What is a patent

A patent is an exclusive right to an invention. It allows the owner to exclude others to exploit the invention. The exclusive right can be enforced via court. More frequently, disputes are settled outside of the court, typically by a license agreement.

Can all inventions be patented

The conditions for obtaining a valid patent on an invention are:

• The invention needs to be technical

All fields of technology are included. Explicitly non-technical innovations are discoveries, laws of nature, aesthetic creations (art, literature, design), mathematical models, etc. Nevertheless, should one implement such non-technical innovations in a technical context, the technicality condition may be fulfilled.

For instance, the discovery of superconductivity of YBCO is by itself not technical, but an electrical circuit made of YBCO is technical

• The invention must be new

The invention may not be made publicly available worldwide by any means, e.g. by publication, by exposition, by sale, etc.

Note the ‘worldwide’ statement includes publication in any language. And yes, this includes dead languages like Latin or programming languages like Assembler.

• The invention must be inventive

Basically, this means that the invention must be more than a straightforward extension or combination of what is known already.

The exact meaning of this condition may however differ slightly for different countries or jurisdictions. For European patents, the invention must involve an inventive step: it may not be obvious to a person skilled in the art, having regard to the state of the art.

• The invention must be susceptible of industrial application

It must be possible to implement the invention in practice. This entails that the invention may not violate physical laws. Note that “industrial” is commonly interpreted in a very broad sense.

A typical example of an invention which cannot be put to practice is a perpetual mobile.

What value do patents offer

Patents may provide value to your business in three ways: protection, fiscal benefits and as an intangible asset. For SMEs, patents and other patent rights can significantly strengthen negotiations with large companies.

RedPat can assist you in optimizing your patent portfolio on all three points. Contact us for more information at info@redpat.eu or on +32 476 09 56 56.

Protection

A patent allows you to block or seriously hinder your competitor by preventing or prohibiting your competitor to sell, produce or market your invention in those countries where your invention has been patented:

• for up to 20 years after filing your patent application
• can be enforced via court
• damages may be awarded
• investments made by your competitor can be lost
• competitor may need to develop an alternative, which can be costly

The protection by patent may lead directly to additional income via license agreements, for instance on markets where your company is not active itself.

A patent portfolio of your own significantly increases your negotiation potential with competitors, e.g. by agreeing on cross licenses, and may avoid costly infringement proceedings.

Patents also strengthen your position towards your business clients, in particular towards large companies: a large customer may very well choose your products or services if your competitor is hindered by your patents.

Fiscal benefits

For companies located in Belgium, a deduction of the Company tax can be obtained. The deduction may be up to 85% of all revenues from patents or patent applications.

The conditions for SMEs are less stringent than for large companies. Whereas large companies need to have a separate R&D division, your SME only needs to provide evidence of R&D activity, typically in the form of test reports, invoices for R&D equipment or R&D services, having an R&D officer, etc.

The fiscal benefit is also available for innovative software which may or may not be protected by a patent.

For example:

• Product A is sold at 80€/piece
• Product A is improved to product B and the improvement is the result of an invention which has been patented by your Company
• Product B is sold at 100€/piece
• 20% of the revenues from product B are the result of the patented invention
• This results in a benefit of 17% of the revenues from product B (85% of 20%), if the Company has performed the R&D (if not, the benefit is multiplied by a Nexus factor < 1)
• The benefit must be reduced with the R&D costs which have led to the patent, resulting in a net benefit
• The net benefit can be deducted from the Company’s EBITDA
• This can be repeated for each fiscal year in which the patent is valid

Intangible asset

Patents and patent applications are intangible assets for your Company, and may significantly increase your Company’s value. For some Companies, in particular for certain SMEs, they may be the most valuable assets.

Furthermore, if you are looking for investors, a patent portfolio may be essential:

• technical knowledge can be substantiated
• intellectual property rights are easily transferred from an employee inventor to your SME
• a former employee inventor may start working for your competitor, but your SME keeps the intellectual property rights on the invention
• the future market position of your SME may be significantly affected by your patents and patent applications

What are the down sides of patents ?

The down side of patents is their cost. A patent is only warranted is the expected return is significant for your SME’s market position.

The costs for filing a patent application up to grant of the patent can be estimated to 6-10 k€ for a Belgian patent and 20-30 k€ for a European patent. Patents in other jurisdictions (e.g. the US, Japan, Canada, …) may also cost 20-35 k€, depending on many factors.

Furthermore, patents and patent applications may be subject to maintenance fees, which need to be paid every year in most countries. On the long run, the maintenance costs can be the largest cost in maintaining a patent portfolio.

Therefore, prior to filing patent applications, RedPat will discuss the potential costs and benefits with you in order to ensure an optimal protection.

I have a patent, can I sell my product or service ?

Be careful!

Other parties may have patents which may prohibit you to sell your product.

A patent allows you to prohibit your competitor to put your patented invention on the market. It does not automatically allows you to sell your product or service.

RedPat may assist you in investigating your freedom to operate, by searching for valid patents which may protect your products or services.

I have a patent, so I am the only provider of this product or service

There is no “patent police”, i.e. the government does not check if Companies may infringe on existing patents.

Your patents can only be enforced by you or by your deputies. Should you become aware of a possible infringement by a competitor, you can take further action. RedPat can assist you in enforcing your patent rights.