As someone who assists corporations and entrepreneurs in monetizing their patents, I am continuously on the lookout for potential technology buyers. To this end, I subscribe to a number of services that provide "wish-lists" of technology that others are seeking to acquire. The most notable of these are Innocentive.com and Yet2.com. Recently, I have seen a number of technologies on each of these websites that are possibly relevant to patents that I have obtained for clients over the last several years. While this could be a coincidence, I also think it could be a signal that more companies are dipping their toes into the Open Innovation space, as opposed to relying solely on internally developed products or technologies.
Patent attorneys seeking to improve the value they provide to clients would be well-served regularly reviewing the listings on these databases and spreading the word to their firm colleagues. Imagine the delight that clients would experience when their patent attorney brought them opportunity to make money on a technology that they no longer need, but have nonetheless spent considerable resources on over the years.
A word of advice, however. If the technology solution was readily apparent, the company listing the need would likely not have gone to the effort and expense to list it on Innocentive.com or Yet2.com. To be acceptable the solution will probably not just be "out of the box" but "out of the truck the box came in." An example of such a solution is found in the Magic Eraser(R) story.
For those who do not use Magic Erasers (or the numerous store-branded equivalents), the story is detailed in this Harvard Business Review reprint. (This product is a must have for anyone with children and/or white kitchens!) The synopsis is that Magic Erasers comprise a BASF insulating melamine that was sold in China as a cleaner. A "technology scout" saw the product in Japan and brought it to P & G for testing. P & G introduced the BASF foam directly into the US as a cleaning product, in addition to entering into an ongoing collaborative R & D venture with BASF to improve the cleaning properties of the melamine foam. The Magic Eraser brand has become a powerhouse for P &G and has extended to products beyond the BASF melamine foam. BASF has also benefited substantially from this endeavor in increased sales of its melamine foam, as well as in developing a strong collaborative supplier relationship with P & G.
The point of relating this story is that although BASF sold its insulating foam product into Japan for cleaning purposes, its business teams did not recognize that these same properties would be game-changing in the US market. Similarly, although P & G has one of the best cleaning R &D operations in the world, its scientific and business teams were unable to identify the BASF foam as a potential fit for its product offerings. It took someone who was charged with scouting technology--that is, working outside of the usual internal corporate R & D silos--to make the connection between the BASF foam and the huge US cleaning market.
I think that patent attorneys can serve as a type of technology scout for their clients. In preparing and drafting patent applications and in conducting opinion work for their clients, patent attorneys develop a comprehensive understanding of the properties and functionalities of their clients' products and technologies. A patent attorney who reads the technology wish-lists posted on Innocentive.com and Yet2.com may be better able to make the connection between the desired properties of a technology and his clients' patented technology that could solve that technology needs. As illustrated by the Magic Eraser story, a client who works in the polymeric insulation space may not be "wired" to recognize opportunities in the household cleaning space, nor will a cleaning expert likely be familiar with the auxiliary properties of an insulating foam. A patent attorney can serve as the bridge to connect such disparate disciplines because they talk to clients across varied technology and business silos everyday.
Of course, most clients will not wish to pay their attorney's hourly rate to serve as a technology scout. Such a service certainly would operate as a value-add for most clients. Nonetheless, as clients demand more from their patent attorneys and patent practice becomes increasingly commoditized, I believe that those attorneys who show their clients that they seek to create actual value for their clients will generate more client loyalty and will face fewer push-back on cost.
Friday, May 29, 2009
Tuesday, May 26, 2009
Looking for Inside Info on the Automotive Bailout and Other Business Issues? It May Be Hiding in Plain Sight in US Patent Assignment Database
One of the under-utilized aspects of available US patent data is the business information effectively "hiding in plain sight" in the U.S. Patent Office Assignment database. While it used to take weeks or months for assignments to be recorded, in recent years, the USPTO has implemented a very efficient electronic filing functionality that results in assignments being available for review almost immediately after being presented for recording. (This is arguably the most efficient process today in the USPTO.) Because most patent owners appear to avail themselves of electronic filing option when recording their assignments, one can find a wealth of information in the USPTO Assignment Branch.
