Strategic Patenting Part 3: Why (Almost) Every Innovator Fails to Maximize Patent Value

The Take Away:  Those seeking to generate market-making patent coverage for new innovations must recognize that patent coverage should focus not on how the problem is solved but instead on the benefits provided to the customer.  Most patent coverage is directed to a specific solution to a customer need that is characterized in the form of an invention.  Patents that cover only one solution to a broad customer need will permit competitors to solve the same customer need with a non-infringing substitute product, thus leaving the patent holder with no legal recourse against their competitor.  On the other hand, market-making patent coverage focuses on the benefits provided to the customer, which means that competitors cannot sell the same benefit.  Accordingly, patent coverage that emphasizes benefits over features will make it more difficult for competitors to provide the same solution to the customer.  Innovators must heed this warning or they will end up being one of the many examples of companies that innovated to successfully solve a consumer need but that did not successfully prevent others from competing in the same market. The Long Story:  As I discussed in a previous post in this multi-part series on Strategic Patenting, those of us Continue Reading →

Strategic Patenting Part 1: Why So Few Patents Create Real Value

Many business people are surprised to find out that all patents are not created equal.  A recent study of Fortune 500 companies reported in Suzanne Harrison’s Edison in the Boardroom Revisited indicates that only a very small number of patents–namely, 5%– obtained by these top patent filers created strategic value for their owners.  If only 5% of the most sophisticated companies, all of which have veritable armies of patent professionals on their teams, can get patent protection right, it must follow that less resource-rich companies have an even lower probability of gaining strategically valuable patent protection.  This and the next few blog posts will aim to help improve the odds for business people seeking to learn how to generate more valuable patents. The first issue to clear up is what “strategic patenting” means.  Those of us in the IP Strategy business define a “strategic patent” as one that is “market making.”  In other words, a “strategic patent” is one that effectively prevents a competitor not only from making the same product, but also from playing in the same market space.  When a company holds a strategic patent, the competitor must expend efforts to innovate around the incumbent patent owner, which is, at a minimum, Continue Reading →

Do Startups Need Patents? Rigorous Study Presents Real Data on Startup Company Patenting Behavior

As an IP Strategy advisor, I am often asked by the leadership of startup companies what the return on investment is from patenting.  While I can confidently provide recommendations as an expert, my opinions are anecdotal based on my almost 20 years experience as an IP professional.  Certainly, I have advised a number of startup companies over the years for which comprehensive patent coverage was critical to financial and market success.  On the other hand, I have advised a much larger number of startup companies over the years where patenting made little difference to their fortunes. The subjective nature of IP advice holds for other patent professionals.  Our respective years of experience results in tacit knowledge that becomes “expertise.”   This expertise guides clients to us for advice and allows them to trust in our counsel.   Missing from my knowledge base–as well as that of my IP attorney peers–have been data-driven assessments of whether, when and to what extent patents really matter to start up success. Similarly, startup companies are typically inundated with the advice of peers, mentors and investors about whether patenting is recommended in a particular business situation.  Such non-specialist expertise is even more fraught with subjectivity Continue Reading →

Presentation: IP and Patent Strategy for Business Value Creation–The Good, The Bad and The Ugly

While postings have not been frequent in 2013, I have nonetheless been very busy with my IP Strategy counseling and speaking engagements.  In 2014, I will commit to being much more diligent in updating my blog with relevant content for those seeking to use IP and intangible asset strategy to create and maximize business value.  In the meantime, here is the deck from IP Strategy Overview I presented at a conference of innovators at Georgia Tech’s College of Architecture in October 2013.  The summary is below the presentation.  (To view the Slideshare presentation you view the full post in IP Asset Maximizer Blog.) This deck includes the basic overview of IP (patents, copyrights, trademarks, trade secrets).  However, this presentation goes beyond the usual lawyer-generated content to highlight not only the positive business aspects of IP, but also to give a reality check as to the likely ROI of investment in protection.  Additionally, commonly overlooked forms of intangible asset business value are highlighted.  A case study of a poorly designed and executed IP protection strategy where a significant (and arguably disruptive) innovation is highlighted. Recommendations for business relevant IP and patent protection strategies to create and maximize business value are also Continue Reading →

Enhancing Innovation ROI by Adding Patents at the Front End: Some Resources

A new client has asked for some information on how consideration patents and IP at the front end of the innovation/product development process can enhance business value.  Readers of this blog might find this material informative, also. This is a published article from Innovation Management article entitled “How to Improve Innovation ROI with Early Stage Patent Expertise.”  In this article, I discuss how IP can help orient innovation teams in a direction that can enhance value capture.  Practical steps to implement such a program into innovation processes is included in this article. Here is a YouTube video that explains my process simply.  In short, including IP at the front end of a company’s innovation process allows one to enhance their calibration with respect to the IP rights of others to better ensure that they will achieve the desired ROI on innovation investment. This blog post describes how a large company failed to capture the full value of its deep investment in a new product innovation.  These folks (the name has been changed to protect the not-so-innocent) failed to grasp that their innovation was not a product, but a customer solution.  This first-to-market Fortune company did not understand that the customer Continue Reading →

