Question

Intellectual Property is an interesting discussion, so here is the dilemma, patent or "first to market"? Explain.

Tell me the pros and cons of each.

Answer 1

The patent or "first to market"; it will depends on the objectives of business. The intellectual property is of course very significant however the patenting can be very expensive. Protecting your idea is extremely difficult because it is difficult to quantify the true value of invention and moreover how costs will be recouped. In my opinion the first to market is a much better option for protection compared to a patent.

The first mover’s advantages include:

-- Time for developing the economies of scale, thus the cost-efficient approach in the process of production or delivering a product.

-- Helps to tap into the potential consumers first and gives strong impression that results lead to brand loyalty and brand recognition.

-- Establishment of the product according to the industry standard

-- It allows for the resource control, such as establishing a premium contract with hiring talented employees or key suppliers.

-- Can enjoy an advantage when there it is inconvenient or high switching cost for consumers to switch to the new brands who are later entrants

The first mover’s disadvantages include:

-- The disadvantages of first movers include the risk of products being improved or copied upon by the rivals in the industry. The eBay and Amazon are examples of those that enjoy first-mover status

-- The new brands who are later entrants can avoid mistakes made by the first mover.

-- The later entrants would not have to spend as much on educating consumers as it has already done by the first entrants

-- New brands can reverse-engineer new items and it will make them cheaper or better

-- The new brands can identify improvement areas left uncovered by the first mover and take gain of them.

The patent advantages include:

-- It provides a protection for a pre-determined time frame, allowing the rivals to be at bay.

-- Patent gives a right to stop others from manufacturing, copying, selling or importing the invention without the permission of the business

-- Business can license the patent for others to use it and thus gives a source of revenue

The patent disadvantages include:

-- It makes the certain technical information about business invention available publicly which is not a good sign

-- The process to apply for a patent is very expensive, lengthy process and time-consuming

-- The business is required to pay an annual fee thus adds to expenditures of the business

-- It is difficult to deal with the infringers