Patents can be an effective means to leverage your innovation efforts to achieve a competitive advantage. There are two strategies on using patents;
1) Gain a proprietary market advantage
2) Generate revenue stream through license agreements
Let’s focus on how to leverage your intellectual property to gain a market advantage.
An issued US patent covering a core technology can provide companies with a significant competitive advantage. The most powerful benefit of patents is to establish and defend a proprietary market position. In some cases, patents define entire new industries. A classic example is the xerography technology pioneered by Xerox. For many years, Xerox’s effective patent portfolio allowed them to enjoy a near monopoly in the photocopier business. Once the key patents expired, the competition became fierce and profitability eroded. Pharmaceutical companies rely heavily on key patents for prescription drugs. After the lengthy FDA approval process, the drug maker has to leverage the exclusivity a patent allows and generate high-margin sales until the patent expires. When the drug goes “off patent”, generic drug makers enter the market thereby increasing the competitive landscape.
Having a laser-sharp focus on intellectual property in new product development is a key factor in developing products with a high probability of market success. Early in the new product development process, the patent position of competitive offerings must be thoroughly investigated. The competitive patent landscape will guide the design team to identify potential patent infringement issues and identify areas where new features may be patented. The primary focus of the patent intelligence study is to define new product features that will make it more difficult for competitors to copy the new product under development.
Companies may also patent business processes. Dell computer isn’t the technology leader in the personal computer business. Dell builds high quality products typically using standard components, but has taken the process of building custom PC’s to a new level. A consumer can go on the Dell website and select an off-the-shelf model, or custom configure a system with a few mouse clicks. From the Dell website, the customer is able to track the progress from manufacturing, testing, and shipping. Dell has over 40 issued or pending patents covering their innovative business model.
Patents covering a core technology or business process may be used to provide an effective barrier to entry for competitors. A well written patent or series of patents can make it very difficult for competitors to develop and sell competing products in your market. An effective tactic is to successfully have several patents issued to cover multiple aspects of the product. An excellent example is the Gillette Sensor razor2. Early in the development of the razor, the engineers and scientists developed seven potential designs. Working with the patent attorneys, the engineering team completed a full patent analysis on each design and carefully compared each design with competitive offerings. The final design was chosen based on how difficult it would be for competitors to get around the Gillette patents. The team ultimately incorporated 22 patentable inventions into the Sensor razor. The Sensor razor was protected by a formidable patent wall that prevented competitors from duplicating the product. This strategy is called “clustering” or developing a “patent thicket” around a product or process.
If you have IP assets and want to increase revenues, our leading polymer consultants an InnoCentrix can help. Contact us at 1-877-887-6596 or click here to visit our website.
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