Patenting the distinctive technological features that drive demand for your products and services will make your patent portfolio more valuable by creating a link, or nexus, between your patent portfolio and your products. You can use this nexus to exploit your patents by preventing your competitors from including the most valuable features of your products in their own products without your permission; commanding a higher royalty if you license your patents; increasing your chances of getting an injunction if you need to enforce your patents; increasing your damages base if you enforce your patents; and defending against an obviousness attack on your patents’ validity by showing that the patented features increased your market share.
Prevent Your Competitors from Copying Valuable Features
With a patent, you can prevent others from making, using, selling, offering, or importing a particular product or process without permission. Each patent includes claims that define the patented products and processes and that must list at least one novel feature of the patented products or processes. If that feature is what drives demand for the products or processes, then you can prevent your competitors from making competing products with the patent that covers that novel feature. And if the market for that feature is large enough, this can make your patent very valuable.
Command Higher Royalty Rates
Reasonable patent royalties are often based on the commercial success of the patented product, whether that commercial success stems from the patented features of the patented product, and the advantages of the patented product over other products. See Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), mod. and aff’d, 446 F.2d 295 (2d Cir. 1971), cert. denied, 404 U.S. 870 (1971). If you have a commercially successful product or process and you can show that the features your patent covers drive that commercial success, then you should be able to license your patent at a higher royalty rate.
Increase Your Chances of Getting an Injunction
If you sue a competitor for patent infringement, you can ask the court to issue an injunction preventing your competitor from selling its products (possibly until your patent expires). To get the injunction, you will have to show, among other things, “that the infringing feature drives consumer demand for the accused product.” See Apple, Inc. v. Samsung Elecs. Co., Ltd., 695 F.3d 1370, 1375 (Fed. Cir. 2012). (Put differently, “if consumers buy that product for reasons other than the patented feature,” then you may not qualify for an injunction. Id. at 1374) So patenting the features that drive sales improves your chances of getting an injunction.
Increase Your Damages Base
If you sue for patent infringement, you may have to “apportion” your damages–that is, you may have to assign a value to the patented features of the infringing product rather than the entire value of the infringing product. For a business-oriented view of patent damages, see Betsy D. Gelb and Gabriel M. Gelb, “An Unlikely Marketing Lesson from Patent Lawyers,” Harvard Business Review, November 25, 2014. This value becomes the base for any damages that you could be awarded if you win the lawsuit. But if the patented features drive demand for the product, then you may be able use the entire value of the infringing product as the base for your damages.
Defend Your Patents Using Market Success
If you try to assert your patent against a competitor, the competitor will almost certainly try to invalidate your patent. One common (and potentially effective) strategy for invalidating a patent is to show that is an obvious variation of the prior art. One possible response to such an attack is to point to facts, such as the commercial success of the product corresponding to the patent, that indicate that the invention is not at all obvious. If the patented product had actually been obvious, the argument goes, then it would not be commercially successful.
You can prove commercial success by first showing that your patented product has a significant share of the market or that its market has increased. Second, there must be a nexus between the features that drive that commercial success and the claims of the patent. Generally, you can show this nexus by pointing to a feature in the claims of the patent that is (1) novel and (2) drives the demand for the patented product.
What You Can Do
Here are few simple steps for linking your patent portfolio to the commercial success of your products:
- File patent applications that describe your products as completely as possible to increase your options when it comes to writing and amending the claims that ultimately define the aspects of your technology that are protected;
- Involve your marketing team in the patent process so that your patents cover the features and markets that are important to your business;
- Find out why your customers are buying your products and use that information to enhance your protection of the most valuable features by filing continuation applications; and
- Record your market share and sales data in case you need it later to rebut an invalidity challenge.
Most important, review your patent portfolio and your patent strategy on a regular basis and tailor your patent strategy to complement your marketing strategy.