What Are the Risks of Not Patenting Your Invention?

By David Fraser, March 2, 2021

Companies large and small often think long and hard about whether to patent their products. For small companies and startups, it is often a question of limited time and money. For larger companies, budget is also a concern, but often it is also the time required of inventors to adequately document an invention disclosure and to work with a patent professional. Often, a patent inventor is also a company executive such as the CEO or CTO and their time is limited.

So, what happens if you decide not to patent? What are the possible drawbacks? What are the risks?

A patent can be looked at in several ways:

• It can be viewed as a type of insurance: if someone copies my invention or if someone else tries to patent the same invention or a very similar one.
• It can also be looked at as an investment.
  • It may allow you to gain access to a competitor’s patents by licensing your patents to them in return.
  • Filing a patent might be necessary or very helpful in obtaining financing from investors.
• It also allows you to license your invention to others and collect a royalty fee. Technology licensing can be very important for a small company that may lack the resources to fully benefit from their invention.

One of the first things to consider is whether a competitor or third party can figure out your invention based on seeing your product in use, by simply viewing it, or by reverse engineering it. For some inventions, it is clear what is being done as soon as you see it. For other inventions, it can take a significant amount of analysis to figure it out. The more your invention is successful and popular, the more incentive there is for someone to try to determine how it works. Without patent protection, once someone has figured it out there is nothing stopping them from using it themselves.

Another thing to consider is what happens if someone else patents your invention independently. For certain pressing problems, there may be several different teams looking for a solution simultaneously. If you decide not to patent your solution, someone else may patent theirs first and it may be sufficiently broad to encompass what you are doing as well. Luckily, if you are already practicing your invention before the other patent is filed or published, depending on the jurisdiction, you may continue to do so. However, this can quickly get complicated as you may be called upon to prove that your use of your invention predates your competitor’s patent. Things can also become more complicated if you decide to sell your business or a portion of your business. Can the buyer practice your invention, or can you continue to do so? If your exit plan involves a possible sale of your company, the lack of a patent or the presence of a competing patent could be a real barrier to you realizing your goals.

To make the right decision whether to patent or not, here are some things to consider:

1. Can a competitor easily figure out your invention from your product?

2. Would someone else obtaining a patent that covers your invention overly restrict your business plan and options?

3. Is the cost of a patent reasonable given your investment in product development and predicted sales?

4. Do you require a patent as insurance when working with partners or manufacturers?

If you do decide that filing a patent is the right decision, here are a few steps you should take:

1.Be careful not to disclose your invention or offer it for sale before filing your patent application as it may prevent you from obtaining the patent.

2.Remember that the first to file gets the patent, so don’t delay filing your patent too long or someone else might beat you to it.

3.Take advantage of any government programs that help with funding for patent applications.

No matter what you decide, we recommend that you consult with a patent professional to evaluate the risks and tradeoffs of your patenting decision.

If you are considering patenting your innovation or product, please feel free to reach out to MBM for a free consultation.

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