When looking at building a targeted patent portfolio, I spend a considerable amount of time considering the Patent Quality of the portfolio content. This can roughly be translated to a boardroom discussion as not just filing patents to fill a metric, but rather filing patents that have been drafted to have business and technology alignment + legally enforceable + economic value.
However, it is one thing to talk about using Patent Quality as an output of an IP Strategy to create a sustainable advantage, and yet another to extend practical guidance to both inventors and their prosecuting firms to execute on it.
A recent paper by Kohler, Blind, and Thumm entitled “An Analysis of the Filing Behavior for Essential Patents in Standards” from the Berlin University of Technology and the European Patent Office, gives some insight into steps to create a patent that has a high propensity for market protection, instead of serendipitously creating something of value.
While not specifically calling out how patents should be prosecuted, there are two complimentary points on this topic to draw from the paper: First, essential patents have a higher number of claims and claim amendments as well as other relevant characteristics (the number of amendments, share of divisionals, the share of references, etc.). Second, and perhaps more interesting, essential patents are amended ~25% more often than patents not relevant for the standardisation context.
A take-away point for execution to ensure a quality patent: Ongoing prosecution by legal should be reviewed by the business for both market and technical match.
It is this standard-focused amendment model to ensure a targeted patent that I suggest can likely be mirrored with a general portfolio. During prosecution this translates to the actions of having the prosecuting attorney work with the business / inventors to amend the application based on market use. It sounds like a simple point, but in practice I find most prosecuting attorneys and businesses ‘move on’ after the original patent is filed and don’t include the ongoing prosecution as important as the original filing, resulting in a patent that is prosecuted as quickly as possible.
I suspect when analyzed the 25% will vary by industry, but at the very least the 25% increase in amendment rates cited by the paper gives at least an interesting benchmark for counsel to consider.
As an in-house IP Manager, this benchmark could be easily confirmed by comparing known “quality” patents to a sampling of the entire portfolio. As a result, this would give a rough internal metric to support a proposal for increasing amendments, taken both as n increase in attorney prosecution cost, and inventor/business employee time commitment required. But as always this presumes businesses are looking to increase competitive advantage with a patent portfolio instead of simply counting patent numbers as the key metric.
Although fairly high level, it talks about how firm strategy shifts when strong intellectual property is seen in the business ecosystem. Using the Smartphone as a model, the authors show that the market shares of Google’s Android phones grow faster in markets and countries with weak intellectual property rights protection as a result of escalated patent wars.
This paper is of interest because it unknowingly addresses the business issue of how firms need to adapt to play in high growth industries, where the speed of product development is greatly outpaced by the speed of the patent office. For startups and SME’s that need to find market share while navigating the patent portfolio of the industry incumbents, this provides a valuable point to bring to the board room table for discussion. By focusing a new entrants first beachhead on markets that have weaker patent protection they can both gain a new customer base and also delay entry into stronger patent protected markets until the firm’s own patent portfolio has been established.
Many firms seem to base their market strategy on one question: Where can the company achieve the biggest market growth and share?
I would propose the better question to discuss at the board room table during a strategy planning session should be: Where can the company achieve the biggest market growth and share, while taking into account the risk of patent enforcement? and then as a followup: How should the company time market entry based on risk and rewards of patents in the industry? Answering these questions also forces the company to define what type of patent portfolio they need in order to be competitive in the long term.
A patent portfolio made without business context will have no long term ROI for the company.
Returning to the cited paper, we can see that using such strategic actions can shape the future business ecosystem and outcomes for a company. In other words having a patent strategy as part of your business and market strategy should highlight these risks, and help position a business for both current and future growth. It will help companies avoid creating growth in the short term, that may be later blocked by a thicket of competitors patents in markets where strong enforcement is possible.
I came across a patent this week covering Invention Disclosures, entitled “Methods and systems for managing invention disclosures“. From a Patent Manager point of view, it is a good reminder that the patent office itself is a valuable resource for getting background on almost any topic, even the patent process itself.
For smaller companies, who are in their infancy in building their own processes, it can give unique insight into the structure and procedures the large entities and multinationals have to move ideas from engineers into patents. Generally speaking my experience in both SME’s and Multinationals, and academic research, the following seems to hold true: Firm size and culture are factors the average type and quality of patent application filed, as seen in patent breadth and depth of coverage. Small firms tend to file wider and more all encompassing application whereas large firms that have a robust process tend to file more narrow and technology specific applications.
Such a robust process always produces one key question:
Does the process encourage Patent Quantity, or Patent Quality?
Looking at the cited patent above and the process described it is fairly easy to see why – potential inventors are queried on a large range of topics related to the idea, from economic to competitive market value, which one can presume gives some weight to the final decision. In large firms by the time this market data is evident the project is typically far enough along that technical work has been done to scope the technology to a specific market segment and technology value. Simply mirroring the project gives patents that are product specific, which will only enable a strict area of technical protection which is not the same as full market protection. The tipping point between market and product protection is usually made by a defined Patent Strategy.
I give a brief outline here as to some of the building blocks that will generate a strong Patent Strategy. In the next few posts I’ll dig into the 3 high level points that can drive a successful business strategy that encompasses IP.
Patent Quality = Alignment with Business + Legally Enforceable +Economic Value
Patent Culture: Creation of a culture-driven IP strategy.
IP Vision: First mover advantage of IP where the future market and technology intersect.
Patenting and Protecting Early Stage Research & Innovations
For all the talk about patenting for startups and spin-offs, people often forget that there is a step that predates this discussion: Solving the Fundamental Technical Problem.