To this end, I recently uncovered an intriguing tidbit of information related to the Automobile Bailout when performing a wholly unrelated patent monetization marketability study for a client. In confirming that a patent was still owned by General Motors, I cross-referenced the patent number in the USPTO assignment database. I found that in December 2001, the U.S. Department of the Treasury recorded a security interest in U.S. Patent Number 7,079,016. In April 2009, a further security interest was recorded in the same patent by Citicorp, "as agent for Hedge Priority Secured Parties."
Digging a bit deeper, we find that the U.S. Department of the Treasury has recorded security interests in several hundred (perhaps a thousand or more) GM patents, thus establishing the U.S. Government as a significant player in the patent world. Still more digging indicates that these security interests were re-recorded apparently in total in the name of the Hedge Priority Secured Interests, thus indicating that this hedge fund is now also a significant patent owner, at least until GM declares bankruptcy or pays off its loans (more likely the former given recent reports).
(Interestingly, the U.S. government's security interest was not released prior to recording of the Hedge Fund's interest. While I don't even know enough secured lending law to remotely competent to provide an opinion in this regard, it appears that others have identified problems with the way Treasury structured the GM and Chrysler loans last Fall.)
While this information may or may not be interesting to those who are monitoring the status and progress of the Automotive Bailout, the larger point here is that such business information is readily available to those who know where to look. To this end, last year I wrote about how one can follow the investment of companies into alternative energy using patent assignment and filing data. Similarly, one can tell what companies may be leveraging heavily leveraging their IP assets to generate cash by looking into this same information.
A word of caution about using patent assignment data, however. Although creditors are typically very efficient in recording their interests in patents, the companies that own the patents often are not. Moreover, the USPTO will record just about anything that is send to them. As such, the USPTO assignment database is often rife with errors. Because state law regulates the legal effect of patent assignments, one must examine the underlying legal rights as set forth in contracts that may not be readily available in order to understand the true ownership interests related to patents. However, I believe that when properly used, the Assignment database can provide highly valuable directional business intelligence to those who understand how to extract and evaluate such information.
To this end, I recently uncovered an intriguing tidbit of information related to the Automobile Bailout when performing a wholly unrelated patent monetization marketability study for a client. In confirming that a patent was still owned by General Motors, I cross-referenced the patent number in the USPTO assignment database. I found that in December 2001, the U.S. Department of the Treasury recorded a security interest in U.S. Patent Number 7,079,016. In April 2009, a further security interest was recorded in the same patent by Citicorp, "as agent for Hedge Priority Secured Parties."
Digging a bit deeper, we find that the U.S. Department of the Treasury has recorded security interests in several hundred (perhaps a thousand or more) GM patents, thus establishing the U.S. Government as a significant player in the patent world. Still more digging indicates that these security interests were re-recorded apparently in total in the name of the Hedge Priority Secured Interests, thus indicating that this hedge fund is now also a significant patent owner, at least until GM declares bankruptcy or pays off its loans (more likely the former given recent reports).
(Interestingly, the U.S. government's security interest was not released prior to recording of the Hedge Fund's interest. While I don't even know enough secured lending law to remotely competent to provide an opinion in this regard, it appears that others have identified problems with the way Treasury structured the GM and Chrysler loans last Fall.)
While this information may or may not be interesting to those who are monitoring the status and progress of the Automotive Bailout, the larger point here is that such business information is readily available to those who know where to look. To this end, last year I wrote about how one can follow the investment of companies into alternative energy using patent assignment and filing data. Similarly, one can tell what companies may be leveraging heavily leveraging their IP assets to generate cash by looking into this same information.
A word of caution about using patent assignment data, however. Although creditors are typically very efficient in recording their interests in patents, the companies that own the patents often are not. Moreover, the USPTO will record just about anything that is send to them. As such, the USPTO assignment database is often rife with errors. Because state law regulates the legal effect of patent assignments, one must examine the underlying legal rights as set forth in contracts that may not be readily available in order to understand the true ownership interests related to patents. However, I believe that when properly used, the Assignment database can provide highly valuable directional business intelligence to those who understand how to extract and evaluate such information.
Saturday, May 16, 2009
Chief Circuit Judge Michel Agrees with Me: NPE's (aka "Patent Trolls") are Not Necessarily "Illegitimate"
On his great 271 Blog, Peter Zura posted excerpts of the Chief Circuit Judge Michel's keynote address at the FTC hearings on "The Evolving IP Marketplace" last December where Judge Michel addressed the state of patent law and patent reform. Anyone interested in patents, the USPTO and patent reform should take a look. I posted a comment on this post, and am reposting it here (with additions) along with Judge Michel's comments about NPE's as presented on the 271 blog.
