However, innovation is expensive: it requires market research, R & D efforts and sales to identify the market need, invent the appropriate product and to develop the markets. Unfortunately, once the products are on the market, the secret sauce is secret no longer. Once the product is proven in the customers product, the customer will often put the product out to bid for a foreign manufacturer to duplicate the formerly secret sauce at a much lower cost. The innovator is thus cut out of the picture and is left to continue spending money on additional innovations to stay ahead and keep developing new customers for its products or, as shown by the abandoned facilities on 1-85, to go out of business.
A well-thought out patent strategy could slow or stall the race to the bottom faced by these small and mid-sized manufacturers. These manufacturers could be well served by developing a robust strategy directed toward protecting those aspects of their products that differentiate them from those of commodity manufacturers. If the manufacturer’s solutions are truly innovative and strategic patent rights can be obtained, the customer will not be readily able to send the product to a foreign manufacturer for knock-off at a lower cost. The customer will be faced with the decision to continue paying a premium for the manufacturer’s product or else select an inferior product based on price because the manufacturer’s patent rights can be enforced to prevent knock-offs from entering the U.S. (This is discussed in more detail in this previous blog posting: http://tinyurl.com/ipassetmaximizer.
An important qualifier here: merely providing a description of the innovation to a patent attorney to draft a single patent to protect a differentiated product is probably not sufficient to prevent foreign knock-offs of the manufacturer’s product. Rather, to be effective, patenting must be strategic and this strategy must proceed the patenting. A single patent may result from this strategy, but the strategy will define the scope and direction of the patent rights to best protect the differentiated product from foreign knock-offs.
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