Patents are one of the Intellectual Property Rights (IPRs) granted to new products or processes to reward invention & innovation. They give the owner an exclusive right to exploit the new products or processes for a maximum of 20 years.
- Patents can be used to identify and develop new brands
- Maintain present markets or create new ones
- Raise development finance
- Generate new income streams through licensing
- Create business presence in countries without incurring a large expenditure
The graph below mentions the basic steps for developing a product, the length of time a patent can last and the effective protection allowed. ODM are involved in every step of product development whether through our invention incubator or China buying office on the development and production stage or commercialisation through Hong Kong and Trade shows.
The value of every patent varies and can be very difficult to evaluate. It generally depends on some common factors:
- Importance of the Patent.
Breakthrough patents which explore new areas of technology are the most valuable. It gives the owner a complete monopoly over an entire industry and is extremely valuable. Examples of such patents- Edison’s light bulb.
Most patents currently force a competitor to start innovating to keep pace with new and improved technologies and products in the market, or conversely to a license from a patent owner who has will to do so. Incremental patents, which make only small advances over existing products, are usually the least valuable though this may not be always so.
- Market Size
Market size, the number of articles that are likely to be made and the cost of each article have a significant bearing on the value of a patent. What sort of sales can the patent be expected to support, and for how long?
- Patent Term.
Patents have a maximum life of 20 years and thus a 20-year potential monopoly. Patents beginning their life have a longer run on the their potential monopoly position and thus more value. In addition, one has to take into consideration the potential business life of a patent Duration which a patent is likely to be economically useful, if other patents are providing better alternatives.
- Amount of Prior Art.
The number of cited documents or patented products populating an area of innovation also has an effect on the value of a patent. Generally, if a particular article is similar to the many articles in the market, consumers are spoilt for choice and the vale of each patent will have a relatively smaller premium.
- Patent Significance.
Every patent has its own significance in a particular area and will usually form part of an overall IP strategy either to maximize its earning potential or to allow other patents to maximize theirs. Used to block other key players from gaining a foothold in a market.Those patents that are additional to an original patent and rely on the protected matter in the original patent to successfully operate.
One other key item which comes into play is the inventor. Whilst it is common for individual inventors to have great drive and understanding of the patented product, most have as many industry contacts and no background in sales.