Business Process Patent: Everything You Need to Know
Business method patents or business process patents define as patents that create a new method of doing business.8 min read
Business Process Patent
Business method patents or business process patents define as patents that create a new method of doing business. Since 1988 this type of patent has been available. A business process method defines as a method to operate a business enterprise or a portion within a business enterprise. The importance of business valuation methods includes the value of patents. So, when evaluating a business make sure to get an estimate on a patent portfolio to determine the business’s worth.
Business Valuation Methods
A patent portfolio becomes a primary part of a corporation’s overall value, as shown by the recent sale of Nortel’s 6,000 patents for $4.5 billion. Then Google’s obtainment of Motorola and their 17,000 patents at $12.5 billion. Individual patents do not ascertain the true value. True values of patents come from its aggregation in the patent portfolio—the entire collection of patent’s values in the entire portfolio matter. All known business valuation methods fall under one or more of the following basic approaches:
1. Income Approach – a real estate appraisal method that has investors estimate value by viewing the net operating income divided by the capitalization rate.
2. Market Approach – determines the appraisal value of assets by estimating the selling price by finding similar items that have been sold. It includes intangible assets such as patent values.
3. Asset Approach – determines what it would take to recreated a business. It includes a net asset value and then subtracts the total liabilities incurred. This includes proprietary, developed products, and items such as patents.
Which approach used can make a huge difference in the evaluation of the worth of your business. Intellectual property, protocols, and processes run a business and have a monetary value even if the income level does not reflect that. Often a smaller business with smart patentable ideas become acquisitioned and those ideas with the new resources of a larger business propel that business to obtaining large income. Ideas matter much more than people realize. The appropriate accounting system takes that into consideration when placing a value on your enterprise. A good business often becomes ruined not because the products changed but someone comes in and undoes the business method put in place that went along with the products giving the place a unique flavor and atmosphere.
Readying a Business for Patenting
Sharing ideas has been an integral part of business since the first trade in days of yore happened. The problem became no income. Patents gave a way to to legalize an idea so you could monetize it and receive an income for it. It has a process. Often business entities combine a synergistic effect happens. Before permanently combining up do some research on their business practices.
It does not mean something illegal has happened. Different business approaches have different levels of compatibility. As anyone in business knows life happens while a person makes a deal and some business practices happen out of necessity when dealing with difficult clients. Decide what essentials exist that make your business method your business. That part of an enterprise should become patented.
Using a non-disclosure agreement protects your business process created. Know other groups of business people who often provide money will balk at it. They make money by sharing others proprietary information. More like variations on a theme, the problem becomes it creates competitors your business has no protection against. Also, clients like to share the good process of your business. Putting confidentiality statements on a business plan protects the assets but lets the sharing continue
How to Patent a Business Idea
Before patenting . what ideas in business practice you created and if any ideas you use were created by someone else. These become co-inventors on a patent. Present a needs list to that person who upgraded, tweaked, or otherwise made your business run smoothly. They will have no rights to the development but it gives credit they can use for their portfolio.
It begins with an initial provisional patent application. The application exists online but software’s offer templates that guide you through the process. Just by filing the patent your business process ideas become protected for a year. You get to put the wonderful phrase “patent pending” on your business products or services. Now continue with establishing mutually beneficial relationships with colleagues and competitors. Protected now if they do use your idea they must pay you. You can generously let them as long as they provide an income stream. Research begins to see if the business process developed truly was original.
Visit the U.S. Patent and Trademark Office website for instructions specific of your business process on how to proceed. Patents do cost. The price varies according to industry. Once a patent becomes received a patent maintenance fee exists. Other rules apply such as how long the patent protects types of patents of your intellectual property. A US patent gives protection only in the USA and its territories’ and a patent does help you negotiate a maximum price when you sell your idea or business. This becomes especially important when estates become passed on to heir. It gives you a means to legally attack competitors who steal from you as in business property or intellectual property.
Three Types of Patents
Three categories of patents exist that depending on the nature of your business you can apply for.
- Utility Patent -covers a useful business process, machine, manufacture or composition or improvement of those areas. It allows you to exclude others from using your business process. You have control of who does for a fee. Most patents fall under this category.
- Design Patent – covers any new, original, or ornamental design or the business process to create it. Again, it determines who you can exclude. This patent has no maintenance fees.
