July 26, 2022
By Robert Cantrell - Registered Patent Agent
The third rule of sales is that a product lacks intrinsic value. The value of a product resides in the benefits it offers, which vary from person to person. For some, the value is practical, such as the need for speed of a professional racecar driver. For others, the value is mostly psychological, such as the racecar pedigree within the sedan parked in the driveway. A good salesperson presents both values to win customers.
If products lack intrinsic value, by default, this means that patents also lack intrinsic value. The value of a patent traces back to the benefits the associated products deliver, which will vary from customer to customer and by how those products are perceived. How those products are perceived, and the realized value achieved, therefore, will further depend on the success of sales and marketing. This means the value of an asserted patent for its owner, even if asserted by a non-practicing entity, depends on the success of someone’s sales and marketing campaigns. The market created—or expected to be created—by sales and marketing informs the value of the patent and any associated lawsuit.
A product does not need a patent to be valuable, but a patent does need a product—or a reasonable probability of a derived product in the pipeline—to have value. But the relationship is not entirely dependent for the patent. A patent can make a product more valuable for sales and marketing campaigns, thereby creating a positive feedback loop to drive the value of the patent still higher.
Take gold as an example of how a patent can come into play. Gold has value in raw form. An ounce of gold at a known weight will have a known value at a given time in the market. Shape that gold into jewelry, and the shape may introduce more value per ounce to many customers than the raw gold alone. But while the way you shape gold could produce patentable subject matter, jewelry is generally not the subject of utility patents. Use some of that gold, however, in a highly patented product, such as a smartphone or a satellite, and the value delivered per ounce may spike.
That value only spikes, however, on the backs of sales and marketing campaigns instituted by people skilled in the sales and marketing arts.
When reviewing whether to pursue a patent on an invention, consider where that invention will reside in a sales and marketing campaign. How will the benefit the invention delivers be promoted? This consideration is important whether the invention is a part of a product sold to the ultimate customer or whether the invention is directed to internal customers who may use the invention, for example, to improve how inventory moves through a supply chain. Exclusivity on how that benefit is delivered, wherever that benefit is employed, is the element you want to control with a patent.
By Jose W. Jimenez, Esq – Former Chief Patent Counsel & Registered Patent Attorney
In view of the upcoming Minnesota Cup competition, typically held in the summer and culminating in September every year, Robert really brings into focus an entrepreneur’s decision to obtain a patent on an inventive product being secondary to the product’s intrinsic worth to a consumer. Securing a patent is only valuable if the perceived benefit of the product exists. Patents protect revenue derived from product sales and a successful marketing campaign, but a patent will not guarantee a product’s success. Auto insurance provides a relatable example: you are protected in case of an accident, but it does not guarantee that you are a competent driver.
Some entrepreneurs have successfully defined a product’s intrinsic value and have also secured a patent to protect revenue generated by potential product sales. Why are they still unable, however, to get their ventures off the ground? Regrettably, getting consumers and some industry players to accept change and move away from an already acceptable solution is not impossible, but very difficult. So, even though you may be pitching your concept to the right industry players, players able to buy or license your patent and product concept, they may still hesitate to jump on the opportunity that you are offering. Why? One reason is they may not see a clear path to market and market acceptance when they are weighing the investment needed to move in that direction. A market leader may benefit the most from your inventive product but can the leader take the risk of losing market share in their core business? A second or third tier player may be more willing and open to your patented product because it sees your patented product as a way to get to number one in the overall market.
Finally, after your many product presentations, you may need to seriously consider manufacturing on a small or pilot scale. Your small success may demonstrate to those industry players that the water is fine and that they can jump in and make a bigger splash.
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