Friday, April 11, 2008

Patent Protection

You have a great idea for a product, you believe this will have a big return when developed into a commercial product. The problem is this is a neat but simple idea that anyone else can copy and reproduce. If they have better resources, supply chain management and sales force, they can sell faster and cheaper.

Do you think patenting would protect you?

In its fiscal year 2007, the USPTO received more than 467,000 patent applications and ended the year with a backlog of 760,000 applications. In an effort to catch up, the office hired more than 2,400 new patent examiners in the past two years. [EETimes]

The US patent office just ran a competition for MBA students from top business schools to solve the problem of patent pendency.
Patent pendency is the amount of time it takes from the time a patent application is filed until the USPTO makes a final decision as to whether to grant the patent. The backlog is how many patents are currently waiting to be examined. Currently, the backlog stands at more than 760,000 patent applications, and the average pendency is approximately 32 months. Patent offices around the world are experiencing similar or greater backlogs and wait times, due to the rapid growth of innovation and increasing complexity of technology, among other issues.
Do you think your product has a lifecycle of 20 years? 32 months?

Even if you get the patent approved, would you have the resources to go after every violator?
Irrespective of who develops and sells, does the product have a total net present value (across all manufacturers and markets) that exceeds the litigation costs and the opportunity costs?
In other words, would the damages awarded cover the litigation fee and lost revenue? Would the violators have resources to pay you?

If you have the next best drug for the incurable diseases it helps. But if you have an idea that has a short shelf life and minimal net present value, is patenting the right decision?

Would you spend your scarce resources on patenting or on developing and marketing your product?

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