When your key component is at risk


Many recent businesses are built on software, their key component. This software is then patented to protect the company from competitors providing the same product using their hard earned intellectual effort. The patent is issued by the government giving its owner an effective monopoly over that property, intellectual property.

All this may change. The U.S. Supreme Court has agreed to hear a case that may lead to different criteria for what is patentable and what is only copyrightable. Any change may have a significant affect on a business’s competitive advantage, thus we call this competitive advantage risk.

As pointed out in ROKC, Leadership built on the Return On Key Component, a key component provides a competitive advantage that if high enough can lead to the creation of a viable and robust business. Once the investment has been in made in creating a product and selling it, the company will also have to engage resources to manage the risks inherent in the business. The first and most important risk to cover is that affecting the key component.

In this case, patenting is a way to protect the key component which covers the risks associated with others using that property without authorization or compensation. Although a strong form of risk management, patents need to be maintained and are subject to attacks from competitors. They are strong protection but not guarantees.

The fact that Supreme Court is hearing this case, Alice vs CLS, means that some patents may be invalidated effectively reducing, or eliminating, the competitive advantage they provide to the business and wiping out large amounts of company value.

Like the old saying goes: There are no guarantees in life. Apparently, not even in patents.