07 July 2019

How to get rid of a competitor in the market using the patent law?

In the modern world, more and more companies – the manufacturers of products or services – face competitors in the market, and they are searching for different ways to eliminate them.

Today, the companies can increase their competitiveness in a variety of ways by devoting their time and resources to an important part of the business – protecting their intellectual property (IP).

The IP assets are of great value to the companies, as well as the reasons due to which they should be managed within the framework of a business strategy. For example, this can help to promote the company to a leading position in business or trade.

Many violators will seek to find out quickly how seriously their so-called potential victims are defending their rights. Defending its rights in an insistent and relentless manner, the company increases its chances that the alleged competitor, violator will decide to search for an easier target elsewhere.

In many situations, the ownership of the intellectual property rights and a threat of a statement of claim for the violation of the rights may be sufficient to deter the violators or even to bring the company to a competitive position.

The short product life cycles and increasing competition have a huge impact on enterprises forcing them to embark on an innovative path of development and to seek access to the innovations of other enterprises in order to maintain competitiveness in the domestic and foreign markets.

The exclusive rights granted by a patent can be critical to the prosperity of innovative enterprises in an energy-intensive, risky and dynamically developing business environment.

What are the advantages of patenting inventions, obtaining patents and how will their availability help in the fight against competitors?

Firstly, the availability of the patent contributes to strengthening the company's position in the market and the competitive advantages. The patent holder owns the exclusive right to the use of an invention. The patent holder may dispose of the exclusive right to an invention. The use of an invention shall be considered in particular the following: importing into the territory of the Russian Federation, manufacturing, applying, offering for sale, selling, another introduction into the civil law circulation or storage for such purposes of the product, in which the invention is used.

Thus, the patent gives the patent holder the exclusive right to prevent other persons from using the patented invention for commercial purposes or to suspend such use, what reduces uncertainty, a risk and a competition on behalf of those involved in the illegal use of the patented products.

If your company has obtained a permission to use the patented invention of high value, by using it, it can create an obstacle for its competitors planning to enter the market with the same invention. This will help you to occupy a dominate position in the relevant segment of the market.

Secondly, the patent allows gaining higher profits or income from investments. If your company has spent a considerable amount of time and money to conduct research and development, the patent protection of the created inventions will help to reimburse such costs and to obtain higher income from the investments.

Thirdly, having a patent will provide you with additional revenue from a license activity or alienation (sale) of the patent. As a patent holder, you may issue licenses for the inventions to other persons in exchange for a lump sum payment and/or license fees (royalties), what is a source of additional revenue for the company. The sale (or alienation) of the patent means a transfer of the exclusive right to the invention in full, whereas licensing means only granting a permit to the use of the invention under the terms specified in the license agreement.

Fourthly, the patents obtained in different countries, namely, of the intended export, will give you access to new markets. Licensing these patents to other companies may give you access to the new markets that are otherwise unavailable.

It is also possible to prevent other persons from patenting the same invention by obtaining patent protection, as well as to reduce the likelihood of violating other persons’ rights while using your products for commercial purposes. While the patent itself does not give “a freedom of the use,” it prevents other persons from patenting the same or similar inventions and confirms that the patented invention is new and it differs significantly from “the prior art.”

In order to defend effectively the exclusive right granted by the patent, it may sometimes become necessary to get into judicial proceedings or to bring the information about your patents to the persons, who violate the patent rights owned by you. Having a patent enhances greatly your ability to handle successfully the judicial proceedings against the persons, who in any way violate the rights to the patented invention.

Finally, if you have a large number of patents, then your business partners, investors, clients perceive their availability as evidence of a high level of the competence, specialization and technical capabilities of the company. This can be useful for involving funds, searching for partners, enhancing the image and market value of your company, what is also a means of fighting against a competitor. Some enterprises mention or specify their patents in advertising in order to create and bring to the attention of the most general public the image of the company as an innovative enterprise. And many competitors may simply be intimidated by such information and they will decide to keep away from you.

Thus, the availability of the exclusive rights to the manufacture of a certain product, the ability to regulate this product circulation in the market, increasing the advertising opportunities and expanding the opportunities of the promotion give the patent holder significant competitive advantages. On the other hand, the patents can be used to restrict the scope of the competitors' activities by closing a part of their manufacture activities. This is achieved by patenting other technical solutions in this field in the required scope. In this case, we can talk about the use of patents as a competitive weapon. Recently, this property of patents has been used increasingly.

Head of Department / Patent Attorney / Mechanics Engineer