To Patent or not to Patent

Angeline Chin examines instances when one should patent an idea that is a product or process that works.

 

Malaysians are a clever lot. They have a multitude of ideas and know how things can work better. However, the actual number of those ideas that get translated into real marketable products or processes are small because after a substantial amount of time and money has been invested into a product or a process, most inventors are not sure how to protect their inventions so that they will not or cannot be “stolen” by others. That is the major deterrent. This is in fact, the primary concern.

 

In the words of Jose Vidal Martina (the inventor and entrepreneur in Lima, Peru of the JVM drill bit): “… there is no point in my making something new if I don’t protect it; it would be a matter of just days for others to copy my product, and then my business would no longer make sense. Obviously, big companies would be able to make my bits at lower cost, distribute them better and leave me with nothing….”

 

 

Protecting the product or process

So, the answer to the question on how to protect the new product or process is to patent it if it meets the criteria for patentability. When you patent your product or process, you get:

 

1. Exclusivity

A patent gives the patent holder (“patentee”) the exclusive right to commercially exploit the patented product or process. This covers the whole range of activity from manufacturing and selling to licensing and importing/exporting the product.

 

2. Enhanced and Stronger Market Position

With exclusive commercial rights, your superior product or process will give you an edge in the market or even a monopoly since the product or process is a new one.

 

3. Higher Returns

Investment in the development of the product or process will yield a higher return when commercialized because of the improvement in the product or process. It is an accepted fact that superior products or processes command premium prices.

 

4. Broader Opportunities

A patentee can exploit his patented product or process by licensing it. The revenue generated from the license via royalties can be substantial depending on the nature of the product or process and the extent of the licensing network. In fact, there are a number of companies that operate purely on licensing out their patents and a foreign company that we know of personally receives in excess of RM105 million/USD400 million worldwide in royalties just for allowing others to make use of its worldwide patents.

 

5. Increased Negotiating Power

Bargaining power at the negotiating table very often determines the terms and conditions of commercial transaction. Whether the patentee is an individual or a small company, the fact of patent ownership gives a tremendous amount of leverage during negotiations.

 

6. Positive Image

Patent rights to products give validity or legitimacy to a product and is readily perceived by current or potential business partners and even the end-consumers. This naturally makes the product or process that much more marketable.

 

 

When there is No Patent

In view of the benefits of patenting a product, what happens when there is no patent?

 

1. Patent rights

There remains the possibility that somebody else might patent your invention and divert the benefits of that patent away from you. However, once your product or process is marketed, the product or process will no longer be patentable since one of the criteria of patenting will not be fulfilled.

 

2. Competitors

Without the right to exclusivity, competitors can copy the product or process and put it on the market in literally days and remove any commercial advantage you may have had. Without the patent in hand, there is very little that can be done to prevent this sort of hijacking.

 

3. Revenue generation

The absence of patent rights means that there is no exclusivity to exploitation rights. Translated into a lack of monopoly of the product or process simply means that the you have nothing to offer licensees nor potential business partners. Not to mention that you would have to lower the price of your product or process just to compete with your competitors.

 

 

Can You Afford (Not) to Patent?

The cost of patenting a product in Malaysia includes the following:

 

  • Cost of drafting a suitable specification for the product or process according to the criteria set out by the Patents Act 1986. This cost is a one-time expense and generally can be covered by a budget of RM8,000/USD2,105 to RM10,000/USD2,632.
  • Cost of filing the patent application with the Intellectual Property Corporation of Malaysia entails your patent agent’s fees (unless you file the application yourself) and the Registrar of Patents’ fees (variable depending on the number of claims). Assuming that there are no adverse examination reports and the patent application is accepted for grant, the cost would be in the region of RM4,000/USD1,053 for patent agent’s fees and RM900/USD237 for the Registrar’s fees (variable depending on the number of claims)

 

Vis-à-vis the benefits that the patent rights confer to the patentee in commercial terms and the losses consequent to not obtaining a patent, clearly anyone whose idea is a product or process that works cannot afford not to patent it.

 

The perception that patenting is extremely costly is true for the over-ambitious inventor intending to patent the invention worldwide. This is because the cost of patenting in each individual country will include other costs such as translation costs (one-time expense for each language) and currency costs.

 

A proper patent strategy should include identification of the countries where the product or process is to be commercialized and possible staggered payment of costs. With a proper patent strategy, the perception that patenting is extremely costly becomes untrue, especially when measured against the benefits of owning a patent for your product or process.

 

 

 

ANGELINE CHIN YOKE FONG

( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 

 

 
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