Here’s how competitors do it—often legally, as part of a system that incentivizes innovation.
Originally published by Investor’s Digest. Reprinted with permission.
Many inventors view a patent as the ultimate shield against competition. After all, being granted a patent often requires years of development, substantial expense and extensive interaction with the United States Patent and Trademark Office.
When the patent finally issues, inventors reasonably believe competitors can no longer enter the market with similar products. The reality is more complicated.
A patent provides valuable legal rights, but it does not guarantee market exclusivity. In many industries, competitors study patents and look for ways to develop alternative products that avoid infringement and meet consumer demand—“designing around” a patent.
Understanding how competitors design around patent protection can be as important as getting the patent itself.
What a patent protects
Inventors commonly misconceive that patents protect the invention in the broadest sense. But they protect only what is specifically claimed in the patent’s claims.
Claims define the legal boundaries of the invention. The patent specification may describe numerous embodiments, features and advantages of the invention, but claims ultimately determine what others are prohibited from making, using, selling or importing.
So, competitors often focus on identifying aspects of a product that are not covered by those claims.
For example, suppose an inventor has a patent directed to a specialized bottle cap with three specific structural features. A competitor may analyze the claims and determine one of those features can be replaced with a different mechanism that performs a similar function. If the alternative design falls outside the scope of the claims, the competitor may bring the competing product to market without infringing the patent.
The competitor is not stealing the invention. Instead, it is taking advantage of the patent’s limited claim coverage.
Designing around patents
The patent system attempts to promote innovation by granting inventors exclusive rights for a limited period in exchange for them publicly disclosing their inventions. Once a patent application is published, competitors can study the disclosed technology and develop improvements or alternative approaches.
Many inventors are surprised to learn that the patent system encourages lawful design-arounds. But designing around patents may lead to entirely new innovations. A competitor may identify a weakness, limitation or inefficiency in an existing patented product and develop a different solution.
This process aligns with the policy goals of the patent system by fostering technological advancement, but it can also frustrate inventors who watch competitors enter the market with products that appear similar to theirs but are different enough to avoid infringement.
Design-around efforts occur in nearly every technology sector—especially in consumer product manufacturing, software, medical devices and pharmaceuticals. However, though some design-around efforts successfully navigate around patent protection and generate commercially successful products, not every design-around effort succeeds.
Broad versus narrow claims
Whether competitors can design around a patent often depends on the scope of its claims.
Broad claims generally provide wider protection and make it more difficult for competitors to develop alternatives, but their increased breadth renders them more susceptible to rejections based on prior art. Narrow claims may be easier to secure during prosecution, but they can leave room for competitors to modify certain features and avoid infringement.
Applicants often initially seek broad protection; then, examiners require narrowed claims to distinguish the invention from existing technology. As a result, the issued patent may provide meaningful protection while leaving opportunities for competitors to pursue alternative designs.
Improvement patents
Another concept that inventors sometimes overlook is the role of improvement patents.
A competitor may develop an enhancement to an existing invention and receive its own patent covering the improvement. This situation can complicate the intellectual property landscape because both parties may then possess overlapping, enforceable patent rights. This overlap can lead to licensing discussions, cross-licensing arrangements, business partnerships or litigation.
For inventors, the existence of improvement patents demonstrates that innovation often continues long after the first patent issues, demonstrating that the patent system is fostering innovation.
Building portfolios
Many successful companies do not rely on a single patent to protect an important product. Instead, they develop patent portfolios covering various aspects of the technology.
A portfolio may include patents directed to product structures, manufacturing methods, software functionality, user interfaces, accessories and future improvements. This approach can make design-arounds more challenging, because competitors must navigate multiple patents rather than a single set of claims.
Additional applications, continuation filings and patents covering improvements may strengthen overall protection and create additional barriers to competitive entry.
Of course, patent portfolios require additional investment and should be evaluated in light of commercial objectives and available resources.
Monitor the competition
Getting a patent is often viewed as the finish line. In reality, it may be the beginning of a longer process.
Inventors who successfully commercialize products should monitor competitive activity and remain aware of new patent filings within their industry, because understanding how competitors approach similar technologies can provide valuable business intelligence.
Monitoring may reveal potential infringement or identify emerging design-around strategies that influence future product development or patent filings. Regular review of competitive activity can help inventors make informed decisions regarding enforcement, licensing, research and development.
A tool, not a guarantee
Patents remain powerful intellectual property assets available to inventors. They can deter competitors, attract investors, support licensing efforts and provide meaningful legal remedies against infringement.
However, inventors should recognize that patents do not automatically prevent competition. Competitors may analyze patent claims, pursue alternative designs, develop improvements and seek their own patent protection.
These practices are not a flaw in the patent system. Rather, they reflect one of the system’s fundamental objectives: incentivizing continued innovation while rewarding inventors for their contributions.
Getting a patent and understanding the limits of its protection are equally important. The most effective intellectual property strategies combine strong patent claims, ongoing innovation, thoughtful portfolio development and a clear understanding of how competitors may respond once an invention reaches the marketplace.
Indiana University Maurer School of Law student Carson A. Arnold contributed to this report.
Related Services:
- Patents
- Intellectual PropertyAbout the Author:
Andrea L. Arndt is a member of the Intellectual Property Practice Group at Dickinson Wright in Austin, Texas. She is a nationally recognized intellectual property attorney with extensive experience advising startups, Fortune 100 companies and market leaders on their intellectual property portfolios globally. Contact her at 737-484-5536 or AArndt@dickinsonwright.com.