Just imagine an oil exploration company. Naturally, one, if not the first of its priorities lies in locating a new crude oil deposit deep in the ground. Yet the entire deposit is worthless unless something can be done with the oil it contains. The company has to bring the oil to the surface before it can extract any kind of value from the deposit. It is the processing and commercialization process that renders the oil valuable.
Now read the previous paragraph substituting an inventive idea for the crude oil deposit. It is not enough to have the idea and invent something useful that did not previously exist, investing time and money into realizing the invention. It is necessary to bring the invention to the mainstream of the economy if any value is to be assigned to it.
And it is exactly here that the analogy ends. Because the oil explorer, after discovering the deposit, will normally exploit the finding without fearing that somebody else could steal the discovery. However, in the case of an invention, the inventive idea could very well be stolen and the copycat product could very well enter the marketplace with an unfair competitive advantage. Unfair because the “thief” would not have gone through the long and costly conception and investment process that eventually led to the invention.
And it is exactly here that the analogy ends. Because the oil explorer, after discovering the deposit, will normally exploit the finding without fearing that somebody else could steal the discovery. However, in the case of an invention, the inventive idea could very well be stolen and the copycat product could very well enter the marketplace with an unfair competitive advantage. Unfair because the “thief” would not have gone through the long and costly conception and investment process that eventually led to the invention.
Drumbeat, enter the patenting process. If the inventor patents the invention, he/she can prevent anybody else from making, selling, importing, manufacturing or putting it to any of the numerous uses that the economy affords him or her. In fact, the owner of the patent has more than one options. He/she can build a production line, produce and market the product without fearing the competition from any underpriced copies from the ‘unfair’ competitors. Or, instead of building the production line and the marketing mechanism, simply license the patent to third parties in exchange for license fees to be negotiated. Licensing is analogous to renting out a property, where the property remains with the landlord. Or the patent owner could assign the patent to a third party for a reasonable price. Assignment is analogous to selling real estate, where ownership is transferred to the new owner.
I can already see some question marks in your heads. However, simple questions do not always have simple answers. For instance, if I get a patent from the Greek patent office, what happens if copied products from abroad are imported and sold in the Greek market? Furthermore, how do we find what a reasonable licensing fee is for a given case? Or how do we set a reasonable assignment fee?
These and other questions will be answered in future posts in this blog. Just be sure to watch this space!
JAN STUDIO