This week, I am using the IP Maximizer Blog to let readers know about an exciting upcoming IP Strategy event. My fellow IP Strategist, Jordan Hatcher, and his team at ipVA and colleagues at ExponentIP are working with Managing IP to provide a free webinar on IP Strategy in Europe on February 26, 2009 at 9 am EST. (I understand it is also going to be recorded.) I am very excited about this program because, as someone who advises on worldwide IP strategy, I am sure the insights provided in this webinar will elevate my knowledge and allow me to provide enhanced advice to my clients regarding IP protection in Europe.
Some might wonder why I am so looking forward to learning more about strategic IP outside of the US, so I will give some background.
By counting a number of many multi-national companies as clients in the course of my years as a patent prosecutor, I was fortunate to gain substantive experience in patent law in many foreign jurisdictions. (This is not necessarily common for US patent attorneys who tend to focus primarily on US clients or foreign clients needing US patent services to support their US operations.) Notwithstanding this experience, it always seemed difficult to know whether the non-US focused strategy I was recommending for my clients was indeed the right one because most foreign associates with whom I interacted clearly did not understand my clients’ business objectives. In truth, these foreign associates typically acted as conduits to the respective national patent offices in which they practiced. I did not expect substantive business advice from my foreign associates, nor did they expect to be asked–their job was to take my instructions and file the papers as instructed by me or my client.
On rare occasions the foreign associates did get to show their mettle by addressing a legal issue that was unique to their national laws. But, typically, they retyped my instructions into the local language, and charged me and my clients handsomely to do so. The value-add on our end to hire expensive non-US patent practitioners was that they could potentially spot the unique issues that occasionally arose to provide a further measure of legal protection for our clients. I have no doubt, however, that my clients wasted immense sums of money by not fully understanding the type of protection available in the foreign countries in which we were filing and prosecuting expensive patent applications that did not support their business objectives in that jurisdiction.
As someone who believes there is a profound need for improvements in the way that IP and patent services are provided in the US, it is affirming for me to find out that there are others outside of the US, like Jordan and his colleagues, who are also working to effect change in other countries. I look forward to collaborating with Jordan to continue to bring the model of IP Strategy to forward-thinking companies and entrepreneurs throughout the world. And, as I am sure Jordan will agree, we welcome others who wish to join us in our endeavor to reshape how people look at IP.
Failed IP protection strategy can be extremely costly
A SVP at a large consumer products company recently expressed frustration that he cannot bring a patent infringement lawsuit even when his company holds 18 US patents (and many other foreign patents) on a product that closely resembles a competitor’s product. His annoyance is compounded because his company spent several years developing the product and technology covered by the patents. His company also spent several $MM introducing the product, which turned out to be a failure. The company removed the product from the market after several months, but the many patents remain in the portfolio today, and are still being maintained at considerable expense. I estimate that the patent protection for this failed product cost as much as $500K for patent coverage worldwide.
Significantly, the product did not fail due to quality or performance issues. Rather, it failed because it was over-engineered and used many expensive ingredients, a fact which made the plastic product too costly for the target consumer market. The competitor’s knock-off product has been successful because they have removed much of the cost from the product by using less expensive ingredients, while still being able to maintain its desirable performance aspects. Of course, the SVP’s company provided the competitor with a road map for product development: consumers desired the product but just not at the higher cost. With much of the cost removed from the product due to reformulation of the plastic composition, consumers have clamored for the product. The competitor’s path to success was thus both less expensive and less risky, which significantly improves the ROI of their product development process.
So why can’t the SVP go after the competitor by suing on one or more of the 18 US patents for which his company paid so dearly? Quite simply, the patents cover the INVENTION not the INNOVATION. The difference is subtle, but critical. The invention centered on the plastic composition of the product, that is, how much of each ingredient was present and how that composition manifested in the finished product. In contrast, the innovation centered on the performance of the product, irrespective of the plastic composition. The product was innovative (and desirable to the consumer) because it performed in a way no other product ever had before. When the competitor was able to extract the same performance from a much lower priced composition, the product not surprisingly experienced market acceptance. Continue reading
Change the way you look at legal services
As legal service fees continue to rise five percent or more year after year, corporate IP managers, such as Chief IP Counsel and the like, continually face pressures from their management teams to reduce outside counsel legal expenses. The current economic downturn has also resulted in corporate legal budgets being slashed, thus increasing the pressure on corporate IP managers to reduce outside counsel costs, even while IP asset value is becoming more important to C-level management. As a result, the need for corporate IP managers to achieve outside counsel fee relief while at the same time maintaining IP legal service quality is more acute than ever today.
Today, there are a number of commonly accepted methods to achieve outside IP counsel fee relief including fixed (or “capped”) fee arrangements and a percentage reduction per total hours billed, as well as electronic billing systems set up to automatically audit law firm bills. For corporate IP managers, adoption of one or more of these methods certainly provides a perception of immediate relief. A corporate IP manager’s task of negotiating with his outside IP lawyers regarding legal service fees nonetheless amounts to nothing more than “pushing the same rock up the same hill” because the same conversation will invariably occur again and again. Significantly, existing models of outside IP counsel fee relief focus primarily on modifying the way the law firm bills its corporate clients. In working within the law firm legal service paradigm, however, only incremental improvements are possible because only so much cost can be removed from this legal service model.
In reality, corporate IP managers do not need improvements in the way IP law firms bill them for legal services. Rather, these clients need improvements in the way their IP lawyers deliver legal services to their corporations. If such improvements ultimately emanate from a group of lawyers collectively practicing in an entity known as an “law firm,” then that group of IP lawyers should be looked at as providing innovative solutions to their clients’ IP legal service needs. But if these improvements come from IP lawyers working outside of the traditional law firm model, corporate clients seeking truly innovative solutions to ever-rising IP counsel fees should not be afraid to try such new models. Continue reading