Hey “Patent Experts”: How Do You Like Groupon’s Patent Now? *Crickets*

Yesterday’s announcement of the firing of Groupon’s CEO and the hope for a rebirth of the company’s business model brought to mind a post that I wrote a couple of years ago railing against the self-interested opinions of “patent experts” on why Google offered $6 Billion for Groupon in late 2010.  Re-reading the post in the rear-view mirror, it is more clear than ever that Google made the offer for the precise reason I set out below in December 2010: Google, and other acquirers, buy business models, not patents.  As we strategy-focused IP people have been saying for years, a patent is worthless unless it covers a viable business model–either yours or one you want to own.  Google is interested in Groupon because it offers them an established business model in an area that fits into their long term business strategy.  Are the patents nice to have? Of course, but if Groupon didn’t have the patents, Google would still want to own them, and likely for a price in the same neighborhood as it bid.  At the end of the day, the Google’s offer for Groupon was a “build vs. buy” decision:  Google ran the numbers and believed that it would make more money buying Groupon than by building something Continue Reading →

Do Patents Matter? Lean Startups Should Ignore Expert Advice and Let Their Data Drive Patenting Decisions

Many hold strong opinions on the value of patents to business.  Both in person and online, there are any number of “experts” who stridently insist that without patent protection, a company’s business goals are doomed.  With about 350,000 new patent applications filed in 2012, there is no question that many agree that patents create, and are even critical to, business value.  But, as the 2012 US presidential election cycle demonstrated, actual data can illuminate how expensive experts are often flat out wrong.  So where’s the “real data” that will allow business people to know whether a patent is the right decision for their company?   This information is likely even more critical for startup entrepreneurs, most of whom have no choice but to rely on self-interested expert opinion regarding the value of patents to their business. Entrepreneurs who follow Lean Startup Methodology understand that decisions must be driven by validated data, not beliefs or opinions.  It would be great if a source of data existed that could illuminate whether and in what circumstances patents matter to new business ventures.  Unfortunately, little information exists regarding the return on investment businesses of any size typically can observe from investment in patents.  There Continue Reading →

Lean Startup Methodology: How Patenting Decisions Fit into this New Business Framework

  One of the first questions start up entrepreneurs usually ask sounds something like this:  “Is it worth the effort and expense to get a patent on this business idea?”  In countless conversations with clients in my years as a patent attorney, I could usually articulate multiple reasons why the person seeking to to start a new business venture unequivocally needed to file a patent application as soon as possible.  Moreover, I could recite a litany of ills that could follow from failing to follow my advice.   Following this conversation, I could typically expect a fat check from the client, whereupon I would dutifully draft strong patent on the subject invention.  It was a nice living. These days, I work as a startup technology company CEO and look at patents much differently than I did in the past:  as a consumer of patent services myself, I now examine patenting issues from the vantage point of an entrepreneur, not as a lawyer whose business model centers on patents.  My viewpoint has been further honed in the last year as I have become a practitioner of the Lean Startup Methodology, a startup business framework that, in short, states that if an Continue Reading →

Open Innovation Insights: 5 Biggest IP Legal Mistakes Small Companies Make When Working with Large Companies

Open Innovation guru Stefan Lindegaard recently asked me what the biggest IP legal mistakes small companies make when they are working with large companies.   This is a subject very near and dear to my heart, as I am currently “moonlighting” as GC of a start up energy company that is moving toward licensing our technology into large companies.  Also, as a senior IP lawyer at a multi-national consumer products company, I was on the other side of such deals on more occasions than I can count.  Prior to that, I was a law firm partner representing large and small corporations in patents and licensing issues, and in doing so, I now realize that I killed more deals than I ever facilitated, a situation that is more typical of law firm lawyers than it should be, unfortunately. In view of this multi-faceted experience, I present this list of the 5 most common mistakes companies make when working with large companies in Open Innovation. 1.  Thinking you have all the answers for the large company’s problems: As a small company, you often have only have a single idea or technology and you quite properly focus your attention in this direction.  This can Continue Reading →

Companies Adopting Open Innovation Must Incorporate Patent Information at the Front End

(Editorial note:  This is a repost from this blog over 2 years ago, but the content is more relevant than ever.  On January 20, 2010, I am participating in a Yet2.com webinar with Ben DuPont and Jason Lye where we will be sharing our thoughts about marketing technology to “non-traditional” technology buyers, many of whom come to the table because they are adopting Open Innovation into their product and technology development processes.  I thought this “classic” post would be a good overview for anyone of my viewpoint for those who find my blog as a result of this event.  For regular readers, well, I hope you enjoy this too.  I will post a link to the recorded webinar when it is available. ) Open Innovation is unquestionably becoming a “hot” area of focus for U.S. companies, especially in the current economic climate in which businesses are more than ever focused on smarter ways of doing business. And, why wouldn’t Open Innovation be an intriguing business model when companies can fill their product and technology pipelines for significantly lower cost and with more variability of ideas than typically is possible from their own R&D infrastructures? As a result, more and more Continue Reading →