Why would a firm seek a patent?

A firm would seek a patent primarily to ensure recovery of costs before competition arises, making it possible to capitalize on their innovation without the immediate threat of competitors imitating their product or process. When a firm patents an invention, it gains a legal monopoly on that specific product for a defined period, often around 20 years. This exclusivity allows the firm to set a price that can cover the research and development expenses, production costs, and any marketing investments made during the innovation process.

By protecting their invention, the firm can generate profits and establish a return on investment, ideally recouping the costs incurred during the development phase before any competitors enter the market with similar offerings. This incentive is crucial, particularly in industries where R&D expenditures are substantial, and the risk of competition can be high.

While reducing competition and preventing leakage of trade secrets are also valid motivations for seeking patent protection, their focus is more on long-term strategies and security rather than the immediate financial recovery. Guaranteed market share endlessly is not realistic, as patents expire, making it necessary for firms to continually innovate to maintain their competitive position.