The Cost-Benefit Analysis of Patent Protection
Deciding whether to pursue a patent for a technology can be challenging. In addition to a variety of legal considerations, the decision often depends on broader business considerations, such as the relative importance of the technology to a company’s products, the practical and financial feasibility of enforcement, and the anticipated pace of technological obsolescence.
For participants in heavily-regulated industries, this calculus can be further complicated by the involvement of federal regulatory agencies, which may influence the competitive landscape via the regulations they impose.
Recent developments in the firearms industry illustrate the complexities of this dynamic. Two examples in particular—the removal of the federal tax on firearm suppressors and the reclassification of forced-reset triggers (“FRTs”)—demonstrate how regulatory change can quickly transform less-thought-about patent portfolios into valuable commercial assets. And the reclassification of FRTs, specifically, presents a novel intersection between regulatory enforcement and patent rights. That is, the federal government agreeing to settle lawsuits against manufacturers of a technology that it wishes to regulate and, in exchange, those manufacturers agreeing to assert their patent rights related to said technology against their domestic competitors.
Regulation and Its Influence on Technology Competitiveness
Regulatory agencies can influence the competitiveness of technologies in several ways.
- Lengthy approval processes can effectively delay the entry of competitor technologies. For example, the U.S. Food and Drug Administration (“FDA”) and the Federal Aviation Administration (“FAA”) each impose rigorous, multi-year approval or certification processes before certain technologies may be brought to market.
- Limitations on permissible technologies may restrict innovation of competitor technologies. The Drug Enforcement Administration’s (“DEA”) restrictions on the experimental use of Schedule I substances is a prime example.
- Prohibitions and market restrictions may render certain competitor technologies unlawful or limit participation to specific, licensed actors—as seen under the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (“ATF’s”) framework for automatic firearms and the FAA’s oversight of commercial drone deliveries.
Stakeholders in heavily-regulated industries must therefore consider not only whether they can patent a given technology, but also consider when (if ever) a competitor will be in a position to use it lawfully.
Patents Directed to Heavily-Regulated Technologies Remain Valuable, Despite the Regulatory Complexities that Surround Them
Even in industries subject to extensive federal oversight, patents remain a cornerstone of competitive strategy. Sectors such as energy, telecommunications, and pharmaceuticals are marked by complex regulatory frameworks, yet companies operating in these areas continue to prioritize patent protection as a means of securing long-term commercial advantage.
For example, the energy industry often faces strict environmental and safety regulation from agencies such as the Department of Energy (“DOE”) and the Environmental Protection Agency (“EPA”). Despite these constraints, patents directed to renewable generation technologies, advanced battery systems, and emissions-reduction processes routinely serve as valuable commercial assets and attract significant investment. In telecommunications, compliance with Federal Communications Commission (“FCC”) standards has not diminished the importance of patent portfolios—particularly those containing standard essential patents (“SEPs”). And, while FDA approval for a new drug may take more than a decade, patents in the pharmaceutical sector are recognized as among the most valuable and strategically important across all fields of technology.
Lessons from the Firearms Industry: How Deregulation Can Rapidly Elevate the Value of Patents
For those uncertain about the merits of patenting in heavily-regulated areas, recent developments in the firearms industry provide a compelling illustration of how quickly market dynamics—and patent valuations—can shift when regulations are eased. The two following case studies demonstrate how companies that invested early in patent protection were able to capitalize on deregulation, turning previously speculative patents into commercially significant assets.
Case Study 1: The Suppressor Market
Since the enactment of the National Firearms Act of 1934, private ownership of firearm suppressors has required both payment of a $200 tax stamp and submission to an ATF background check. This upfront cost and paperwork artificially depressed consumer demand for nearly a century.
Effective January 1, 2026, Congress removed the $200 tax requirement, maintaining only the background-check provision. The change had an immediate effect: consumer demand for suppressors surged almost overnight, and with it, the value of suppressor-related patents.
Entities that had pursued patent protection during periods of low commercial interest suddenly found themselves holding valuable assets. Indeed, some patent-holding stakeholders in the suppressor market began asserting patent rights in connection with emerging suppressor technologies, such as 3D-printed suppressors, through publicly posted cease and desist letters.
This episode illustrates that patenting in low-demand, highly-regulated environments can yield significant rewards when regulatory barriers are lifted.
Case Study 2: Forced-Reset Trigger Technology
A second illustration comes from manufacturers involved in the development of forced-reset triggers (“FRTs”), devices which enable rapid trigger resets and thereby increase firing rates.
In 2022, the Department of Justice (“DOJ”) filed suit against manufacturers of FRTs, alleging that FRT products constituted illegal machine gun parts under the ATF’s interpretation of the National Firearms Act. Despite the possibility that FRT technology could be deemed unlawful in its entirety, some manufacturers continued to actively file and prosecute patent applications covering FRT innovations.
That strategic persistence proved prudent. In 2025, the DOJ reversed course and decided not to enforce the National Firearms Act against FRTs. Accordingly, demand for newly re-legitimized FRTs has resurged sharply. Those who maintained active patent prosecution throughout the uncertainty will likely emerge with valuable assets that can be enforced against competitor technologies, much like those for the suppressors discussed above.
The DOJ’s deregulation of FRTs also presented a novel intersection between regulatory enforcement and patent rights, which will require further consideration from stakeholders in heavily- regulated industries going forward. Specifically, as part of settling its lawsuits against FRT manufacturers, the DOJ required those manufacturers to enforce their FRT patents against domestic competitors—effectively deputizing the manufacturers to regulate FRTs on the ATF and DOJ’s behalf.[1] Accordingly, stakeholders in heavily-regulated industries should begin considering the U.S. government’s willingness to make certain patents central to its desired regulatory scheme and the perceived value that may flow therefrom.
Once again, this episode illustrates that patenting in low-demand, highly-regulated environments can yield significant rewards when regulatory barriers are lifted.
Strategic Takeaways for Innovators
The experiences of the firearms industry underscore a broader principle: patents often become most valuable when regulatory barriers decline.
For entities operating in regulated markets several strategic considerations emerge:
- Identify emerging or “fringe” technologies that may soon be subject to deregulation or relaxed oversight.
- File proactively to secure patent rights in these technology areas with limited current competition.
- Monitor legislative and administrative developments to anticipate potential shifts that could rapidly expand market access.
By investing early in patent protection for technologies positioned at the periphery of regulation, companies can establish defensible positions that become central, and highly valuable, once the regulatory environment evolves. In some instances, as illustrated by DOJ’s settlement with manufacturers of FRTs, certain patents may even become central to the overall regulatory scheme.
Conclusion
Patent strategy should not be viewed solely through the lens of current market conditions. As recent developments in the firearms industry demonstrate, regulatory change can transform speculative IP assets into significant commercial opportunities almost overnight.
[1] Settlement Agreement between Rare Breed Triggers, LLC et al. and the United States (May 13, 2025), p. 5 (“[Claimants] . . . agree to take all reasonable efforts to engage in patent enforcement seeking prohibitory injunctions against any person of entity that manufacturers, sells, or distributes any FRT during the life of U.S. Patent No. 10,514,223 patent [sic], provided [Claimants] have a good faith argument that the device is within the scope of the patent.”) (available at https://gunrightsfoundation.org/wp-content/uploads/FRT-Settlement-Agreement-FINAL.pdf).
