You own or run a niche business that makes value-added products. Yes, that still happens in America, the Number 2 manufacturing country in the world, according to a comprehensive new study by the Congressional Research Service. (Read further for details.) American manufacturers spend far more on R&D than any other country in the world. What’s more, you’re probably improving your products without even calling it R&D—without looking for “inventions”—without thinking about intellectual property (IP).

You might make and sell electronic medical records software (services), or high end motorcycles, or offshore oilfield equipment, or any of a hundred other products. Your people are coders or engineers or just smart folks. You know your field and your customers and, above all, you know your products inside out.

You’re the expert in your field

To satisfy your customers and stay a step ahead of your competition, you’re constantly making improvements. What’s needed to solve the customer’s latest need? Your people figure it out. You make your products better. As you climb each step, you look back at the previous step, and you say, “It wasn’t that hard.”

Smart people fail to recognize their inventions

Ironically, the smarter your people, the less likely they are to recognize their own inventions. I get calls every day from dreamers with an “idea,” but I rarely meet an engineer who calls herself an inventor. Coders almost never think of themselves as inventors. And “just smart folks” think they’re under-qualified, even though the U.S. Patent Office does not require an inventor to have any technical education whatsoever.

USPTO sealThe real question is this: “Would it have been obvious to anyone else?” That’s the legal standard to get a patent.

It took years for your people to put their finger on the problem, and another few months to develop the solution. What looked easy on Day 1 turned into a real project. Often you’re working with customers or vendors—who may see themselves as the inventors—watch out.

Now that you have the solution, your people say, “Of course.” In hindsight, it’s obvious to them. They don’t want to blow their own horn. In their minds, they just applied their knowledge and skill to solve the problem in front of them.

A mindset of inventor modesty is one of lost opportunity—it fails to recognize the value added for the customer—and that mistake is more costly than pouring money down the drain.

Your customers love your products and they shop for price

You roll out the vastly improved product with only a small increase in price. The customer loves it. Then they say, “I can get a better price.”

They take your new product, and they shop for quotes. They beat you up.

To meet the competition, you lower your price until all the profit is gone. Or worse yet, you lose the customer to someone who can “do it cheaper.”

If you’re tired of competing on price, here’s a simple solution: Protect your intellectual property (IP). The surest way to not get a patent is to not file a patent application. This truth is explained, along with three other reasons why your patent may not issue, in my recent blog. Tip: To get a patent, you must file for one, and even better, do it right.

PatentBy the way, just as the product you make is better than a knock-off, the same principle applies in the field of patents. You don’t get a patent by filling out a form, adding a cover sheet, and sending in two box tops and a self-addressed envelope.

International manufacturing and patents

Concerned about international competition? You should be. In 2010, China passed the U.S. as the world’s largest manufacturing country. U.S. is close behind, in second place, though China is expanding its lead. Japan, Germany and Korea fill out the top five. See study by Congressional Research Service.

Those same five countries (counting Germany as primary home of the European Patent Office or EPO) also account for most of the world’s patent applications, according to IP5 statistics. Is your head in the sand? Better look up, because more than half of all U.S. patents are being issued to foreign applicants, according to Inc. magazine and the U.S. Patent and Trademark Office. If your foreign competitors are filing for U.S. patents, maybe you should be, too.

To make money, patent your technology

When you’re ready to make money on your new improved products, get started protecting your proprietary technologies with good strong patents, agreements, and other IP rights. And do it sooner rather than later.