Early stage research presents a challenge with respect to patenting: Balancing the trade-off between the competing forces of ensuring protection of the final technical direction against the patent rules of filing early enough to gain that protection, and more critically, filing with enough quality content to create a robust patent. Many early stage researchers realize IP is an important tool for protection on their forthcoming technology however because of the timing and stage of the research are not able to find the balance in this trade-off.
Often rooted in academia or driven from industry needs, early stage technical research addresses specific technical challenges that have potential for future large commercial impact. These technical projects often focus on applied research to validate a technical direction, and then ultimately moving that technical direction into an innovative, market ready product and an associated spin-off company.
Early Stage Research in practice: In the early days Bell Labs often considered how the capacity of telephone and switching traffic would need to change as it became more complex. In The Idea Factory: Bell Labs and The Great Age of American Innovation, Jon Gertner discusses how Bell Labs looked ahead, beyond what was technically possible, and considered where the research had to develop. Their driver to address the burdens todays technology will create for businesses tomorrow and as a result were instrumental in many key technological advances such as the transistors, solar cells, the laser and the first single chip DSP.
Rethinking the Development Cycle
A Patent Strategy for Rethinking the R&D Cycle
To overcome this challenge we must first think about the entire R&D cycle, starting at the point where the technological research begins and finishing where the product is usually released to market. We can do this by categorizing the research into three stages: starting at Early Stage Research, moving to Validated R&D, and finishing with MVP to Product Release.
Stage 1 – Early Stage Research: In Stage 1 most research may be technology driven, not necessarily market need based. Researchers often realize there is a technological or economic challenge that needs seminal discoveries to meet the challenge. This early stage research shares the characteristics of having multiple directions to go, with the uncertainty of what the final technology direction will be.
Stage 2 – Validated Research & Development: In Stage 2 much of the technology plan and direction has been validated. With a business mission and vision in place the beginning of a new venture or spin-off company can be formed.
Stage 3 – MVP to Release: In Stage 3 the market opportunity is defined and the Minimum Viable Product is ready to release. Market-ready technology is seen through customer validation or product launch.
Staging the Coverage:
Considering the long term business view of protecting technological research, taking a Staged Portfolio approach to building patent coverage allows for the flexibility to grow and evolve the footprint over the development timeline. The goal is to create a wide and broad portfolio and continue to narrow and refine the coverage over time. This generates early patent coverage for key technological breakthroughs which gives the opportunity for core patent protection for both the final product and in the industry.
Looking at the Staged Portfolio view illustrates the portfolio growth difference when comparing it to the Convention Portfolio, which is where most IP is secured.
Patent protection of a convention portfolio vs. a staged approach
Stage 1 – Early Stage Research: Characteristics of the patents filed at this stage are a wide technology scope, driven to cover the technical trends and results. Collaboration between the legal and technology teams are critical to ensure Sound Prediction and Enablement requirements for the patent office are met. There is an expectation that not all patents filed will be kept as there is still uncertainty of the final market-ready product, so cost filing strategies should be considered, such as provisional applications and PCT filings.
Stage 2 – Validated R&D: Characteristics of the patents filed are also wide in technology scope, but focused to have technical depth around the validated technology direction. The breadth is seen where coverage for technical pivots are protected as well. Taking the business value and spin-off direction into consideration will provide direction for legal counsel to seek protection. Again collaboration between the legal and business groups are essential: without a clear view of the business plan and technology direction, the legal view that is driven by reducing risk by ensuring robust patents on the specific technology are granted may not always align with the long term needs of the business. The ultimate goal for the collaboration is to create IP that has a wide enough footprint to allow for coverage if redesign or adjustment of the end-use product is required. This model also ensures at enough coverage to account for adjustments by competitors as the new product is released.
Stage 3 – MVP to Release: This patent protection is the typical filings by startups. With business and technology direction defined, products are released and the coverage reflects as such.
Risk & Reward: Each Business Case is Unique
Building a Staged Portfolio has the same risk of funding innovation at an early stage and as such the balance of risk vs. reward must be considered in applying this approach. Risk is seen in both cost outlay, as well as potentially creation of prior art for the invention if the development cycle is long. Balance considerations include licensing program expectations for IP not commercialized, ability to perform work under a NDA and maintain IP rights, and position of the competition and their speed to market. Rewards include deep and early protection of potentially disruptive technologies as they evolve into the market.
Patent Strategy as the Long Game
Very few companies succeed in creating such a wide footprint of protection from inception of the technological developments. Realistically there are cost pressures, resource constraints and a general apprehension of applying such fixes resources towards protecting an uncertain end-game. However, when the portfolio coverage is considered as a whole it provides a viable patent strategy for technologies in their early stage development stage.
I presented this week on the topic of Patent Strategy for Startups and Early Stage Ventures. We spent a short time talking about IP from the business side, specifically why early stage ventures need to consider IP at their incubation stage, and then some practical tools on timing and planning to think about.
There is always plenty of discussion when it comes to this topic, particularly when startups are faced with budget, market and resource restrictions. Throw in the pro-patent lobbyist and the open-innovation champions and it becomes even more confusing to workout what the right direction should be for your venture. Whatever the decision, not everything can be done to cover IP or reduce the business risk that comes with it. However when it comes to IP it is always easier to decide NOT to do it at this stage of the venture due to resources, then wait until it was too late and wish you had at least made that “no” decision – at the very least when saying “no” it gives the options to plan for the future implications of that choice.
Sometimes the best IP Strategy plan is to say ‘we have no plan to file any patents,’ but then as a result ensure we are prepared in other ways to address the business issues that come with this decision.
I will do a follow-up post in the next few weeks on IP for Startups, and give some additional details on pitfalls and success points for new ventures.
I have attached the slides below. Feel free to reach out if you want to get more details.
