Author Archives: Jackie Hutter, IP Strategist

About Jackie Hutter, IP Strategist

Jackie Hutter, named one of the Top Global IP Strategists by IAM Magazine in each year since 2009, has almost 20 years experience advising innovation-driven corporations, investors and universities on how to maximize intangible asset value. As an IP Strategist, Jackie does not just "get" IP, she makes sure her clients only get IP that makes them money. Jackie has established this blog to provide forward-thinking business and legal professionals with strategic information to enable them to identify, capture, protect and exploit their organization's intangible asset value. As the CEO of a startup technology company, Jackie also understands the IP and legal needs of small and emerging companies and works frequently in an in-house counsel role for such clients. Jackie lives in Decatur, Georgia, in a groovy Mid-Century modern house with her husband, 2 daughters and far too many pets.

Strategic Patenting Part 2: It’s Not Your Patent Attorney’s Job to Get it Right

not my jobFrom the last post, we see that it is very rare for patents to create value for their owners.  Moreover, if the “big guys” with pockets deep enough to hire the best lawyers can get it right only 5% of the time, there should be no doubt that smaller companies and individuals should re-examine the advice they are getting from their IP counsel.  This is not to say that smaller companies and individuals cannot be successful in creating market-defining patent protection.  To the contrary, it is my strong belief that small companies can create solid patent protection at a reasonable cost, but to do so will likely require patentees to recognize that their IP counsel likely has no clue how to do what you need done.  And, even if she does, it is not her job to make you money from your patents.  Instead, her only job is to get you a patent.  Period.  End of story.

Smaller organizations or individuals should not assume that that your attorney does not have your best interests in mind when doing patent work on your behalf.  Certainly, the vast majority of patent attorneys are ethical and have their client’s best interests at heart.  But, as noted, their job is to get patents on behalf of their client, not to get valuable patents.

We get a picture into this reality in a recent appellate case in which a disappointed patentee tried to sue his patent attorney for malpractice.  In this case, the patentee asserted that his attorneys, who worked at a prestigious patent law firm, acted negligently when prosecuting his patent for a weed trimmer guard by including unnecessary language that limited the patent’s scope.  He claimed that addition of this language resulted in his losing an infringement suit against Stanley Black & Decker.  In order to demonstrate that his attorneys’ negligence resulted in his loss and to recover damages for legal malpractice, he was required to prove “the case within the case.”  This essentially means that the patentee must show that the errors or missteps in the patent prosecution process by the attorney led to his inability to recover against Stanley Black & Decker in the patent infringement case.  It should be apparent that the likelihood of proving that a decision made by the attorney during the patenting process–and only during the patenting process–could be blamed for the client’s inability to recover is an exceedingly tough thing to show. Continue reading

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

value_introMany 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, more expensive.  In other cases, to avoid infringement, the competitor must make a product that does not hold the comparable consumer acceptance. Continue reading

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

beautiful dataAs 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 because the advice will be based on a smaller number of anecdotes.  I frequently encounter startup company advisors who are absolutely certain in their opinions about the value of patents to startups that do not involve any context or analysis of the company’s business model but are instead grounded in unchangeable beliefs based on the advisor’s personal experience.  Unfortunately, startup companies seeking the counsel of these peers, mentors and investors often do not possess the ability to gauge the subjective nature of the advice and end up incorporating the same erroneous belief systems about patenting to not only the detriment of their companies, but also the rest of the startup community as the errors become embedded in the local ecosystem.

The subjective nature of patenting advice for startups has long bothered me, but without actual data a solution has been elusive. I continue to provide guidance to startups based on my extensive professional experience, albeit also with letting my clients know that their results may vary from those of my previous clients.  While this honesty is appreciated, many have expressed disappointment that given the financial and time investment required to obtain strong patent protection, the return on investment remains uncertain.

I am glad to say that I have now identified a detailed and data-driven study of how patenting influences start up companies in the marketplace, with competitors and in obtaining outside investment.

