Intellectual property (IP) is an essential part of innovation in industrial companies. In some cases, it can be a decisive factor in determining the return on investment in R&D. That is why effective innovation management in industry requires a sound understanding of how IP works.
In this article, we focus on patents—one of the most important forms of IP protection in manufacturing—to explain three functioning aspects that are often misunderstood and can, in our experience, jeopardize the success of industrial innovation.
1. A patent does not provide freedom to operate
One of the most widespread misconceptions about patents is that they give their owners the right to exploit an invention commercially. This is incorrect. What they provide is the right to prevent others from doing so. In other words, a patent grants a negative right.
This is a fundamental distinction.
Because of the way patents are drafted, particularly their claims, an invention may fall simultaneously within the scope of protection of two or more patents owned by different parties. If a company exploits its invention under the mistaken belief that its own patent guarantees the right to do so, it may end up infringing other patents.
This situation can lead to patent infringement claims between companies, potentially resulting in substantial damages and legal costs.
Before bringing an invention to market, therefore, it is highly advisable to investigate whether it could infringe any third-party patents. This means assessing whether the company has freedom to operate (FTO).
We recommend incorporating freedom-to-operate studies into the company’s innovation process. This makes it possible to identify potential risks early and take timely action to avoid infringement.
What can companies do to achieve freedom to operate?
The simplest option is to modify the invention during the R&D phase of the project to design around the claims of third-party patents. If this is not possible, the company can try to negotiate a licence with the patent owners. If no agreement can be reached and the company still wants to pursue its innovation project, the remaining option is to seek the revocation of those patents or a limitation of their scope.
2. A patent may be vulnerable
A second common mistake is to overestimate the strength of patents, both our own and those held by others. The aim is not to diminish the undeniable value of IP rights, but rather to point out that a patent can sometimes be successfully challenged by exploiting its weaknesses, leading to its complete revocation or, at the very least, a limitation of its scope.
Challenges most commonly arise during patent prosecution, using the procedures available at the patent office. In Europe, third parties can submit observations during the examination process. Once a patent has been granted, they may also file an opposition and, where applicable, appeal the decision. It is even possible to seek the invalidation of a granted patent through the courts. The latter is relatively uncommon. More often, arguments questioning a patent’s validity are used to encourage its owner to negotiate an out-of-court settlement.
What weaknesses can a patent have?
The most significant weaknesses arise when one or more of the three patentability requirements are not met: novelty, inventive step and industrial applicability. Of these, lack of novelty is particularly decisive. Other grounds for challenge include insufficient disclosure of the invention and the addition of subject matter that was not included in the original patent application.
These potential weaknesses must be taken into account both when drafting patent applications, to anticipate possible challenges, and when assessing whether third-party patents can be challenged to secure or expand freedom to operate.
Failing to do so can have significant financial consequences. Companies may overestimate the value of their own patents or abandon profitable innovation projects because of freedom-to-operate issues that could, in fact, be resolved.
We recommend systematically incorporating measures to protect a company’s own inventions and secure freedom to operate into its innovation processes. The specific actions will depend on the needs of each project.
A fundamental step common to both objectives is conducting prior-art searches to identify existing patents and other technical disclosures in a given field. These searches provide the starting point for assessing whether an invention is patentable and drafting the corresponding patent applications. They also help identify the most problematic third-party patents, assess their weaknesses and determine their procedural status, making it possible to develop the most effective strategy for challenging them.
In all these activities, the expertise of the IP attorney can make all the difference.
3. A patent is not always the best option – trade secrets
The third common mistake is choosing patent protection without considering whether the rights it provides can realistically be enforced. Effective enforcement depends on being able to detect and prove potential infringement.
To understand why this matters, it is important to remember that patent protection requires the public disclosure of the invention’s technical details, allowing other individuals and companies to learn about the technology. Some may be tempted to exploit the invention without the patent owner’s authorisation, doing so covertly to avoid detection.
Infringement can often be detected, but not always easily. When it is impossible to detect or prove an infringement, the patent owner may be left with a patent that cannot be enforced in practice. The financial consequences can include lost revenue, as the owner may be unable to effectively exercise the exclusive rights granted by the patent or prevent others from exploiting the invention without authorisation.
When is it difficult to prove patent infringement?
It is particularly difficult in the case of inventions involving manufacturing processes or ingredient compositions used in facilities that competitors cannot access, especially when the process or composition leaves no identifiable trace in the final product on the market. Although technical and legal tools are available to investigate potential infringement, proving that a third party is using a protected invention can still be difficult.
In these cases, trade secrets may offer the best form of protection
A trade secret is not simply an invention that has not been patented. It is an alternative protection strategy that requires specific internal procedures to qualify for protection under applicable trade secret legislation. These should include reasonable measures to maintain the confidentiality of the information, as well as mechanisms for documenting the development and use of the invention. Such evidence can be essential for exercising the prior-use right if a third party subsequently patents the same invention.
We therefore recommend including trade secrets among the options for protecting industrial companies’ inventions.
The takeaway
Patents are essential to industrial innovation, but poor patent management can jeopardize the profitability of innovation projects. We should avoid three common mistakes with particularly serious consequences: 1) assuming that patents guarantee freedom to operate, 2) overestimating the strength of patents, and 3) filing for patents that cannot be effectively enforced.
The 5-40® innovation management methodology integrates all activities related to industrial property, including patents, helping companies avoid these mistakes and improve their return on investment in R&D and innovation.
Visit https://www.innovation5-40.com to find out more.
