Patents are the essential fuel for the challenging, uphill journey that every inventor has to face.
This is why it is more important than ever to ensure that inventors appreciate the irreplaceable value of patents as they build their success stories. If they do not, then inventors will lose money to larger manufacturers that are able to reproduce their items at unbeatable prices. Patents encourage innovation, rather than hamper it, and they are the only viable pathway for the ‘little guy’ to secure lucrative deals and partnerships with larger businesses.
The number of people being given patents is still at a high in the US. Last year, over 370,000 were granted, which is more than double the figure for 2000. Nonetheless, it was a slight decrease compared to the Covid-powered innovation boom of 2020, when being stuck at home gave more people the chance to pursue all the ideas that they’d previously had to put on the back-burner.
While this decrease should not be a cause for concern, it should present a gentle reminder that we must work harder to educate new inventors and highlight to them the importance of patents.
There are two primary reasons why inventors should seek out a patent. Firstly, and perhaps most obviously, patents offer the strongest form of protection against an inventor’s idea being stolen. Sure, there are examples of people like Elon Musk choosing not to use patents, however, as he sits atop his $260+ billion empire, Musk is able to relinquish patents in favor of enabling other inventors to use Tesla technology in the name of cultivating greater innovation. But for the first-time inventor that is simply trying to get his newly designed coffee-table into Walmart while at the same time holding down his day-job, considering the ‘greater good’ of industry innovation is a luxury he cannot afford.
The likelihood is that if you sell 5,000 units of your unique water-bottles without the security of a patent, then this design will get picked up by a company that can rapidly produce and sell 50,000 units for a much lower price.
The second key reason why patents are a necessity is the fact that they open the doors for crucial partnerships. Small-scale inventors are often looking simply to license their idea, which entails giving another company permission to produce and sell their product. This can come with either a large upfront fee for the inventor, or a per-unit royalty.
These kinds of partnerships and distributor agreements are generally off-limits without a patent. If you don’t own the intellectual property, then you have nothing to sell as part of a licensing agreement.
Some might argue that the costs and waiting times involved in obtaining a patent are not worth the hassle. An extremely simple patent can set someone back by around $5-7,000, while a patent for a highly complex, software-related invention can be upwards of $16,000.
However, when you take into account the fact that some inventors buy a patent for $10,000, but then sell it for seven figures, the costs involved are put into better perspective. Compared to manufacturing and marketing the product yourself, patenting is almost always the cheapest option.
For further evidence, we need only look to the examples of famous inventors, such as Daisuke Inoue, the founder of karaoke. In 1971, Inoue created eleven units of his ‘Juke 8’ karaoke machine but decided against patenting the idea. As a result, it wasn’t long before larger and more tech-savvy karaoke machines sprung up al over Tokyo. Inoue missed out on a potential goldmine - all because he chose not to get a patent.
Research clearly underlines that new firms with a higher number of patents are much less likely to go bankrupt, compared to those with fewer patents. Patents have also been shown to make new firms more attractive as targets for mergers. In addition, companies are more commonly selling unused patents to their competitors and creating additional revenue streams.
Ultimately, inventors need patents both for protection and to act as the golden key that unlocks a host of potential partnerships and licensing agreements that would otherwise remain inaccessible. The costs involved in gaining a patent can be annoying for inventors, but they are far outweighed by the lucrative deals that patenting can open up.
Vince Kehoe is President of Innovative Licensing & Promotion Inc. He has over thirty years’ worth of experience guiding inventors through issues such as patenting, manufacturing and securing a retail deal.