The on-going pandemic has drastically affected the availability of resources for discretionary expenses such as patents, and it is of no surprise that many companies are proactively looking to conserve cash by pruning their patent portfolio.
So, what are some of the strategies that companies can opt to reduce their patent expenditure?
The following points aim to highlight the plausible ways:
Patents are intangible assets, and so are trade secrets that enjoy legal protection from misappropriation.
The caveat here is that if a trade secret holder fails to maintain secrecy or if the information is independently discovered, becomes released, or becomes known in the general course of business, then the protection of a trade secret is lost.
Nevertheless, the Courts can enforce trade secrets in misappropriation cases by ordering maintenance of secrecy as well as payment of royalty to the owner.
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Another way of curtailing or deferring expenses relating to patents is to use the criterion of defensive publication to your advantage.
The defensive publication refers to the publishing of a technical disclosure of your idea in the public domain as prior art, which prevents the competitors from obtaining a patent.
The reason behind the popularity of defensive publication is its cost-effective nature over patents.
Unlike a utility patent, a provisional patent is not reviewed by the USPTO.
A provisional patent acts as a reservation for the invention until an investor is willing to file a utility patent. However, the follow-up utility patent application needs to be filed within a year.
Thus, filing a provisional patent allows a company to defer patent expenses for a period less than a year while it continues to conduct more research into the market viability of the patent or refine the patent product/process itself.
Curtail Overseas Spends
Patents are an expensive proposition, more so in foreign countries where patent applications stretch out over a year or sometimes more.
Furthermore, the patent protection regime in such countries may not be conducive to patent filing as enforceability is often lax.
Therefore, companies should reconsider their non-strategic patent spends and weed out jurisdictions after undertaking a cost-benefit analysis of obtaining a patent in that particular country.
A continuation patent application is an extension of the existing patent application wherein it increases the scope of patent protection from multiple perspectives.
However, continuations are expensive to file, and since they are “designed” around an existing patent, it only serves to enhance coverage of an existing patent.
To conserve cash, companies can either forego filing continuations or defer them.
Apart from the above pointers, there exist a few more high-level strategies that will ensure the optimization of patent spends for companies, the strategies are:
Companies or clients should regularly question their patent attorney to gauge the timeframe as to when a patent will be issued, what are the chances of getting a patent, how best to curtail patent spend, etc.
By asking questions at every step along the patent application process, the viability of a patent can be determined and whether it makes monetary sense to pursue the issuance of a patent or abandon it altogether.
Align Corporate Strategy
Often, patents are pursued with the sole intention of ensuring the protection of an invention rather than the protection of a monetizable invention.
Hence, in the prevailing scenario of depleting cash reserves, it is prudent to pursue patent applications of those inventions which align with the overall corporate strategy or expected to provide for economic benefits.
License to Litigate
Patents are a means to litigate, i.e., they provide for legal protection for your inventions, and in cases of infringement, the Court can award damages, court costs, and reasonable attorneys’ fees. Hence, it is a wise notion to pursue a strategy only for patents that are litigate-able.
The COVID pandemic has thrown corporate strategies as well as financial forecasts for a toss, and it is the all-hands-on-deck mode to conserve cash. It is widely acknowledged that patents, albeit extremely critical to the success of a company, incur exponential costs.
Companies can look at rationalizing their patent expenditure over the short-term and medium-term by aligning it with the overall business objectives or opting for ways to postpone filing a patent application.