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What happens if a business lacks patent protection?

On Behalf of | Jul 26, 2023 | Intellectual Property, Patent Law

When someone creates a new product or process, they can apply for a patent. A patent gives them the sole authority to make, use and sell their invention for a limited time. In a business setup, when businesses fail to patent their work, they expose their innovative ideas to being copied and exploited by competitors. They may struggle to attract investors or secure funding. They may even face costly legal battles that they could have avoided in the first place.

Loss of competitive advantage

Competitors are free to imitate and replicate an innovative idea or invention if it is not patented. When this happens, the original business’s unique selling points may vanish. This can erode the original company’s market share and profits. They may lose their competitive advantage because, without exclusive rights, they cannot capitalize on their invention. So, what is the result? They get reduced revenue, and it will be hard to achieve sustained success.

Impact on business valuation

The absence of patents can affect a business’ overall worth in the eyes of investors and potential buyers. Intellectual property, including patents, represents a competitive advantage and potential future revenue streams. Without it, a business may struggle to demonstrate its unique market position and ability to capitalize on its innovations. As a result, investors may perceive higher risks and uncertainty surrounding the company’s potential for sustained success. Furthermore, the lack of patents could weaken the company’s negotiating power during acquisitions or mergers. The business may end up dealing with less favorable deals.

Infringement and legal battles

Different entities may unlawfully use an unpatented invention. If a business loses control over who can use or produce its innovative ideas, infringement and legal battles become a looming threat. This may lead to costly and time-consuming struggles to defend their intellectual property rights. But it does not stop there. Companies may also face difficulty in licensing or collaborating with others. This is because potential partners may fear legal issues or uncontrolled competition in the absence of patents. The business also loses its ability to leverage its intellectual property for strategic partnerships and market expansion.

Securing patents allows businesses to keep control over their innovation. New businesses may not see its value at the onset, but patenting their works and processes will help them avoid infringement battles and foster collaborations. This can help drive their company’s success in the long run.