Five Ways Patents Provide Value

Patents mean big money, in more ways than one. They cost a lot to acquire and keep up with maintenance fees. However, they can also bring big value to a company. As a result, companies continuously try to build their patent portfolios via applying for them or buying them from other companies. In fact, Lenovo, a leading personal technology company, recently bought 21 patent families for $100 million. Such purchases will continue as patents prove to bring great value to companies.

1. Keeps competitors at bay. Competitors have a harder time competing with companies that own patents in the same field. This is because patent owners can prevent competitors from entering the market with a similar product, due to risk of infringement.

2. Allows for competitive pricing. Patent owners can charge much more for a product than other companies. Since patents protect inventions that are unique by nature, this means that patent owners have a product like no other. Therefore, they can command a higher selling price since no other company is likely to have the same product without infringing.

3. Positions inventor/owner as market leader. Patents position companies as leaders in specific fields. For instance, pharmaceutical and technology companies often command superiority in particular areas. As a result, most consumers can name the top pharmaceutical companies and technology companies. These companies represent brand names such as Lipitor, Nexium, iPad, and Galaxy. When companies such as Pfizer, AstraZeneca, Apple, and Samsung position themselves as market leaders, they create customer loyalty.

4. Sets foundation for future improvements. Companies that own patented products can continuously tweak those products and command higher prices. Thus, many smartphone companies frequently introduce slightly newer versions of their smartphones, tweaking them slightly by building off the first version. As mentioned earlier, market leaders create customer loyalty. Therefore, a customer who purchases an iPhone is likely to continue purchasing newer versions of iPhones rather than switching to an Android or a Galaxy.

5. Provides protection in event of lawsuit. With the increase in patent lawsuits, owning patents provides the best protection in the event of willful infringement. Patent owners can receive up to treble damages in such cases. This is why companies scramble to boost their patent portfolios. Patent lawsuits are becoming commonplace, and the best safeguard is to own patents.

As noted, patents represent big money. While they may cost a lot to acquire and maintain, gaining major traction in competitive industries as well as providing protection in the event of a lawsuit make patent ownership worthwhile.

Technology Leads Patent Pursuers

In the business world, some of the most successful companies own a large amount of patents.These patents provide great value. Check out our article titled “Five Ways Patents Provide Value” to learn more on patent value. For this article, we’ve highlighted some of the patent leaders. These leaders aggressively apply for and buy patents to protect their inventions and ward off competitors.

For the first four months of 2014, the following companies represented the top ten that have been awarded the most patents.

1. IBM – 2,247
2. Canon – 1,210
3. Microsoft – 988
4. Sony – 948
5. Panasonic – 730
7. Qualcomm – 703
8. Google – 681
9. Toshiba – 678
10. LG – 673

As the list indicates, technology companies are the most aggressive when it comes to the patent landscape. Patents are so important to the technology industry that Apple had to change its game plan. There was a time when Apple relied simply on its products without the added protection of patents. While Apple did not make the top ten in patent grants for the first four months of this year, it follows close behind at number 11 with 632 patent grants. That alone is a telling aspect since it was only a few years ago that Apple didn’t have many patents to brag about at all. In the past few years, Apple has built its patent portfolio by acquiring patents from other companies and has stepped up its game by applying for patents as evident by this research. In fact, Apple ranked seventh in the first four months for the most patent applications. Therefore, it is not inconceivable that Apple will rank in the top ten by the end of the year.

As technology continues to advance, it is likely that these technology companies will remain top players in the patent arena for years to come. Especially since these same companies represent the companies with the most patent applications so far this year.