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 in the IP Strategy business view a “strategic patent” as one that is “market-making.”  Put simply, a strategic patent is one that makes it cheaper for someone to come through you (such as by buying your product or taking a license to your patent) than around you (such as by leveraging your innovation and insight to knock off your product).  With the data showing that only about 5% of patents can be considered “market-making,” it is certain that when a business needs strategic patents to allow them to capture the value of the business model, most patents widely miss the mark.

Note that the innovator has only herself to blame if she fails to fully protect the value that her innovation creates in the marketplace.  That is, not only is it not stealing if a competitor provides a non-infringing substitute to the same consumer, the Free Market demands such behavior.  Countless numbers of innovators have found even though they successfully solved a significant consumer pain with a strong product offering, they nonetheless did not end up with the level of revenue anticipated.  Indeed, it is far more common for the number 2 or 3 market entrant to end up as the market leader than it is for the actual innovator to stay in the lead.  This does not have to be the case, however.

So how does one increase the probability of obtaining a patent(s) that protects a company’s market position when it brings a successful innovation to the marketplace?  The answer is actually embedded elsewhere in the business.  In short, when patents are being created to protect a successful innovation, the team with the most knowledge of the consumer pain must define the scope of protection.  Those familiar with Marketing 101 will recognize this in the context of “features vs. benefits.”  Much like how one sells a product, market-making patent protection emphasizes the “what” over the “how.”

Note that this strategy is in-apposite to the normal patent drafting procedure.  That is, inventors typically define the invention by the results their efforts which necessarily means that the focus of the resulting patent will be on the features of the product that addresses the problem they set out to solve.  Indeed, by the time the patent application is written, the solution invariably becomes the center of attention and the aspect for which the patent attorney drafts claims.  Sure, the claims can be broadly written as to this invention, but this invention is necessarily only one solution to the problem that set up the product development pathway that led to end product.  Almost always lost in the patent drafting process is the problem that the business team set out to solve in the first place.  In other words, the framework of possible solutions–which can be considered to be the “innovation“–is left out of the patent drafting process.

Why does this matter?  Going back to the “features vs. benefits” reference, time and time again we find that the customer does not care how his problem is solved, he only cares that their problem is solved in a way that works.  That is, he cares about the benefits as opposed to the features.  If a patent covers only the features—in particular, the one way to solve the customer’s problem identified by the inventor—competitors will be able to provide the same benefits to the customer without infringing a patent that covers only the features of a solution.  Moreover, this competitor will be able to enter the market with lower risk because the first to market will have demonstrated that a strong market already exists.  Still further, the competitor will be able to sell a non-infringing substitute at a lower price because the hard and expensive work of creating the market was already done.  It follows that the first to market will likely be subjected to price erosion, which will further reduce the ability to capitalize on the likely large investment in developing and commercializing the innovation.

A few examples of features vs. benefits with everyday products are set out in the below table:

Product Features Benefits
Apple iTunes® Platform Specific coding/software Easy to use distribution platform for music, movies etc.
Swiffer® Mop Disposable pad, refill bottle etc. Mop that provides a fresh and new cleaning platform with every use
EnMotion® Automated Paper Towel Dispenser Sensors, hardware, towel roll configuration etc. Fewer germs after washing hands
Kuerig® Coffee Maker Pod configuration, water flow/temperature etc. “Dummy-proof” way to make a multitude of hot beverages in a single machine

Of course, in the abstract, defining a tangible invention in relation to the benefits provided in a way that can result in a strong patent is harder than the “just the facts” claiming of an invention typically done by inventors and their patent attorneys.  But if it were easy, there would be many more market-making patents, right?  To provide guidance to those seeking to generate the thought process and tools needed to create more valuable patent rights, I will provide an illustration of features vs. benefits claiming using the Swiffer® mop product.  Look for this in a subsequent post in the near future.  As a preview, those using this product will recognize the success of P&G’s patent strategy due to the 15+ years that the company has maintained premium pricing for this product innovation.  In the meantime, feel free to contact me with your thoughts on this post.

 

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

  1. Kingsley

    Jackie, excellent post! What would you say for those innovators who rely (as advised or as per belief) on branding to compensate for the problem highlighted here? Thanks.

  2. Ohyoon

    Hello Jackie,

    Thanks for the great post. It is very insightful. I am working on a software startup called CloudMatch based in Amsterdam. We’re exactly dealing with this matter! I’ve been swamped with patents in last days.

    Focus on describing benefits not on features is very powerful. I was wondering how this could reflect to actual patent literature. Could you indicate an published patent literature as a good example?

    Thanks!
    Ohyoon

  3. Jackie Hutter, IP Strategist Post author

    Of course branding is a powerful tool, but others can be just as good as branding or sell at a much lower price to negate/reduce the power of branding. In this case where there is no “market-making” protection the innovator has no legal recourse. If you’re in the States, one can see a good example of this in the EnMotion(r) paper towel dispenser. The innovation/customer pain is hygienic dispensing of paper towels and the invention (for which there are 25+ patents) is the specific manner in which Georgia-Pacific provides this consumer solution. After Georgia-Pacific created this new market (at great expense over the course of several years), others were able to enter the market with competitive solutions–all of which no doubt avoid infringement of the EnMotion portfolio–that solved the same consumer need. These competitors also entered the market at much lower cost and risk because the market was first validated by the innovator. Certainly, Georgia-Pacific is a branding powerhouse (Dixie(r), Brawny(r) etc.), but it appears that they were nonetheless unable to keep these competitive products (Kimberley Clark, Domtar, San Jamar etc.) out of the market using their branding prowess.

  4. Pingback: Product Companies Must Modify Patent Strategy When Adopting Innovation as Business Model | IP Asset Maximizer Blog

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