Why are patents important?

In order to understand the importance of patents from a business perspective, I will exemplify with the industry I been working in, during the last around 20 years; the Wireless communication and smartphone business.

Looking at the worldwide handset market 2016, close to 1.5 Billion smartphones were sold with a revenue of more than $420 Billion! The operator revenues 2016  were even larger, around $1300 Billion. Focusing only on the US market, the revenue (2015) for the two largest operators, AT&T Mobility and  Verizon Wireless  was $90+ and $70+ Billion respectively!

As can be seen, the market is huge, and the players in the market need to protect (and possibly try to increase) their market shares. In order to do so, the companies need to invest money in R & D and Patents, and licensing patents to other companies are ways to protect their own business and therefore a way to get money in return on invested R&D.

For a company investing a lot of money in R & D, patents can have different values depending on the company’s business model and position in the market. First of all, patents will protect your own inventions from others. This might be of importance for instance for start-ups with few patents, and then patent protection may then be a way to get venture capital.

Secondly, building a strong patent portfolio helps avoiding paying royalties to other patent holders through cross-license agreements, providing freedom of action. This might be important for a larger company coming into a new business, for instance.

Furthermore, a very strong patent portfolio makes it possible to license the company’s inventions to other companies, which may bring royalty revenues. Furthermore, such revenues may add additional cost of sales to competitors’ products, giving a company with a strong patent portfolio an cost advantage. This is what can be called the offensive value of patents.

So, in short: Why are patents important? It is business!

The How, What and Why ….

In my seminars about inventions and patent creation I usually talk about the “How, What and Why of patents”, and in order to follow the blog it might be good to understand what that means.

First of all, one needs to know What a patent is. This information can be found elsewhere  on the Internet, but I will in the next blog update make a short “crash course” on “what is a patent”.

Secondly, one needs to understand “Why are patents important for industries and society”. Here comes the business perspective of patent into the picture, and this is also information that can be found on many places  in cyber space. However, I will also deal with this subject in the blog since it is of importance to understand the need for inventors, inventions, patent creation and patents.

Finally, we have “How to create patents”, and here we come into my area of expertise, Inventing and patent creation. I will reveal some of my secrets on how to become a prolific inventor, in forthcoming blog updates.

I will also deal with related stuffs, concerning creativity, inventors, inventions and patent creation from my, a researcher and prolific inventor’s, perspective. Example embodiment also covered by the invention … ehhh …sorry….the blog, is; “corporate inventors vs independent inventors”, “who has most Patents on the Planet”, “Statistics over prolific inventors”, “Inventing improves your business network”, “Method and apparatus for producing one invention per week over a year”,  “patent war 100 years ago” and many more. So follow my blog and see what you can learn ?.