Submarine patent

A submarine patent is one that the holder does not draw attention to, even when aware that it is being infringed, in the hope that it will be possible to extract more money from unwitting users of the patented idea when it becomes more widely used.

A patent may have a relatively low value when first granted. However if the idea becomes very widely used, its value may be greatly strengthened by network effects.

The problem the patent holder faces is that if they demand royalties from the start, it may never take off - potential licensees may be able to easily work around the patent. This will mean it will never benefit from network effects.

The solution is to keep people unaware of the patent. This means not enforcing the patent, or even talking about it, and hoping that patent searches miss it (likely due to the huge volume of patents in force). Once the idea is widely used and entrenched by network effects, the patent holder can then start collecting royalties.

Deliberate use of this technique is likely to mean the patent holder is regarded as a patent troll, but it can be very profitable.

Submarine patents may also come about accidentally. A company may not realise that a particular patent has value outside its own industry, and only realise the application when the idea in question is already in wide use elsewhere.

Defensive patents can help protect against submarine patents, but not against a patent troll or a company in another industry (or otherwise unaffected by a defensive patent portfolio).

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