While a few years old, I recently discovered this article from lead author Stuart Graham, a Georgia Tech Business School professor who from 2010-2013 served as Chief Economist of the US Patent Office.  Entitled “High Technology Entrepreneurs and the Patent System of the 2008 Berkeley Patent Survey” (published in the Berkeley Technology Law Journal and available in this link) this piece is clearly relevant reading for start up company leadership teams seeking to gain understandings of why and how patent protection might be relevant to their success in obtaining investment and in the marketplace.  IP experts and other startup advisors should also be interested in reviewing the data and conclusions in this rigorous study to gain confidence that the advice they give is, in fact, backed up by data from other startup companies.

Admittedly, the data used in this article is a several years old and much transformation in the start up and financial communities has occurred since the article was published in 2009.  Nonetheless, I find this data to provide at least strongly directional data-driven insights into the patenting activities of start ups.  Since the number of patents issued annually continues to increase markedly year over year, we can assume that the number of patents obtained by startups has at least stayed constant in recent years.  I plan on using this data to advise my startup clients on the relevance of patents to their business strategies.

Here are some highlights of the article that I found interesting:

  • Patents were found to be highly relevant to obtaining venture-backed funding at biotechnology and IT hardware-based startup companies.  It may also be surprising that this study also demonstrated that patent protection was also found to be relevant to software-based startups gaining venture-backing.
  • Patents were also found to be more relevant to obtaining Angel and “friends and family” funding than previously thought.
  • A large share of early-stage companies, especially in the software industry,
    avoid the patent system altogether. At the same time, the study found startups
    hold more patents and patent applications than previously
    reported.
  • Usefulness of patents to startup entrepreneurs is driven by industry characteristics. Patents help many startups compete in the market with their technology, but this is much more pronounced among biotechnology and hardware companies (including both medical hardware, such as surgical devices, and IT hardware, such as computers and semiconductors). Conversely, patents are much less important as a means by which most software firms—the majority of which hold no patents –capture competitive advantage from their innovations.
  • When electing to patent, startup executives tend to be most influenced by a desire to prevent knock-offs and than by “reputational” and financial motives, including a successful exit event such as being acquired or going public.
  • Surprisingly (at least to me) startup innovators do not appear to reference the patent literature during the pre-development or development processes.  They do look at the patent literature after launching their products or when considering patenting themselves.
  • Licensing of others’ patents also happens, and while startups are generally receiving information or know-how in the transaction, they are also commonly trying to settle a controversy—and in some cases they take patent licenses solely to avoid a lawsuit.
  • Startups tend to spend considerably more on obtaining each patent than what was previously reported.  Specifically, the 2009-reported patent spending for start ups was $38,000 for each patent, which exceeded the $10,000 to $30,000 range for other patent recipients.  One startup CEO posited that the extra cost could be due to a number of factors including the relative importance of a start up’s patent matters to the business, the likelihood that a startup would use outside counsel vs. internal legal resources and the lesser ability of a startup business team to appropriately manage the work of outside counsel.

There are many more interesting conclusions in this article that will no doubt enhance the knowledge of startup business teams of the value of patents to the success of their companies.  In short, the data set out in this article make it clear that “your mileage may vary” when it comes to patenting, but there are real reasons to patent and to not patent that can be gleaned from the information presented.

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 included.

Free and Low Cost Patent Search and Analysis Tools: Who Needs Expensive Name Brand Products?

(NOTE:  At the end of this post is a detailed spreadsheet that lists the free and low cost tools that I use regularly in my IP strategy practice.  At the request of a group of IP strategy professionals with whom I network, I will be giving a presentation on these tools at a local event.  I thought that readers of this blog would also appreciate learning about how these tools can add high value at a low to minimal cost.)

no name brandIn private conversations, some of my corporate peers inform me that they pay $1000’s per year (or even per quarter for larger companies) for access to “name brand” patent search tools that nonetheless  do not contain accurate and up to date information.  For example, a client tells me that one of these expensive tools fails to update USPTO records on a portfolio her company is monitoring and that the PAIR data is more than 1 year out of date.  This limits the effectiveness of the expensive database by requiring her IP support staff to check each individual record on a regular basis to update the data.  Of course, this limitation defeats the purpose of spending the big bucks to engage with a “name brand” search tool.

