Home / Business investment Articles / Investment And Intellectual Property: Patent(S) Pending

Investment And Intellectual Property: Patent(S) Pending

Intellectual Property

Any inventor can protect unique ideas, suggestions, designs and products. The main advantage of having IP rights are to protect the inventor in case of conflicts of interest or while sourcing external funding from investors. Knowledge transfer happens when the research institutions collaborate with companies for utilization of knowledge and expertise. Here, it is imperative that there is appropriate and effective use of IP rights at domestic and international levels. There are 4 types of Intellectual Property (IP) rights:

  • Patents protect the processes and products that are unique
  • Trade marks protect logos and brand names that enable the competitors to distinguish in the marketplace.
  • Designs protect the appearance of the product
  • Copyrights are automatic rights for any work that is written or recorded in any manner

Confidentiality agreements or non-disclosure agreements (NDAs) protect the secrets of the trade including business plans and strategies while discussing with potential manufacturers, investors and business partners. NDAs are suitable in pre-patent discussions. The UK Intellectual Property Office provides a sample NDA for standard and simple situations.


The Government offers certain rights to the inventor to protect the product and the inventor. The patent is a legal agreement that any one who wants to copy the product must pay the inventor a license fee for the product. The patent offered becomes the exclusive right and property of the inventor; no individual or company can therefore duplicate the product. A patent will avoid unauthorised copying or manufacturing of the product. A patent will thus prevent theft of your invention and will earn additional income for the inventor.

Patent Pending

The inventor is required to send claims, abstracts, application fee and search fee within a year of filing for patent approval. The application is published after 18 months in the event that all requirements are met. A typical patent application can take 2-3 years for approval and can extend to 41/2 years from the date of filing. In case of the product being environment friendly, there can be a quick approval. Patents are renewed every 20 years.

The inventors are interested to market their inventions without waiting for a patent approval. In such cases, they can mark their product with a patent pending label. This is an indication to others that the product will receive a patent shortly. The product can be manufactured using this patent pending label but production must be stopped in case of a patent refusal. Any application granted will protect the invention since the date of its application. Upon receiving a patent, the inventor can replace patent pending with the official patent number.

An individual or company can legally use this term ‘patent pending or patent applied for’ when they have filed an application with the Intellectual Property Office. They are an official government body responsible for granting Intellectual Property (IP) rights in the UK. Any potential infringer become liable for damages once the patent is issued. The competitor can take advantage and sell this product only until the patent is granted.

Fraudulent use of the ‘patent pending’ label is prohibited and in the UK, a warning notice will mention the number of the patent pending application. According to the UK Patent and Copyright Laws, the fraudulent person or company using a patent pending label becomes liable to a large fine or even a custodial sentence.

Uses of Patent Pending

Patent pending enables the inventor to apply for external funding The mortgagor has access to a legal right to the patent until the loan is repaid in full.

Patent pending allows the investors to place their financial resources at a calculated risk.

Patent pending is a critical factor in obtaining funds especially venture capital. It mitigates risk on capital investment and offers a stability feature.

Patent pending accounts for appropriate knowledge transfer among the business partners and research institutions.

Patent pending enables the inventor to market his invention with the notice that the product is due for patent approval

Enforcing Patent Pending

  • Displaying patent pending may deter people from copying a product that is due approval
  • UK patents will only protect your IP rights in UK. You may have to apply for patent in Europe or for worldwide patent
  • Disputes can be resolved when the patent pending label has been utilised and the patent granted from the date of filing.
  • Certified copies of patent pending applications help avail a mortgage or market his invention

Venture Capitalists and Patent Pending

  • Firms and start up entrepreneurs find funding a major hindrance to their objective. They access funding from banks and Venture Capitalists:
    • Require details regarding the invention or innovation that is patent pending
    • Analyze its advantage in the market place
    • Check for a competitive edge
    • Evaluate the ability of the entrepreneur to commercialize the product This study will help them to maximize their return on investment at a lower risk. They analyze market, financial, technological and managerial risks before investing time, money and resources. NDAs and IP rights like patent pending reinforce their decision in financing.
  • Patent pending will thus stimulate capital, stabilize the market and thus influence the availability of venture capital.
  • Appropriate use of patent pending label can contribute to higher rates of return and thus attract investors to finance.
  • Patent pending can avail a carefully weighed economic value if assessed as an intangible asset by the venture capitalists.
  • Venture Capitalists also consider the security of patent pending and other IP rights as a vital issue. They even consider all the costs pertaining to protecting the same.
  • Patent pending is crucial to a highly global and competitive market. This has stimulated the need for IP development and the respect for IP in the financial market.
  • Patent pending leads to an availability of additional venture capital.
  • Support from venture capitalists who gain potential returns on their investment has encouraged inventors leading to further innovation and growth in patent pending.
  • Increased patent pending and a respective increase in venture capital investment will increase the overall economy of the country
  • Patent pending and a resulting gain in venture capital investment will aid further research and development for the benefit of the society.