The patent, an offensive and defensive weapon for the innovative company

The patent, an offensive and defensive weaponfor the innovative company

A patent is an industrial property right protecting an invention by providing to its owner the exclusive right of exploitation of the invention on a determined territory during 20 years, for the payment of an annual fee and in compensation of a legal publication within a period of 18 months after the patent application.
The recent and numerous cases opposing companies like Apple and Samsung or Google and Oracle highlight that, today, patents are defensive weapons as well as offensive weapons according to the strategy developed by the holder. Many companies notice lately this functional ambivalence of the patent, just as a patent-related dispute happen, like its violation by a counterfeiter party who reproduces without any authorization the protected invention.
If adopting a strategy of patent application may appear expensive in front of the strategy of the secret which consists in keeping the invention undisclosed, it must be clear that the patents ensure an effective legal protection of the inventions against potential counterfeiters and also permit to the innovative companies recouping their Research & Development costs as a patent owner will be able to negotiate royalties for license agreements signed with firms interested in the use of the patented technology.
 In the digital era, whatever is the product or the service commercialized by a company, it’s likely that this firm uses and creates itself some patentable elements or contents. Therefore, the international expansion of a company necessary has to go through an intellectual property audit of projects and the definition of a pertinent strategy for each territory in which the firm wishes to go in.
So, a patent on a very disruptive technology will be constitute a main asset against the competition for a start-up by getting a reputation and a particular trust from the  business angelsat the moment of raising funds. Besides, entering a market having previously constituted a patent cluster (that is to say a group of patents on a same matter or all necessary for the production of one product) will allow a company to gain a decisive competitive advantage.
Beyond the traditional function of protection of the patent, the patent owners adopt more and more diverse and original Research & Development strategies with the aim of beating the competition on the basis of the patents. Nespresso SA, a Swiss subsidiary of the Nestlé group, built its undisputable commercial success on an intelligent and aggressive patent strategy which has permitted taking the leadership of the portioned coffee market.

Indeed, its R&D efforts made possible to patent 70 inventions on its capsule-based coffee machine system as for a result a total of 1700 patents, by file a patent application in each and every country where the Nespresso trademark was present. Any attempt of the potential competitors for entering the market gave rise to a patent infringement proceeding initiated by Nespresso on the basis of its patents. In 2008, only when the first Nespresso inventions have fallen into the public domain, then the competitors could produce coffee machines and similar or compatible capsules, but Nespresso had already won recognition by building a particular brand image before the consumers.
This strategy of defensive patent to block the competitors may be completed by some patent applications on a closely related or associated technology. In this way, the defensive blocking permits to create a kind of barrier of patents and thus guarantee a monopoly and the effective penetration of the target-market.
It is also possible to do R&D working from the legal publications of the patent applications filed by another company in order to invent some technical improvements to the invention and then file patent applications. And so, except the limit of the abuse of process which is punished by the courts if proved, the patent owner may be blocked in a situation of cross licensing to commercially exploit its invention.
Besides, the patent may be used to elude and deceive the competitors. As a matter of fact, it’s quite usual that firms proceed to « patent-lures » applications in the purpose of leading the competitors to believe that its R&D efforts focus on a determined technology or sector, taking in the same time advantage that various National Patent Offices don’t proceed to an automatic technical examination for grating a patent. Consequently, these patents often don’t concern real inventions but the expected effect of these lures is clearly to weaken the competitors by sending their respective R&D department on a wrong track, for make up a fake R&D delay.
Moreover, the growing importance of the harmful practice for the innovation named « patent trolls »is noteworthy. Patent trolls are companies that do not operate any real commercial activity but only search to take financially advantage of the current patent system by acquiring a large number of patents without any intention of exploit them. The only purpose of a patent troll is to consistently initiate in bad faith legal proceedings on the ground of patent counterfeiting against companies which may use any of the patent purchased by the patent troll. Due to the highly cost of the industrial property justice, especially in the United States of America, the patent trolls remain alive as they obtain most of the time an extrajudicial settlement of the cases with the payment of a large amount of money from the industrial sued. Nevertheless, in various recent cases, companies like Kaspersky Lab or Google refused to budge from their position as they didn’t paid the patent trolls, and they won the trials.

Figure N°6 of the patent EP1654966 B1 “Capsule with sealing means” filed by NESTEC SA on theOctobre, 25th of 2004 in the European Patent Office
To conclude, from now on it’s essential for the big companies as well as the small and medium companies to take in consideration the highly strategic dimension of the patents, to perform an efficient technology intelligence and monitoring, and finally to develop strategies based on their patents and the patent applications realized by their competitors in order be the best armed and equipped possible on the market.

      José Marquis
      Departamento de Propiedad Intelectual
      OMC Abogados & Consultores
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