Certainly, one need not have sympathy for corporate IP professionals who manage large department budgets–if they spend needlessly on “name brand” tools and staff to manage the quality of such tools, so be it.  But most companies with IP strategy needs do not have money and staff to purchase such tools, let alone to fix the errors in the datasets obtained from them.  Others might wish not to waste their department budgets on worthless tools.  To this end, over the last 5 years, I have used a number of free and low cost tools in my IP strategy practice.  I use all of these tools on a regular basis and have personally validated the quality and validity of each one for my practice.

Notably, this list was generated from actual landscaping and portfolio management projects performed by me for both large and small corporate clients.  I have used other tools in the past that did not meet my high standards of quality, ease of use and data integrity–if a tool is not on this list and I have previously recommended it elsewhere on this blog, you should assume that I have experienced some degree of problem with the product and no longer use it or it has disappeared from the list of free or low cost tools. Continue reading

IAM Top 300 IP Strategists for 2013 Released this Week: I am on the list for the 5th year in a row!

pat-on-back

A drawing included in a patent protecting patting of oneself on the back.

Please indulge me as I pat myself on the back–

Largely as a result of the efforts that I have put into this blog over the last 5 + years and of the resulting recognition of my expertise by my peers, I have again been named to the Intellectual Asset Magazine Strategy 300.   This award acknowledges my expertise in IP Strategy and Intellectual Asset Management and is given only to those people who actively practice in areas related to capturing and leveraging business value from IP and intangible assets.

Although I have been included on the list in each of the previous years of the award’s existence, inclusion on the list is particularly satisfying this year.  Specifically, the 2013 list was compiled from scratch as the result of substantive original research from the staff at IAM.  I did not pay to be included.  (More on the methodology here.)  Recognition like this makes all the hard work of keeping an active blog worth it.  I hope you will stay with me as I continue to share my strong opinions with you about IP and value creation throughout the next year.

Why the IP Law Firm Business Model is Broken And What I Am Doing About It

Business model innovation in IP legal services is only just beginning.

Business model innovation in IP legal services is only just beginning.

As a former IP law firm shareholder and senior corporate lawyer, I know all too well the expense required to start and maintain an IP law practice.  Not only are IP lawyers of all levels of experience paid handsomely, but so are the highly skilled paralegals, docket clerks and administrative professionals traditionally required create the infrastructure needed to handle the myriad of details involved in an IP law practice.  Of course, this expensive infrastructure must be sustaining, so while a lawyer serves today’s clients, her eye must also be on finding the next client because payroll and rent obligations don’t take a holiday when clients do.

This “feed the beast” nature of the IP law practice model was a primary reason that I decided several years ago that I would not again work in the traditional practice of law.  How could I?  The standard legal service framework required me to build and maintain a business model where the product offered is obtaining patents for clients.  However, over the years I discovered that often the client does not need the very product that sustains the IP law firm business model.  What I perceived as an inherent conflict between my business interests and those of my clients made it impossible for me to continue practicing as I had for many years in the traditional model.  Instead, I moved in a different direction in becoming an IP Strategist where, for the last 5 years, I successfully built a business model where I could focus on building and maximizing IP value for my clients independent of any need to build and maintain the expensive “bells and whistles” of a functioning IP law practice.  In other words, I have figured out how to get paid for saying “no you don’t need a patent.”

Certainly, clients appreciate the ability to provide IP advice given independently of any need by me to generate legal fees from patent drafting.  Nonetheless, many clients have expressed disappointment when I cannot provide them with additional patent services beyond that of IP strategy consulting when we do determine that a patent is the right course of action.  Even though I choose my referrals very carefully, when I have to bring lawyers with more traditional legal services models in to service my clients’ patent drafting needs, I have found that the normal pressures of maintaining an IP legal services business appear.  As a result, costs to my client start inching up even though I worked to avoid this at the front end of the engagement.   I strongly believe that the cost of obtaining IP legal services is too darn high, even at law firms that portray themselves as being willing to use “alternative billing” structures.  Put simply, the IP legal services model is broken and tweaking of billing structures and the like can only amount to the proverbial “rearranging deck chairs on the Titanic.” Continue reading

