What you must know about patent

Is patent really important to all business people?

Firstly, it is now a universal consensus that innovation is the key to business success. All successful world class companies hold large number of patents. For instance, during the period between January 1995 and mid-February 2001, Microsoft has obtained approx 1,475 U.S. patents, Toyota 820, and Sony 859 . Companies that do not innovate lose out in market competition quickly. And if you invest to innovate, you should protect your innovation by patents as far as possible.

Secondly, failure to handle patents issues in your business could cost serious legal liability with astronomical financial consequence. In 1990 Kodak was ordered to pay USD925 million in damages to Polaroid for making and selling products that infringed Polaroid’s patents. Legal fees cost Kodak an additional US$100 million. Kodak was also forced to shut down its US$1.5 billion manufacturing plant, lay off 700 workers, and spend nearly US$500 million to buy back the 16 infringing articles it had sold to consumers. It is important to note that you may infringe a patent not only by making a patent product, but also selling and even using it.

Patent is relevant to retail business!

Innovation is also the key to success in the retail business. The most successful personal computer seller in the world, Dell Computer, built their success on innovation of their built-to-order direct sales model. As of February 2001, it holds approximately 582 patents related to its business.

Another good illustration is a patent on retail method held by Walker Asset Management (an associate company with Priceline.com) and licensed to KFC: Upselling (US Patent No. US06119099). For example, an KFC customer paying US$2.7 for chicken and macaroni may forego his change (for US$0.3) in exchange for a cup of Coke. Since its use, this method significantly increased the revenue of KFC.

At present, few countries other than the U.S. recognise and grant patents on business methods. Yet any one who invents a business method may apply for a patent in the U.S., the world’s largest market, and licence it to U.S. companies to earn license fees.