As a real estate title may cover a square inch or a square mile, a patent may be broad or narrow, cover various products or processes, and have widely varying value. Some believe that patenting an invention will cause the world to beat a path to their door. However, patents do not guarantee market success, but they and other forms of intellectual property can be worth the cost. As a first step, inventors should evaluate an invention’s market.
Many factors affecting the market potential of new products should occur to a thoughtful person. However, the passionate inventor should refrain from thoughts encumbered by unreasoned hope. Instead, innovators do well to think about how they behave as purchasers and use unbiased methods to gain proof of market.
Sellers of products and services might start with these fundamental questions.
- What are consumers looking for?
- Does the product meet their needs?
- Is the price reasonable in light of needs that are met?
- Are these things true for many or only a few people?
Two points to remember: First, the purchaser is unconcerned with the innovator’s sweat or ingenuity. Second, the cost is a critical factor. A new product might work many times better than anything on the market yet fail because of cost.
Competition is likely in all scenarios. For example, a new product meeting a new need (a risky proposition) will soon find competition if the product is successful. In addition, competition finds new or varied solutions to needs. For example, the transitions from shellac to vinyl, magnetic media, optical media, and then streaming media and, now, back to vinyl demonstrate how technology changes and competition finds a path.
As discussed elsewhere, the potential for competition does not need detailed treatment here. For example, the Guide to Invention and Innovation Evaluation booklet provides an excellent discussion. Published by Gerald Udell and colleagues at the University of Oregon in 1977, it outlines 33 factors for consideration, with a questionnaire for each. Innovators reading this post are interested in a particular question, “Can the inventor legally exclude others?”
Intellectual Property Costs and Benefits
Intellectual property protection helps the innovator or entrepreneur gain some advantage against the competition. Thus, the business-minded person weighs the costs and benefits of IP advantage to determine profit and market potential. Costs include government fees, attorney fees, and enforcement. The benefits all stem from the potential for legal exclusion of the competitor in obtaining, making, using, selling, or copying the innovator’s work. The value of these benefits depends upon too many variables to discuss in this article. Usually, an IP attorney will discuss the question of what rights help or don’t help soon after the initial contact with a new client.
Other cost and benefit factors:
- Pace of market change
- Time for develop and testing
- Geographic limitations
- Market information
- Patent search
- Patent landscape
- Inventor awareness of scams
If a business idea or invention lives up to expectations, it is critical to be able to recover the costs of developing and marketing. Small firms, in particular, should consider how, when properly used, patents, trademarks, and other kinds of IP can help match the margins of more prominent and better-known competitors.