Registering a patent is not always the right solution for your business. It’s best to carefully weigh the costs and benefits of patent protection before embarking on this process. Therefore, you need to understand what can happen if your business decides not to register your patent:
- Someone else can patent your invention: In most countries (except the United States), when more than one person or business files a patent application for the same invention, the first applicant has the rights to the invention. This means that if you don’t protect your invention through patent registration, or if you file your application too late, someone else—potentially a competitor—may be granted the patent. Subsequently, the patent holder can legally exclude your business from the market, restrict the continued activities of prior users (if patent law provides for such exceptions), or demand royalties from your business for using the patented invention.
- Competitors can take advantage of your invention: If your product becomes successfully commercialized in the market, many competing companies may try to produce similar products using your invention without paying for its use. Larger companies can leverage economies of scale to produce the same product at a lower cost and compete in the market at a more attractive price point. This can significantly reduce your company’s market share for that product. Even smaller competitors may produce similar products at a lower price because they don’t have to recover research and development (R&D) costs, as your company did.
- Licensing, selling, or transferring technology can be severely hindered: No one is willing to pay a fee for using something they don’t legally own. If intellectual property isn’t protected, the opportunity to license technology to others in exchange for royalties is seriously hampered. Moreover, in technology transfer negotiations, parties often hesitate to reveal their inventions for fear that the other party might “run away with the invention.” Patent protection limits the risk of this happening, as the patent owner has legal exclusivity over the use of the invention
