During the lifespan of a company, there is a continuous balancing of capital towards various expenses. Two of the more consequential and frequently competing line items are advertising and patent protection. Both can be essential to long-term success, but each serves a fundamentally different purpose – thus, what are important factors to consider to strike the right balance?
For companies in a “winner-takes-most” industry (like an Nvidia) or in a space with competitors filing a large number of patents, then a budget favoring patent protection may be preferred. Alternatively, for companies in a service or a brand-based industry, advertising may be more important.
It can be difficult to measure the utility of a patent due to the significant time gap between filing a patent and its issue date, whereas advertising may yield a faster feedback loop. In some instances, biasing marketing may be preferred if cash flow needs are more immediate. However, this may hamstring long-term company growth. Early patent filings may increase company valuations and deal leverage. Patents may include the intrinsic benefit of providing legitimacy to a product in a crowded field.
Reverse engineering of a product may be another good reason to file a patent. Alternatively, if a product has a secret formulation, such as Coca-Cola, it may be best to avoid public disclosure.
Regardless, both advertising and patent protection need to be executed correctly. Miscalculated advertising campaigns can sow negative public sentiment. Patents that are poorly drafted or narrow in scope may waste company money and open space for competitors to mimic or commercialize a competing product. When considering developing a patent portfolio, it is important to work with a firm, such as McCoy Russell, that values client success and patent quality over financial gain. Contact us if we may be of assistance.