IP and Intangible Asset Strategy: The Easy to Deploy, Not-So-Secret Weapon for Capturing Business Value

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Properly deployed, IP and intangible asset strategy is the not so secret weapon for capturing business value

IP and intangible asset strategies are a critical feature of ALL businesses regardless of size, product or customer.  But why?  Put simply, leaders need to be comfortable that their companies have the mechanisms in place to capture the value that you see possible from the venture.  Without foresight and action, other businesses will be able to capitalize on the first/early mover’s advantage.

This happens often when a US company develops a new product, as well as the market for the product, and ex-US companies come in with a lower priced product to take the market away from the first mover.  I have also seen customers (that is, big box or other consumer facing retailers) actually instigate the knock-offs:  when the first mover demonstrates that a market exists for a product, the retailer will reach out to an Asian manufacturer to create a private label product with the same consumer benefits as that of the innovator’s product.  The retailer is motivated to do this because it can gather all of the profit margin associated with a successful product, instead of having to share the proceeds with its supplier.  If the innovator does not have some form of legally enforceable protection, such action is not only legal, it makes good business sense for the retailer.

Sometimes (but not as often as people think), patents are the strong way for the innovator to capture value in the long term.  Other times, we look at alternate forms of IP and intangible assets like trademarks/branding, contracts, employee incentives etc.  In the product example above, effective patent protection that prevented or greatly restricted the retailer from making an non-infringing alternative would have likely done the trick because in a cost benefit analysis, the retailer would see reduced profit margins for the product as preferable to the costs of redesign and/or patent litigation.

However, patents are not the only source of protection for product innovators like those in my example.  If the innovator had a supply or other form of contractual agreement in place, it would have been more difficult for the retailer to outsource to an alternative manufacturer even in the absence of strong patent protection for the innovative product.  Although not many patent lawyers would admit to this, it is far less costly and complex to litigate a contract claim than a patent.  It follows that a strong and enforceable supplier contract may be a preferable form of intangible asset protection if the goal is to capture first mover advantage found in strong product placement in a retail environment. Continue reading

A Branding Lesson for the Lean Startup Entrepreneur

Before you build a brand, startup entrepreneurs have to build a business model.

I recently spoke to 2 different startup entrepreneurs who explained to me that each had “a brand that needed protecting.”  To each, this meant that they intended to focus their sales and marketing efforts on customers who fit image they saw as befitting their respective products.  While I was intrigued by the products and the amount of work each had done to date, I am afraid to say that if these entrepreneurs stay with their present mindset that only certain customers are desirable, each will fail.  Full stop.

For one of these entrepreneurs whose product had already launched, brand protection meant that he was trying to dissuade “undesirable” customers:  apparently truck drivers LOVED his product and it was flying off the shelves at C-stores in which the test launch was conducted.  This entrepreneur perceived these sales as a huge problem because he saw his product as high end and “above” the truck driver market.  Indeed, in its marketing collateral and packaging the product was presented as high quality and upscale.  When placed in front of customers, however, it was apparent that the upscale buyer to whom the product was directed showed little interest, but that less affluent consumers—here truck drivers—found the product desirable, likely for its aspirational aspects.

The second entrepreneur had yet to launch her food product—which was a neat twist on a cheap Southern snack food staple–but she was insistent that her customer had to be of a certain demographic.  When I explained that scale would be limited by singular focus on this specific customer, this entrepreneur said something along the lines of “It doesn’t matter, I need to stay true to my brand.” 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 cared not about their cool product, but that their pain was solved.  As a result, competitors were able to also fulfill the same customer need without infringing the 20 or so patents on the market originator’s product.   Since the post was written, the market originator has undertaken a couple of strategy changes.  However, it continues to lose market share to non-infringing competitive products in an increasingly price-eroded market.

There’s a whole lot more in the archives of this blog, and please don’t hesitate to let me know if you’d like more information.