competitive edge.
Patents serve as proof of both. They signal to potential investors that your startup holds something unique—something that’s not only valuable but also protected. This can significantly boost investor confidence, making your venture a more attractive investment.
Amplifying Market Presence
In today’s digital age, a patent does more than protect—it amplifies your presence in the market. With a patent, your startup can claim authenticity and innovation, key attributes that resonate with consumers and partners alike. It positions your brand as a leader in innovation, enhancing your public image and helping you stand out in a crowded marketplace.
Paving the Way for Future Innovations
Patents are often thought of as the end game—the final step in the innovation process. However, they’re really just the beginning. Holding a patent not only protects your current invention but also lays the groundwork for future innovations.
With the security of a patent, your startup can continue to innovate, refine, and expand on your original idea without fear of imitation, creating a continuous cycle of innovation and protection.
Licensing Opportunities to Broaden Revenue Streams
One of the most strategic moves a startup can make with a patent is to license it. This allows other companies to use your patented invention in return for royalties.
Licensing can be a significant revenue stream, providing consistent income without the added costs of production and market penetration. It’s a way to monetize your invention while still retaining control over its use.
Creating Partnerships and Collaboration
Patents can open doors to partnerships and collaborations that might otherwise be inaccessible. They give your startup a tangible asset that can be leveraged in negotiations, forming alliances that can bring in additional expertise, resources, and market reach. These collaborations can accelerate your growth, diversify your capabilities, and expand your market footprint.
How do you enforce your patent right?
Well done! Your patent has been approved, you paid the issue fee, and you received the seal and red ribbon. It has been years in the making, but now you can relax your mind and your legal funds. Right? Perhaps not. You, your company, your legal counsel, and potential infringers may need to take very different steps to decide how to use a single patent or an entire collection of intellectual assets.
With the Rights also come certain obligations required to be followed by the Patentee.
To keep your patent rights intact, owners must take action against parties who infringe on these rights. However, enforcement can be difficult.
Businesses must monitor their patents. Unfortunately, no agency can police potential patent infringement cases. It is up to the patent owners to research and monitor. Owners can overlook cases of patent infringement because of this.
You have the right to sue someone if you discover that your patent has been copied or used without your consent.
Instead of waiting for someone else to infringe on your patent, we recommend that you create a strategy to address infringement in advance.
Proactive Monitoring of the Market
To effectively enforce your patent rights, begin with proactive monitoring of the market. This involves regularly scanning the market for products, technologies, and services that may infringe on your patent.
Utilizing online tools, subscribing to industry publications, and attending trade shows can help you stay informed about new entries into your market space. Early detection of potential infringements is key to preventing widespread violation of your patent rights.
Setting Up an IP Compliance Team
Consider establishing a dedicated intellectual property compliance team within your organization.
This team would be responsible for overseeing IP matters, including monitoring for potential infringements, managing patent documentation, and coordinating legal actions.
This specialized focus ensures that patent enforcement is not overlooked and that any potential issues are addressed promptly and efficiently.
Engaging in Assertive Communication
Once a potential infringement is identified, engage in assertive communication with the infringing party.
Start with a formal cease-and-desist letter that outlines the infringement, your patent details, and a request for immediate cessation of the infringing activities.
This letter can serve as a strong deterrent and is often sufficient to resolve the issue without resorting to litigation.
Utilizing Alternative Dispute Resolution Methods
Before moving towards litigation, consider alternative dispute resolution methods such as mediation or arbitration. These methods can provide a less costly, quicker, and more amicable resolution to patent disputes.
Mediation, in particular, can help both parties reach a mutually beneficial agreement, such as a licensing deal, that respects your patent rights while allowing the other party to continue their business activities under agreed terms.
Preparing for Litigation
If alternative dispute resolution fails, be prepared to enforce your patent rights through litigation. Litigation can be a long and expensive process, so it’s crucial to evaluate the potential costs versus the benefits.
Ensure that you have a solid case with clear evidence of infringement before proceeding. Engage with experienced IP attorneys who specialize in patent law to develop a strong legal strategy.
Leveraging Patent Insurance
Consider investing in patent enforcement insurance, which can help cover the costs of litigation. This type of insurance can provide the financial backing needed to pursue a case without draining your startup’s resources.
Patent insurance can be particularly valuable for smaller companies that may not have the funds readily available to handle expensive legal battles.
Creating a Culture of IP Respect
Beyond direct enforcement, fostering a culture of intellectual property respect within your industry is crucial. Educate your peers, customers, and the broader market about the importance of IP rights and the potential consequences of infringement.
Building a reputation for taking your IP rights seriously can deter potential infringers and enhance your company’s image as an innovative and principled leader in your field.
You should follow these steps to ensure you are in the best possible position to defend against infringement:
- Create awareness of the market
- communicate your legal rights
- If necessary, take legal action to defend your rights.
There are several options available if you suspect that your patent has been infringed. These include a letter from your legal representative to the infringer and negotiations to resolve the matter out of court. If this fails, you can also take court action. The outcome you seek will determine the course of action that you take.
You could lose patent rights to an injunction against an infringement if you delay taking action. Government agencies don’t police your patent or provide advice on your patent’s possible or actual infringement.
