How buyers can negotiate smarter with 'monopolistic' suppliers

In the world of procurement negotiations, usually, the buyer takes the lead, but that can quickly change if the supplier claims to have a patent. For many buyers, a patent means that the room for negotiation is suddenly significantly reduced. After all, the supplier seems to monopolize the product or technology, forcing the buyer to accept the fixed price. But what many buyers don't realize is that with a few simple clicks of the mouse, they can check whether that patent holder is really a monopolist.

It is wise to always check a claim to a patent, especially if the supplier uses it to justify their price. When I worked at Océ, I usually took such claims to be true. After all, the list of approved suppliers had been carefully compiled after an extensive selection procedure. But fortunately I now know better: these kinds of assumptions can significantly weaken your negotiating position.

If a supplier claims a patent, there are some simple but effective steps you can take to verify the claim and strengthen your negotiating position.

1. Ask for the patent number

This may sound obvious, but it is crucial. Ask the supplier for the patent number. If the supplier claims the patent is still secret, alarm bells should ring. This is because patents are always public as soon as they are issued. You can quickly check the patent in public databases such as Espacenet of the European Patent Office or the patent register of Octrooicentrum Nederland. These databases not only provide insight into the patent information, but also whether the patent is actually in the name of the supplier.

2. Check whether the patent is still in force

A patent is not eternal. It usually expires after 20 years; to maintain it, the patent holder must make annual payments. If these payments are not made, the patent expires, and the supplier loses its monopoly. Moreover, a patent is often only valid in one country. A Belgian patent, for example, gives no rights in the Netherlands. So, checking in which countries the patent is active and whether it is still in force is crucial.

3. Analyze whether the product is covered by the patent

It often happens that a product that is brought to market is no longer fully covered by the original patent. In lengthy development processes, patents are often filed early, but later, significant changes to the product may cause it to no longer be fully covered by that patent. As a purchaser, it is worth investigating this, especially if the purchase value is large.

4. Investigate whether it is possible to work around the patent

In some cases, it is possible to work around the patent with minor modifications. This may mean you can use the same or similar technology without the limitations of the patent. Exploring these possibilities can save you money and strengthen your negotiating position. If you can show that the patent is not an insurmountable obstacle, you may still be able to buy from the same supplier, but at a lower price.

In short, by examining and challenging the patent, you can gather strong arguments that significantly improve your negotiating position. You don't always have to settle for the imposed price. With a little research and the right questions, you can make smart decisions and potentially save quite a bit of money.

So be smart and use these tips to regain control of negotiations. This can not only help you get better deals but also increase your value as a buyer within the company.