Every company wants to innovate. We have all heard the stories about the engineer who stumbles onto something remarkable in the lab, or the sales team member who devises an ingenious workaround that saves millions. But most companies have no systematic way to capture, evaluate, or protect these moments when they happen. They treat innovation like serendipity — nice when it occurs, but not something you can plan for.
That is where invention disclosures come in. If you are responsible for R&D, product development or strategic planning, understanding invention disclosures is not just about checking an IP box. It is about building a repeatable process that turns good ideas into business value, and knowing when to walk away from ideas that will not.
The stakes are real. Protected inventions (patents, trademarks, trade secrets) represent some of the most valuable assets on a company’s balance sheet, even if you do not think of your business as a technology company. As of 2020, intangible assets accounted for approximately 90% of the market value of S&P 500 companies, totaling over $21 trillion. Procter & Gamble, a consumer goods company founded in 1837 that sells soap, diapers, and toothpaste, holds over 103,000 patents globally and identifies intellectual property as among its most valuable assets. Your inventions matter, if you protect and commercialize them strategically.
But here is the uncomfortable corollary: most patents never generate revenue. Research suggests that only about 40% of patented inventions ever reach market launch and mass production. Some estimates put the commercialization rate as low as 5% for patents held by small inventors. This is not a reason to avoid patents. It is a reason to be disciplined about which inventions you pursue and to have a process that helps you identify the right opportunities early.
What Is an Invention Disclosure?
An invention disclosure is a written description of an invention that explains what it is, how it works and what problem it solves. Think of it as the technical birth certificate for an idea. It is not a patent application, it comes before that decision.
The critical word is “how,” not “what.” A good disclosure does not just describe what the invention does; it explains the specific mechanism or approach that makes it work. Patent attorneys call this “enablement”, the kind of detail that would allow someone skilled in the field to actually make and use the invention. Without it, you do not have an invention; you have a wish list.
An invention disclosure also forces your organization to ask uncomfortable questions early: Is this actually novel, or has someone else already done it? Does it solve a real problem worth solving? Can we protect it in a way that creates value? That early discipline saves significant time and money.
More importantly, capturing disclosures preserves your options. Once an invention is publicly disclosed or offered for sale, you typically have one year under U.S. law to file a patent application, and in many foreign jurisdictions, the window is shorter or nonexistent. Miss that deadline and your rights are gone. A good disclosure process ensures you are not inadvertently forfeiting valuable IP because no one bothered to write anything down.
The Decision Framework: Four Questions Worth Answering
Once you have an invention disclosure in hand, the real work begins. You need a framework that takes into account legal, business and technical factors together. Here is what to ask:
1. Is there a real, unmet need here?
The first question is deceptively simple: does this invention solve a problem that matters, one that customers will pay to address, or one that creates competitive advantage worth defending?
Too many companies fall in love with elegant technical solutions to problems no one cares about. This is where honest internal assessment matters. Talk to your sales team and your customers. Understand what actually causes pain.
The Gatorade story is instructive here. In 1965, Dr. Robert Cade, a University of Florida professor, developed a drink to help athletes rehydrate. He offered the invention to the University, which, notably, had no IP policy requiring inventor assignments, either for $10,000 or in exchange for help with production and marketing. The University declined, saying they were not in the soft drink business. No one seriously evaluated the commercial potential. The University later sued, eventually settling for 20% of royalties, more than $280 million over time, but a small fraction of the $1.1 billion the inventors’ trust received, and a sliver of the total revenue Gatorade has generated. The lessons are two: assess carefully before you walk away from an opportunity, and have your IP policies in place before the invention happens.
Even when a need is genuine, fit matters. Does addressing this need align with your capabilities, your customers and your channels? A brilliant invention that requires building entirely new infrastructure and distribution may be better pursued by someone else, or licensed rather than commercialized directly.
2. Can you protect it in a way that creates real value?
The goal is not just securing a patent, it is securing meaningful protection. That requires understanding prior art, competitive positioning and which form of IP actually fits your situation.
Start with prior art. Has someone else already invented this? Have they published or patented something similar enough that your invention lacks novelty? Prior art searches are not just about avoiding rejection, they map the landscape. If there are dozens of similar patents, you may still carve out a narrow claim, but it is worth asking whether narrow protection justifies the cost.
