Failure to protect your IP can lead to costly losses

An increasing importance has been placed on a company’s intellectual property (IP), as the disparity between labor costs in the U.S. and those found outside its borders grows.

“Today, companies can source labor anywhere in the world to find the least expensive option. Many American companies are seeing themselves more as places where workers’ brains, rather than their backs, are employed,” says Roger Emerson, managing partner at Emerson Thomson Bennett. “U.S. companies are seeing a competitive advantage in the value of their ideas.”

Despite this shift to a knowledge-based economy, many companies do not realize just how much of what they produce qualifies as IP. Because of that, they often fail to lock up those assets with IP protections, leaving them vulnerable to copycats, or putting them at a significant cost disadvantage in the market.

Smart Business spoke with Emerson about how to identify and protect IP.

Are companies fully leveraging their existing IP to create a competitive advantage?

Many companies that create IP don’t fully understand the options they have, often because they don’t understand how IP works. In most cases, these are good business people who, if given the necessary information, could pick the best option for their company, but they simply aren’t aware of the choices they have.

Businesses often overestimate the cost of IP protection, such the cost to obtain a patent, and therefore don’t consider applying. But a U.S. patent can be obtained for a few thousand dollars.

Companies also often assume an invention isn’t patentable because, in their mind, the innovation seems to be simply the next step. However, if the innovation is ‘novel’ it is patentable, even if the advance seems small in the eyes of the inventor. That’s where an experienced attorney with knowledge of the patent system can help.

How well do companies protect their IP, whether existing IP or IP that is still in development?

Patent law is written with an inherent bias toward granting patents. But there are other factors that determine whether a patent can be secured.

U.S. patent law has deadlines by which a patent application must be filed. If those deadlines are not met, the invention will be unpatentable and will fall into the public domain. For instance, a company may have sold a product for five years without a patent. Then, because of the product’s success and increased value to the business, it decides to protect it with a patent. The company, however, will not be able to get a patent because it waited too long and now the product is part of the public domain.

When is the best time in the lifecycle to pursue IP protection?

It’s best to seek IP protection when the product design is completed and before selling or producing. When the final design is finished, call a patent attorney and start a patent availability search. This will determine the likelihood of securing protection for the idea.

There’s also the chance that the idea has already been protected. If that’s the case, production can’t move forward or the company risks patent infringement.

Companies should budget for patent search — usually less than $3,000 — and possible protection from the start of development as a natural part of the process so as not to be caught off guard by unplanned expenses.

What should companies do to be competitive in a future in which IP has greater value?

Business leadership would benefit from a working knowledge of the basic kinds of IP protections so they can recognize the opportunities and options available for the products being created. That should lead to better decision-making.

Keep in mind that not protecting IP puts the company at a cost disadvantage to its competitors. Any money spent on development is lost without IP protection because the competition is free to replicate the product without the investment in R&D.

Taking steps early on to protect IP gives the company control. Don’t go to market without it.

Insights Intellectual Property is brought to you by Emerson Thomson Bennett