- Plant Patent – covers actual green plants created such as mutants or hybrids. It excludes others using the process or creating the same plant.
Each offers different protections to your idea and has differing lengths of time your business remains covered. Patent lawyers exist that can help you navigate the process. Hiring a professional can save you time from all the legal jargon necessary to protect your idea from others. After all, you have a business to run, and experts exist that can manage all the details of patenting your business process. All available for a fee of course.
What If Your Business Process is Global?
Globally the rules play differently. Some places have more protection of intellectual property, but by and large, most countries do little to protect intellectual property. Some countries such as China thrive on stealing because they did not invest in the initial development they are able to sell the product much cheaper. Mainland China and Hong Kong account for 87% of counterfeit goods seized by the U.S. Customs and Border Patrol.
Dealing with Asian countries the rules do not favor honesty apparently. At the same time, USA vendors buy the items creating the market. Understand it remains a form of war just not with bombs. Realize most business ideas remain not patentable since the level of cooperation to do business negates it being all one person’s idea over another. Particularly in small businesses doing niche markets, many ideas remain patentable if you can afford the fees.
Patent fees in other countries sometimes are cheaper, so you get protection at less cost. If much of your business happens overseas explore that option. Patenting an overseas process remains helpful to offer protection outside the USA. Realize it becomes a compliment to have a business process stolen. Find a way to make them pay for it. As a small business, it gains you huge leverage against corporate who most likely will make an offer to buy the business rather than compete. Sometimes the goal is not an empire but an idea so worthy to get American corporates attention to pay you for being a smart American.
A portfolio of patents managed well gives a competitive edge but better yet give s cross-licensing opportunities. Making deals with other companies if each your employees intellectual property remains protected makes money. So, patents like football has an offensive and defensive perspective. It gives you an edge in a competitive market for a certain length of time. Your brand has the possibility of becoming a household name. Patents can also become sold. Selling your business process patent may create a franchise or even a corporation which you receive an income stream from for yourself and your heirs for an eternity or your lifetime.
The first application for a provisional patent expires in a year. No option exists to extend such protection. It gives you a year of protection for that competitive edge, or to find a partner to sell the business. It gives you a possible route to become a trademark. You must follow up on that to make it viable. If patenting becomes unaffordable like what happens with many small businesses budgets consider documenting and archiving all your work. Be aware what the patent really covers becomes the methods you used for your business since they are tangible.
Copyright protects ideas, but a patent protects the process used to create whatever it is you create. A patent’s worth changes over time so have a financial advisor keep track. A patent worth million in its first years may become worthless over time as technology or consumer needs change. If you are using much Internet processes, know that remains new territory, so the laws do not cover everything.
Google, Facebook, Microsoft, and others have been setting new precedents for patents in these digital corporates. Small and medium companies can benefit from their attempts and successes, but it will take time to discover which pieces will help that level of business enterprises. Patents can raise capital so be ready to attempt that. Paying patent maintenance fees eats up profits so while researching the patent research how to get investors.
Breakthrough patents give the most money but are rare. In most cases patents remain improvements for processes, so it gives some money but not at the levels to create a monopoly. Once patented other companies can find you and a technique known as creating patents to block your business efforts may begin. Getting a professional can make you aware how another entity can strangle your business with the other patents. Over time patent rules change.
Patents give a personal satisfaction like no other thing out there. It gives a sense of worth to the creation of your business. It is something most people never do. It announces to the world what you have done is uniquely you. It provides protection from unscrupulous practices and ravenous business wolves for a time. It gives a chance for you to compete on a level others cannot by its 15 to 25-year protections allowing your own personal monopoly.
Patents by their nature make the world a better place to do business. It can level the playing field and take a small business to the heights. It keeps corporate honest in some areas. It tells other countries that intellectuals and inventors are valued members of society. Instead of being punished by the law you become protected by the law of it. Patent pending on your product or service notifies everyone you are not thief. You took the time and effort to create your business in a way that takes away from no one and gives something good to the world in business.
If you need help with creating a patent you can post your legal need on UpCounsel’s marketplace. UpCounsel hires only the top 5 percent of lawyers into its site. Most have 14 years of legal service and have worked with small business to corporates. Their level of expertise ensures you the best and latest legal advice.