Benefits of a Patent
The patent system is designed to stimulate invention by providing inventors with a monopoly to develop and commercialise their invention. Applying for a patent can be a fairly lengthy process but there are many benefits associated with filing a patent. In order for a patent to be granted, the invention has to be novel and involve an inventive step.
There are several benefits in patenting an invention, including:
- gaining a monopoly to commercialise and develop an invention. Patent protection can last up to 20 years (25 years for pharmaceuticals);
- lawfully restricting competition;
- potential tax benefits (e.g. for health care inventions in Australia);
- creating/obtaining an intangible asset that can be used to increase credibility, attract investors and funding; and
- the ability to generate income through licensing the invention (including internationally).
Patent assets generate income and protect profit
A patent is an asset which adds value to a company. It can be sold, transferred, licensed and used as collateral to obtain finance. A patent in and of itself does not generate income, revenue is generated via commercialisation of the product and/or licensing fees.
A well drafted patent can provide the inventor with a head start to commercialise the invention and restrict competition, allowing the inventor to charge and control its market driven process rather than being subject to competitor driven prices. If a new product is introduced to the market and becomes highly commercialised, it is often reverse engineered or copied by competitors. This often allows the competitors to sell the same or similar product at a lower price as they did not have to bear the original costs associated with research and development. If the invention is not protected, the originator will have to rely on its brand name or reduce its prices to remain competitive. If patent protection has been obtained, the originator will be able to issue a cease and desist letter to the competitors. Legal proceedings can also be commenced, if necessary, to enforce the patent, restrict competition and obtain damages where applicable (these include reputational damage and loss of profits).
The ability to restrict competition and have protection for up to 20 years allows inventors to patent inventions that may not yet be fully developed. It also allows concepts that may not yet be commercially viable to be protected for future commercialisation. Concepts that may currently appear to be futuristic or have no current commercial value may become very valuable in the course of the 20 years of protection provided by a patent.
Patent tax breaks
Certain inventions in the healthcare domain may also attract tax benefits. The Australian Government is introducing a “patent box” system where IP derived income will be taxed at a much lower rate of 17% for inventions in the medical device and biotechnology spaces.
Patents are better than confidentiality agreements
Once a patent application has been filed, the invention can be disclosed to potential investors, collaborators and granting bodies without having to rely on the use of confidentiality agreements. There are many pitfalls in relying on confidentiality agreements to protect an invention, these include difficulties in enforcing the agreement, difficulties in quantifying and calculating remedies for breach and the irreversible damage of losing the ability to obtain patent protection due to prior disclosure.
Getting started with patenting
There have been cases where inventors have disclosed their invention more than 12 months before filing (in conference proceedings, in tender applications and the like) and were therefore not able to apply for a patent. It is important to note that Australia (like most jurisdictions) is a “first to file”, and not a “first to invent” jurisdiction. If two inventors are working on a similar invention in parallel, the first to file will be granted the patent (assuming all other requirements are met) and the other inventor will then have no rights to commercialise the invention. It is therefore extremely important that inventors seek advice on the protection of their invention at a very early stage.
In Australia, it is also possible to file for a provisional patent which gives inventors 12 months to decide whether to file a full patent application. The filing of a provisional patent establishes an internationally recognised priority date and gives an inventor time to decide whether the invention is worth patenting. It also allows disclosure of the invention for commercialisation and investment purposes without needing to rely on a confidentiality agreement.
The key takeaway message is to contact a qualified patent attorney to get advice on how to protect your invention from the early stages. A successful patenting strategy involves deciding in which jurisdiction to file, drafting the claims in the patent appropriately so it has less chance of being contested and managing any identified competitor infringements. The ability to enforce a patent and restrict competition depends on the drafting of the claims in the patent application and the scope of the invention. It is, thus, vitally important to consult a professional patent attorney who can ensure that the claims are drafted to provide maximum protection and are yet not so broad that the requirements of examination cannot be met. Baxter IP has the skill and expertise required to advise you on every step of your patenting journey.