SMEs: The 5 biggest reasons to patent have nothing to do with starting a fight.
Dali Wireless, an SME with operations based in BC, was enjoying early success. But eventually that success attracted the attention of a multinational competitor, who sued for patent infringement.
“Fighting for market share as a startup is one thing,” Dali co-founder Albert Lee said, “but fighting for your existence is a whole different level of hardship”.
The court decided against Dali and ordered it to pay millions in damages. That blow could have spelled the end for Dali Wireless.
But it didn’t.
That’s because, years earlier, Dali had seen the importance of filing its own patents, as an SME taking on big incumbents. With its own patent in hand, Dali hit back.
“Not our choice to be entrenched in legal battles,” Albert later said. “But you have to defend yourself”.
Dali’s best defence turned out to be its offence. The court decided that the competitor infringed Dali’s patents, and ordered them to pay twice as much as Dali had to pay.
Instead of a crippling bill, Dali Wireless had first-hand proof of an unexpected value of protecting its IP.
Consider this: What if Dali Wireless had not filed those patents?
If the Dali team ever doubted whether startups should file patents, I’m sure they don’t now.
What can a patent really do for me?
Fewer than 0.01% of patents ever go to court. Think the other 99.99% are worthless? Think again.
IP Myth: Patents are useless if you can’t discover if someone is infringing.
IP Fact: Even if it’s difficult to discover infringement, patents can bring value to your business. Plus, reputable companies try to avoid patents even if you can’t discover what they’re doing.
A few weeks ago, I called patents the “most misunderstood IP right”. But it’s not only the legal stuff that people misunderstand.
People misunderstand why it is useful to have patents.
Succeeding in business is about improving your odds. Patents can help. Here’s how:
1) Be investable.
Investors are taking a risk. How do you demonstrate you’re worth the risk?
Investors like patents because they improve the odds for success, and provide options. Patents show you have a savvy business strategy. Patents can grow in value and provide a significant return-on-investment if the patent or business is later licensed or sold.
These are investment advantages.
2) Be credible.
Patents can boost your image as innovative and bolster your technical credibility. Customers like patents because they perceive they’re getting something unique. Both are advantages.
3) Compete every day.
US President Teddy Roosevelt famously said he preferred to “walk softly and carry a big stick”.
If you prefer to walk softly and let your business do the talking, having a “big stick” may cause competitors to hesitate before jumping in to copy you. They may even decide not to copy, or to modify their approach.
Whatever the reason, their delay is your advantage. More time to grow. To secure more customers. To develop improvements. Their delay may also increase their costs, making them less profitable than you. Trying to avoid your patent may also give them an inferior solution.
More advantages.
4) Be profitable.
Having fewer competitors, and competitors with inferior offerings, can drive better margins. Customers are also willing to pay more for patented stuff.
If you license out your tech or leverage it in a collaboration, both will command a better price if patented.
More dollars here and there are a definite advantage.
5) Live to play another day.
Jeff Bezos said he patents to “protect against competitors trying to put us out of business”. IBM says it files patents to defend itself in lawsuits.
Just ask Dali Wireless – before you can win, you have to survive. Patents can level playing fields like nothing else can. That’s a clear advantage for SMEs.
Every little bit helps.
IP Myth: There is no point in having a patent if I can’t afford to enforce it.
IP Fact: Even if you never set foot in a courtroom, a patent can help your business.
Study after study shows that businesses with patents are up to 4x more likely to grow. Why? Because patents provide options. And options improve your odds.
It’s that simple.
After Blackberry’s mobile handset business faltered, they began licensing their patents. That still generates hundreds of millions in revenue annually.
Patents provided Blackberry a rainy-day option.
The good news.
The best news of all is that you don’t have to choose why you are patenting. All of these benefits come included with your patent.
Winning rarely comes from a 9th-inning grand slam. Usually, it’s the result of many little good things working in your favour.
Patents have many little good things to offer.
Takeaways.
- You don’t need to sue anyone to derive value from patents.
- You can “walk softly” and still benefit from having patents.
- Patents provide you with options that improve your odds.
*Todd is Chief IP Officer at Scale AI, and a lawyer, patent agent and IP strategist with 25 years’ experience helping startups, SMEs and multinationals protect and commercialize their IP.
Please Note: Concepts discussed here have been simplified to facilitate learning. You should consult a qualified IP lawyer or agent to discuss your unique IP needs. Protecting your IP should not be a do-it-yourself project.
Scale AI is Canada’s AI Supercluster, investing in AI supply chain projects, acceleration and talent development across Canada. Visit us at www.scaleai.ca to see how we can help your business grow.
