Originally, patents probably carried the image of an “exclusive right to sell.”
Monopoly Systems and the Patent System
In ancient China, the Tang Dynasty monopolized the right to sell salt and imposed high taxes on government-approved salt.
Since salt was essential for daily life, people had no choice but to buy it.
As a result, the Tang government earned enormous profits. Later dynasties continued using the same salt monopoly system.
A patent right is a right that allows its owner to monopolize a source of profit, while the government helps exclude others who try to infringe on that exclusive position.
If a company obtains a patent for a core technology that many people must use, the company can charge a high price for products using that technology.
This mechanism is very similar to a monopoly system.
However, unlike a monopoly system, patents have a limited term.
In addition, the value of a patent changes depending on how technology develops during the patent’s lifetime.
Unlike “salt,” the value of a patent is not stable. We will discuss this later.
NEED and WANT
The patent system temporarily grants exclusive rights to people who open up a “new market” with new technology.
Creating a new market ultimately means creating something people need or want.
Therefore, when building valuable patents, it is useful to think from two perspectives:
・NEED technologies: technologies people must use
・WANT technologies: technologies people want to use
If a technology is as essential as “salt,” the patent can become extremely valuable.
On the other hand, patents related to technologies that nobody needs or wants usually have little value.
(1) NEED Technologies
Patents for technologies that people cannot live without become very powerful.For example, imagine a company obtains an early basic patent for automatic braking technology.
Later, automatic braking becomes widely used and eventually becomes legally required in vehicles.
At that point, the patent becomes a “must-use patent” for automobile manufacturers.
If a company predicts that automatic braking will become an essential technology and invests aggressively in related intellectual property, the return could be enormous.
Automakers that fall behind in automatic braking technology may eventually be forced to accept market control by companies that took the lead earlier.
Technologies related to communication, safety, and measurement standards can often become NEED technologies.
(2) WANT Technologies
Technologies that everybody wants to use can also create powerful patents.For example, many people say that society is entering the IoT era.
If IoT infrastructure becomes widespread, new kinds of services may become possible.
Imagine a household refrigerator that automatically orders more beer when the number of cans becomes low.
Technically, such a product may already be possible, although practical challenges outside technology still remain.
If you believe IoT infrastructure will eventually mature and that people will someday want such refrigerators, it may be smart to obtain patents early.
If the IoT era develops as expected and many consumers want this type of refrigerator, the value of the patent could rise dramatically.
One useful approach is to think about technologies that cannot be fully commercialized today but seem technically achievable in the near future.
Words like AI, smart grids, eSports, and robotics often help us imagine future markets and opportunities.
Realistic Technologies and Predictive Technologies
Patents for technologies that people already clearly need (“realistic technologies”) can have value even at the filing stage.
However, competition in these areas is often intense, making it difficult to obtain broad and powerful patents.
In some cases, the market may decline before the patent is granted.
For example, a company may obtain a patent for memory-saving technology, but later memory becomes cheaper and more highly integrated.
As a result, the need for memory-saving technology decreases, and the patent quickly becomes obsolete.
On the other hand, patents for technologies that people may need in the future (“predictive technologies”) can sometimes become broad and powerful because the field is still undeveloped.
However, there is always a risk that the prediction will be wrong.
In the refrigerator example above, society may never actually demand refrigerators that automatically reorder beer.
Another possibility is that such a market appears only after the patent expires.
Sometimes a technology is simply too advanced for its time, and the patent expires before the market fully develops.
For this reason, filing a patent application as early as possible is not always the best strategy.
Reading the Future
One of the basics of patent strategy is predicting where technological trends will lead and targeting that future market at the right timing.
Another strategy is to guide the market toward technological fields where your company already owns many patents, through approaches such as patent licensing or standardization.
When you pay attention to emerging technologies and think carefully about the new NEEDs and WANTs they may create, the quality of your patents can improve dramatically.