Why patent?
Is a patent useful?

In 2022, 193460 patent applications were filed with the EPO.* Yes, that is a high number, a new record in fact. But why do so many people want to obtain patents? What can a patent offer?

Despite being a patent attorney I will not tell you to patent every idea you have. (And not just because ideas cannot be patented.) Filing a patent application needs thorough preparation, obtaining a patent requires a lot of time and money, and a patent is not a guarantee that you will be able to sell your product, find an investor, generate revenue, etc. (More on this in the "The most common misconceptions about patents" article.)

There are many things you will need to consider before applying for a patent. You can find several articles about the different aspects of patenting to help you decide and questions to guide your thoughts, but the final conclusion will have to be drawn by you. You will need to take into account your invention, business plan, budget, goals and other particulars of your business. Every case is different.

But now, let's start with the question why protecting your invention can be useful.

According to the Trips Agreement**, the goal of a patent is to prevent unauthorized third parties from making, using, offering for sale, selling, or importing the patented product for these purposes.

This might already answer the question "Why should you patent your invention?", since if you patent, you will have exclusive right to make, use, sale and import your product, therefore you will be the one making money from your invention. Also, you, as a patent owner can decide who may – or may not – also use the patented invention for the period in which the invention is protected. Here, it is important to add that the protection provided by a patent is limited in both time (usually 20 years is the maximum) and territory.

Let's take a look at what small to mid-sized enterprises said when faced with the question: why is it worth to obtain a patent. The most common reasons SMEs named was to prevent competitors from imitating their inventions, build up a reputation and secure freedom to operate.***

5 reasons why a patent can be useful

1. A patent provides exclusive right

   A patent enables its proprietor to exclude others from practising the invention within the state in which the patent was granted. The invention cannot be commercially made, used, distributed, imported, or sold by others without the patent owner's consent.

2. Patents help prevent imitation and annoy competitors

   This obviously follows from point no. 1. Through the exclusive rights patents offer, you are able to prevent others from commercially using your patented invention, thereby reducing competition. As written above, preventing imitation is the most frequent motive for patenting among SMEs. Without patent protection, anyone is free to copy your invention. The fact that you have a patent may discourage unauthorised use by others. Thus, a patent can help protect your product, your business and your production.

   There might always be some people who will try to use/sell/manufacture your product without being allowed to. If this happens, you will have to take legal steps and start litigation in order to stop the infringing actions.

3. Patents help you earn money from your invention

   Patents themselves will not make you any money. However, if you have a patent, you can profit from its commercial exploitation. Recent studies show that companies caring about IP rights have higher revenue.****

   A few of the options to make money from your patent:

   • Sell your patented product: this is probably the most basic option, to produce the invention and sell it in the market. A patent can contribute to selling your product at a higher price.

   • Licensing: grant right (exclusive or non-exclusive) to companies allowing them to use your IP in return for payment to you. The licensors will normally pay royalties at agreed, regular intervals for the duration of the agreement. So, this can be a long-term solution providing a continuous source of income for your company. It is advantageous, because you remain the proprietor of the patent.
     More on licensing in our article “Licensing”.

   • Combine the above two: if you have not excluded the option in the licensing agreements, you can also sell the patented product while licensing it.

   • Sell your patent: this is a short-term solution, where you simply transfer your patent to another entity and get a one-time payment in exchange. You will no longer be the proprietor, but you do not have to maintain the patent and pay the annuity fees either.
     More about transfers in our article “Transferring a patent”.

   • Use the patent as a means to raise funding.

   While I am trying to provide you with as many useful tips as we can, please note that no patent attorney can ensure that your patent will bring you any financial reward. Once you filed a patent application, you will need to focus on your business and marketing, sales, etc. A patent is necessary, but a patent by itself will not guarantee any revenue. If you are interested, read article “How to make money from your invention?”.

4. Patents ensure that you are recognised in law as the owner

   Each patent application (if not withdrawn earlier) is published 18 months after filing (or priority date. After this publication, the data of the patent application (name and address of the applicant, etc.) is also available in the patent databases. Thus, if an application is already published, it is quite simple to check if someone really owns a patent or not, and what the patent is about. A patent will belong to the inventor who filed the patent application the earliest (except for when a non-entitled person file a patent application). This helps you, since - contrary to copyright lawsuits - proving that you are the real owner is straightforward and usually not the topic of lawsuits.

5. Patents increase the value of your business in many ways

   Patents increase your competitive advantage and contribute to your public image in a positive way. IP rights also increase your company's value in investment negotiations. According to different studies, patents also keep employees happy. Furthermore, when you sell your business, a patent or patent portfolio increases the valuation of the business.

Unlike copyright, patent protection is not automatic. Another bad news is that there is no such thing as a worldwide patent, you have to carefully select the territories where you need a patent and then file a request with each relevant patent office. However, when it comes to Europe, you can file a single patent application with the European Patent Office (EPO) and potentially obtain a patent for 39 countries (44 states counting the validation and extension possibilities). European patent is a well-recognized, extremely valuable right.

Even if you decide not to patent your invention, you should keep learning about intellectual property, since you have to make sure that you do not infringe anyone else's intellectual property right, e.g. patent.

The EPO has a helpful summary about exploitation routes, please read it if you want to know more about this topic: https://www.epo.org/learning/materials/inventors-handbook/risk/exploitation.html

* Click here to see EPO statistics.

** Trips Agreement:
"Article 28 - Rights Conferred

1.  A patent shall confer on its owner the following exclusive rights:
(a)  where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing (6) for these purposes that product;
(b)  where the subject matter of a patent is a process, to prevent third parties not having the owner’s consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process."

*** Motives of SMEs for obtaining a patent:
"Preventing imitation was cited by 83% of SMEs as an important or highly important motive for maintaining their European patents, followed by improving the SME’s reputation (69%) and helping to obtain freedom to operate (59%).
Roughly half of the SMEs surveyed also consider motives related to the use of patents in technology transactions as important. These motives include facilitating commercial contracts (53%) and licensing (46%). Using European patent applications to secure financing is regarded by over one third (35%) of SMEs as an important or highly important motive for maintaining their patent.”
Source: Market success for inventions, EPO (2019)

**** "IP statistics show that 9% of SMEs in Europe own registered intellectual property rights (IPRs) like patents, trade marks or design rights, versus 40% of large companies. These IPR-owning SMEs outperform their counterparts that hold no IP rights. They are, for instance, more innovative, more likely to grow over time, and have almost 32% higher revenues per employee than SMEs that have no registered IPRs." 
Source: European Patent Office and European Union Intellectual Property Office, “High-growth firms and intellectual property rights – IPR profile of high-potential SMEs in Europe”, May 2019

Author: Zsofia Pintz
Published: August 2020
Updated: July 2023