The Dark Side of Patenting

Most high tech entrepreneurs view patenting as an important means to protect their invention. As a matter of fact, there are many ways in which a patent can be abused easily, either to protect or destroy the entrepreneur. In the spirit of the series, we review the dark side of patenting.

If you are a technopreneur, one of the important defences that you might possess is a patent to your innovation. Yet, most people have taken this unfair advantage as if it is a given right. There are two sides to the coin. If we surveyed the landscape back here in Singapore, most entrepreneurs are not very efficient in using their patents. Usually, they use it to defend themselves rather than using to create a barrier of entry for their competitors. Yet, in patenting, there is a dark side to the game which a few interesting legal cases have cropped up mostly in the US. The loopholes possess by patent law can create bizarre situations for both the person owning the patent and the person violating the patent and don’t own it. Most of the time, as an inventor, if possible, you should seek the help of a patent lawyer to draft the document. The reason is simple, they know how to make it as broad as possible so that they can help you to deal with infringement of patents by other companies.

How big companies can defeat you with your own patent

Let’s start with the entrepreneur first, it is relatively easier to see how their companies can fall apart even if they possess a patent. Suppose you are a scientist with an invention X, you start a company and paid about US$100K for the patents to your technology. Suddenly, you realize that a big multi-national corporation (MNC) does not own that patent and delibrately using your technology. Naturally, without hesitation, you would go to the court. Usually, if you think that you are going to win the legal battle and get back your money in millions, you are pretty naive. This is where the dark side of the corporate world can go. Here is how many MNCs have broken small companies down by turning the patent advantage against them. First, since the MNCs have a lot of money, they can afford to drag a lawsuit against the small company. What is going to happen, is that they drag till the point where the small company runs out of cash to afford the lawyer. Then they come in and seek a outside settlement, where they will end up paying your legal fees and at the same time, acquire your patent. Patents are good defensive weapons but the reality is very different out there. There are three ways to deal with this situation: one you speed up your product and start selling to the customers with your patented technology; two, you seek the help of a white knight i.e. another big company who will back you up against the MNC who infringed on your patent or three, just sell your technology or do exclusive licensing to the big company. Yes, for the third way, you are taking a retreat, but sometimes, in war, it is better to take a retreat and live to fight another day.

Earlier Articles:
1. BL, The Dark Side of Entrepreneurship.
2. BL, The Dark Side of Venture Capital

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