Words by Alec Schibanoff
Every business – regardless of its size or industry – has some type of R&D (Research and Development) function. Every business is continually searching for the next product or service to take to market – a new product or service that will generate more sales and even greater profits, will expand the customer base, and will give it a distinct competitive advantage.
Some businesses have an actual Department called “R&D” while other businesses use other terms such as “New Product Development” or “Office of Technology” that is lead by a CTO (Chief Technology Officer). In some enterprises, the Engineering Department heads up new product development while in other businesses it is a function of marketing.
Regardless of where the process resides within the business enterprise, the process is pretty much the same. Starting with the products and services the company presently sells, the staff attempts to look into the future to see how these current products and services can be improved or enhanced with the latest technology, or what the next generation of products and services will be that replaces the current generation.
R&D is critical to the long-term survival of any business, and it is expensive and time-consuming. New product concepts have to be tested. Prototypes have to be built. The invention covered by the new product needs to be patented. A supply chain of parts and components for the new product has to be established. And then there is packaging, pricing, and promotion to consider. In fact, traditional R&D is so time-consuming that it is not uncommon today – with the considerably shortened life cycle of most products – to have a new product come to market only to find that it is obsolete!
There is, however, an alternative to the traditional in-house, home-grown, labor-intensive, and time-consuming process of developing new products and services: Acquire the technology of a new product or service that has already been invented and patented!
The U.S. Patent and Trademark Office granted over 350,000 utility patents in 2019. The European Patent Office processed 180,000 patent applications last year. All of the industrialized nations have patent agencies that are busier than ever. While most of the patents granted are issued to businesses and universities, a substantial fraction of the patents granted each year around the world are issued to individual inventors. These inventors do not have a factory in their backyards that they can use to commercialize these patents – “practice the patent” is the patent law term – so these patented inventions are available for acquisition by a business that can commercialize them and take new products and services to market based on these patents. And do it very quickly and in considerably less time than the conventional method.
While a patent is not cheap – in the U.S., a utility patent typically sells for hundreds of thousands of dollars – the cost of buying a patent is very likely much less than the payroll for two or three years of an R&D staff. If a company does not have the cash-on-hand to outright purchase a patent, that company can license the patent and pay a royalty, so the patent costs are back-loaded.
Most patent brokers – IPOfferings offers this service and we know of other patent brokers that also do – will conduct a free search of the current patent database in your country to identify for a business patents and current patent applications for new products or services that could be a good fit for a business. Most provide this service free-of-charge. Here is a Low Risk/High Reward opportunity for any business!
We do not suggest that you fire your R&D staff, but it would certainly be a worthwhile exercise to have a search conducted to see what recently granted patents or active patent applications there are for new products and services in your industry. You might find the ideal next product for your company. Or you might find a new product concept that is not a perfect fit, but with some tweaking by your R&D staff, it can be the next new product for your business. And if the patent broker comes up with NO viable new product patents, you are only out some of our time and none of your cash.
Be sure to consider both granted patents and active patent applications. A company can acquire a patent application, introduce a new product based on that patent application, and mark the product “Patent Pending” while it awaits final approval of the patent application.
Why invent the next wheel when someone else may have already invented it? The time has come to re-think traditional R&D from outside of, and not within, the box.
Alec Schibanoff is Vice President of IPOfferings LLC, a leading patent broker and a provider of patent valuation and IP consulting services.
