How patents help businesses succeed YouR guide to patents..

1. Investment..

Investors look for innovative businesses with well defined intellectual property
  • Investors want to understand the extent to which a business ensures its freedom to operate, establishes certain barriers-to-entry and meets a real market need.
  • The main barrier smaller businesses face is asymmetric information – namely they have better information about the business, and the likelihood of success, than potential investors.
  • Patents can overcome this with an ability to convert idiosyncratic inventions into a standardised format with a known set of technical and commercial qualities.
  • Once investors have confidence in the technical and commercial aspects of an invention, the likelihood of investment increases.

2. Protection

The protection of ideas goes beyond infringement concerns towards helping form the basis of a business plan
  • Patents grant exclusive operating rights to owners, protecting the source of income.
  • A patent provides the economic confidence to invest in research and development as there is assurance in the exclusivity of results.
  • A patent creates operating room for a company, increasing the quality of revenues and helping facilitate a 'high-margin' pricing model.

3. Growth..

Patent licenses can allow firms to create and develop additional revenue sources
  • Patents enable transfer of technologies, via licenses, to third parties, who subsequently invest their own capital in production; meaning firms are able to create – and control – additional end-market delivery channels.
  • License opportunities are strategically important when it comes to reaching out across divergent markets, without compromising on branding. Licenses enable a manufacture to build a high quality brand, via its own channels; while using third parties to secure a stake in low cost markets.

4. Leverage..

Patents can help unlock unexpected opportunities for business success
  • Companies acquire patents or even whole other companies for the strategic leverage it provides...
  • Patented technologies are often one of the main reasons behind high profile acquisitions. For example, the acquisition of UK based software company SwiftKey by Microsoft for $250m in 2016.
  • Larger companies in litigation disputes with competitors often go on the acquisition trail for patents owned by firms in potential infringement. These assets may be unrelated to the business but have value purely because the competitor is in infringement.
Created By
James Dowler

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