How to increase the value of your business through intellectual property rights

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Massive corporate valuations are often the result of monopoly rights. While the broad trade monopolies available in the 1600s are no longer available, today’s massive valuations are often the result of the limited monopolies granted via intellectual property rights.

For many companies, patent and trademark rights are foundational. Patent rights often justify heavy investment into product and service development. Similarly, trademark rights justify investment in marketing and brand development.

Yet there are limitations on the availability of intellectual property rights. How does a company secure, maintain, and enforce intellectual property rights?

Securing intellectual property rights

Exclusive intellectual property rights are generally only available in exchange for some contribution to society. One of the key requirements of most patent systems is that an inventor discloses how to make and use a novel and non-obvious invention to the public. One of the key requirements of most trademark systems is that a mark can only be protected if it distinctively identifies a source of goods or services.

To get an idea of whether an invention or a mark can be protected, many potential applicants conduct a preliminary assessment. Such assessments generally include a search of existing technologies or brands to determine if the invention or mark can be distinguished from what is already known.

Securing Intellectual Property

When a potential applicant is ready to apply, the first step is to prepare an application. In most jurisdictions, patent applications should precisely define what the invention is and should also teach the reader how to put the invention into practice. Trademark applications should set out what the mark is and define the set of goods and services that are to be associated with it.

The application is then filed with an appropriate government authority, which is typically called an intellectual property office or patent and trademark office. The government authority reviews the application and decides whether to grant it based on a set of criteria.

In many cases, if the government authority identifies an issue with the application, the authority then grants the applicant a time in which to respond by either correcting the application or demonstrating why the government authority is incorrect. If the government authority is convinced by a response, they then grant the application.

Maintaining intellectual property rights

Many owners of patent or trademark rights are familiar with the concept of maintenance fees, which are periodically payable to government authority to maintain a patent or trademark rights in good standing. Failing to pay a maintenance fee can cause rights to lapse or even be permanently lost. However, paying maintenance fees is only part of maintaining rights.

Maintaining Law

To secure indefinite patent protection, an applicant must be continually improving their technology. Generally, patents expire 20 years after the filing date of the initial application, even if all maintenance fees are paid. To maintain a zone of patent protection, a company must continue to develop and improve its technology and to seek patent protection for the improvements.

Often this involves an ongoing commitment to research and development. When a patent is granted for a base technology, the owner of the patent has a vested interest in the success of the technology and can afford to invest in it. This can include improving the technology, modifying the technology for use in new fields, and developing compatible or complementary technology.

Similarly, securing indefinite trademark protection generally involves an ongoing investment in a brand. While a trademark registration can be renewed after its initial term, trademarks which are not used in the marketplace can become vulnerable to challenges even if maintenance fees are paid. Ongoing and qualifying use of the mark often must be shown especially if the mark is challenged by a competitor.

Enforcing intellectual property rights

Many rights are valuable even if they are not enforced. For example, patent and trademark rights can be bought and sold, licensed, and used to signal inventiveness or sophistication to investors or customers. However, one of the keys to the value of such rights is that they can be enforced.

Enforceability generally depends on the scope, or broadness, of the rights and the strength, or robustness, of the rights. Enforceability is largely determined during the drafting and examination phases of an application. A well-drafted application will attempt to claim as broad a scope of protection as is available, without attempting to overreach. Broad claims are claims which include few limitations.

However, if too few limitations are included the claims may be vulnerable to being struck down by a court or other authority reviewing it. If a claim is vulnerable it is difficult to enforce even if it has been allowed by an intellectual property office.

In the case of trademark registrations, the enforceability of registration may also change over time. If an owner of a registration does not oppose the use of the mark by others, over time the mark may no longer be as strongly associated by the public as distinguishing a particular source of goods or services from others. A loss of association may result in a mark becoming less robust and less enforceable.

Final thoughts

While broad monopolies are generally no longer available, intellectual property rights provide opportunities for limited monopolies for inventions and brands. Securing, maintaining, and enforcing intellectual property rights can be the key to increasing the value of a business.

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