Study what your competitors are doing. Patents are public documents. Are competitors filing aggressively in this space? Are they building thickets to block entry? Understanding their IP strategy will tell you whether you are entering an open field or a minefield.
Then ask whether IP protection will actually drive or protect revenue. Some inventions are best protected as trade secrets, Coca-Cola’s formula being the obvious example. Others require patents because competitors will reverse-engineer them the moment they reach the market. The right choice depends on whether you can keep the invention secret, how easily it can be reverse-engineered, and whether formal protection will meaningfully deter competition.
Sometimes the value of a patent is purely defensive. If competitors are accumulating IP arsenals, you may need patents not to assert them, but to ensure that any attack on your position carries real cost for the attacker.
3. What is the market actually worth?
You need numbers. What is the market size? How fast is it growing? How long will this opportunity last? This is not about optimistic projections. It is about understanding whether an invention can generate returns that justify the investment.
Market analysis also means studying failures. Who else has tried this, and why did they fail? Are conditions different now, or are you about to repeat someone else’s expensive lesson?
That analysis feeds into financial modeling. If you are considering licensing, what is a realistic royalty rate? If you are commercializing directly, what does the payback period look like? A rough model beats no model.
4. Does this fit your broader strategy?
Even an invention that checks all three boxes above still needs a strategic home. Does it deepen what you already do well, or extend your reach into adjacent markets? Can it be sold to your current customers with minimal friction, or does it require building new go-to-market capabilities?
And consider the denial question: if a competitor develops this first, how much does it hurt you? Sometimes the value of an invention is not in the revenue it generates, it is in the competitive ground it protects.
What Happens After You Decide to Pursue It
If the analysis points toward proceeding, a few things need to happen quickly.
Assign clear ownership.
Invention disclosures die in committees. Someone needs to own the assessment and the outcome, with the resources and authority to move it forward.
Follow a structured process.
Most organizations use some version of stage-gate methodology: proof of concept, market validation, scaled production. The specifics vary, but the underlying logic is universal — de-risk the invention incrementally rather than committing fully before you have tested your assumptions.
Integrate IP strategy from the start.
Do not wait until you are ready to launch to think about patents. By then, you may have already disclosed too much or missed filing deadlines. Early IP analysis should shape your product development decisions, not follow them.
The Policies and Culture That Make This Work
None of this functions without the right foundation.
Confidentiality.
From the moment an invention is disclosed internally, protect your options. That means confidentiality agreements with anyone who sees the disclosure, careful controls around external presentations, and a clear understanding of what constitutes a “public disclosure” under patent law. Once information is public, you cannot pull it back.
Incentives and culture.
If you want employees to submit invention disclosures, create an environment where they are rewarded for doing so, and where failure to commercialize an idea is not treated as failure on the part of the inventor. Acknowledging the effort, even when an invention does not move forward, encourages future disclosures.
A written IP policy.
If intellectual property matters to your business, and for most businesses it should, you need a clear written policy. At minimum, it should address who owns inventions created by employees, what the scope of that assignment is, how disclosures are submitted and reviewed, and what protections are in place for trade secrets. Without a policy, disputes are not a matter of if, they are a matter of when.
The Bottom Line
Invention disclosures are not glamorous. They do not generate the same excitement as a product launch or a patent grant. But they are the connective tissue between a moment of inspiration and a defensible business asset.
The companies that manage IP well do not rely on luck. They build processes to capture ideas when they happen, frameworks to evaluate them honestly and cultures that encourage people to keep thinking past the next quarter. They know when to invest and when to walk away, and they do not forfeit valuable IP simply because no one wrote anything down.
If your organization does not have an invention disclosure process, or has one that no one uses, the risk is not just missed opportunity. It is the slow erosion of competitive position that can take years to recognize and is very difficult to recover. The good news is that the fix is straightforward, and the value it unlocks is often already sitting inside your organization, waiting to be found. To discuss how your organization can better identify, protect and commercialize its ideas before opportunities are lost, contact KJK partner Ted Theofrastous (TCT@kjk.com).