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Blockchain, nanomaterials, AI, CRISPR – disruptive technologies can transform entire industries. A common misconception is that patents are only for protecting cutting-edge and disruptive innovation. Indeed, only technology that is new and non-obvious can be protected by a patent. However, these requirements do not mean that only disruptive technologies can be protected. In fact, the Canadian Intellectual Property Office (CIPO) estimates that 90% of patents are for improvements to existing patented inventions. For example, a patent was granted this week for a bar of soap!
An improvement patent is based on technology that builds on a previous idea or invention – a better mouse trap if you will. An improvement patent does not give you the right to use the original patented invention as the patent holder can exclude others from using their invention. However, an improvement patent gives you the right to exclude others from using the improvement.
Exclusivity over the improvement can be a valuable defensive tool when faced with the threat of an infringement suit. Companies can avoid protracted and expensive patent litigation by aligning with would-be competitors or infringers and cross-licensing your technology with the patent holder of the original invention.
A cross-license is an agreement to grant mutual rights to each party’s respective patents.
A perfect example of a beneficial cross-licensing relationship is Google and Samsung Electronics, who signed a broad cross-licensing agreement in 2014. By joining forces, Google and Samsung Electronics mitigated their risk of infringement, allowing the companies to place a larger emphasis on innovation. Cross-licensing agreements are especially effective for companies that target different markets, creating a win-win for everyone.
Far too often companies underestimate the value of small improvements made to existing technology. By protecting incremental improvements, companies can bolster their IP portfolio and create new opportunities to license other technology.