Innovation is the basis for success in business today. Consumers and investors are attracted to companies that innovate. Therefore, it follows that protecting innovation is the cornerstone for preventing competitors from freely copying a company’s advancements.

Indeed, patents and trademarks offer two symbiotic ways to protect innovation. For instance, patents protect new products, technologies, processes, and even aesthetic features of products. Whereas, trademarks protect brand names, marks, logos and symbols associated with a company’s products and services. So when used together, patents and trademarks help protect those features of a company’s products or services that differentiate them from a competitor’s products or services.

Investing In Intellectual Property Assets

Still, innovation starts with ideas. And it is often challenging — especially at the outset — to foresee which ideas will succeed and which will not. Thus, it is difficult to know when and how much to invest in intellectual property (IP) assets — such as patents and trademarks — to protect an idea.

Nonetheless, these IP assets often act as an insurance policy to minimize against loss. For instance, if the innovation becomes a success in the market place, the IP assets may help ward off copycat competitors. Conversely even if certain innovations are not successful in the marketplace or become outdated, the IP assets associated with these innovations may still be enforced, litigated, licensed, or sold for monetary gain.

Patents and trademarks may also serve as valuable business assets. For instance, suppose a company’s strategy is to eventually become acquired. Without any intellectual-property assets on the company’s books, an acquiring entity will simply value sales, know-how and inventory. On the other hand, a company with intellectual-property assets listed on the company’s books should make the company more attractive to potential suitors, because these intangible (i.e., intellectual) assets may be valued as part of a sale. Patents and trademarks also offer some assurances to the acquiring company that the assets being acquired can be protected against infringers.

Still further, if a company ever desires to seek investment or a loan, these patent and trademark assets are securable, and offer a mechanism for third parties to secure the investment or loan.

Yet another strategy behind securing patents and trademarks is to prevent former employees from becoming instant competitors. Here, patents and trademarks serve as a non-compete mechanisms against former employees that start competitive ventures by freely riding off the coattails of their former employer.

Of course, there are other advantageous as well as risks in investing in patent and trademark assets, and the merits of investment must be aligned with business goals. Below are some benefits of investing in patent and trademark assets. Ultimately, this is a business decision.

Business Benefits:

  • Patent and trademark assets offer protection (offensive weapon) against competitors if the patent issues or trademark registers.
  • Patent and trademark assets are embedded assets of the company, which are exchangeable as part of a sale (may offer more value to a potential suitor than know-how alone).
  • Patent and trademark assets are securable against investment or loan in company.
  • Patent and trademark assets may be licensed or sold in the future.
  • Patent and trademark assets may ward off potential theft by employees.

In conclusion, if your company is looking to protect its innovations and achieve maximum success in today’s increasingly competitive marketplace, patents and trademarks often serve as a form of insurance — hedging against losses while allowing protection of a company’s most valuable assets.

About the Author:
Robert R. Axenfeld is the founder of Axenfeld Law Group, LLC, and is a patent attorney. He has over 25 years’ experience in the patent and trademark profession, including as a patent and licensing attorney for Lucent Technologies, Inc. and Unisys Corp. He is also an inventor with two issued patents. When not practicing law, or lecturing, Robert trains in mixed-martial arts, and is a brown belt in Brazilian Jiu Jitsu. He is also a youth soccer coach.