Specifically, I was intrigued by Chief Circuit Judge Michel's view that NPE's ("non-practicing entities" also known by the pejorative term "patent trolls") should not be viewed as somehow "illegitimate." He apparently believes that by allowing those who are on the receiving end of NPE lawsuits to control the argument by "naming and framing" (my phrase) the problem as "trolls" is not helpful. Here is the excerpt of this part of his speech (again, thanks to Peter Zura of the 271 Blog for posting this--Peter's emphasis removed):
Judge Michel is right on the money about the NPE argument! As Judge Michel properly asserts, there are many patentees, such as universities, that never intend (nor do they have the wherewith all) to ever make a product covered by the patent claims. Rather, their objective from patenting is to sell or license their rights. If another entity chooses not to buy or license their rights, that entity is effectively "stealing" from the university etc. and should be sued.
The view that NPE's are a burden on society is one promoted by those companies that must react to lawsuits (or threat of lawsuits) on a regular basis. And, clearly, this is an expensive proposition for these entities. As a result, in recent years, these manufacturers have banded together to develop a framework for making Congress, as well as the public, aware of the negative effects that NPE's allegedly have on the business community.
To this end, I sat in a Gathering 2.0 webinar this week where Dan McCurdy of Allied Security Trust ("AST") made the argument that only those companies that actually make a product should be able to sue for damages. This effectively means that only his colleagues (that is, those large technology companies who fund AST) and those other companies in roll of "manufacturers" should be allowed to sue for patent infringement. This is an viewpoint that is in opposition to the public policy with which the patent system is imbibed.
I think what is almost always lost in the "patent troll" argument is the fact that patents exist to disseminate information and promote innovation through public disclosure. People will not do so unless their self-interest is served by giving them exclusive rights to that innovation for a limited term in return for this disclosure. Corporations, along with their lawyers, have long considered patents first and foremost be a legal right to protect their products from competition. In short, corporations appear to believe that the Constitution provides them with a right if they make something that benefits society. This is a perspective of a monopoly right (that is, an affirmative right to sell something) as opposed to a broader exclusionary right.
In other words, public policy is agnostic to the fact that the patentee actually makes something, as long as the patentee meets the disclosure requirements of the patent laws. It is the exclusionary aspect of patents that allows the public policy of innovation promotion through patents to succeed, but it is this exclusionary aspect that provides universities and other NPE's to sue corporations when they do not actually make the product covered by their patent rights.
In my opinion, the battle against NPE's is at its core a battle against the public policy that serves as the foundational basis of our patent system--disclosures of innovations that "promote the progress of science and the useful arts." Those of us who believe that NPE's meet the objective and, as such, are not inherently "evil" must begin to reframe the argument and communicate the societal benefits of patent publication to those who set public policy. Of course, it will be difficult for the diverse interests of NPE's to come together in a uniform manner to present the arguments against corporations that today control the public argument. I hope that cooler heads will prevail as we move forward with patent reform in the current Congress.
Specifically, I was intrigued by Chief Circuit Judge Michel's view that NPE's ("non-practicing entities" also known by the pejorative term "patent trolls") should not be viewed as somehow "illegitimate." He apparently believes that by allowing those who are on the receiving end of NPE lawsuits to control the argument by "naming and framing" (my phrase) the problem as "trolls" is not helpful. Here is the excerpt of this part of his speech (again, thanks to Peter Zura of the 271 Blog for posting this--Peter's emphasis removed):
Then the argument keeps shifting. Well, it's not so much the number of infringement suits filed every year, it's who's filing. Well, why should we assume that a non-manufacturing patent owner shouldn't be allowed to enforce its patent? What is wrong with a university owning patents based on research of its faculty scientists or research institutes or small inventors or small innovative companies that either can or don't want to try to manufacture products themselves but license their inventions so others can make them?
Well, are these patentees really illegitimate somehow? I mean, after all, at least up until now a patent has given its owner the right to exclude, not the obligation to make. Then some say, well, it's not so much the non-practicing entities, it's certain companies that don't invent at all, but merely acquire and enforce patents, and of course calling them ‘trolls’ just confuses the analysis because obviously a troll is a bad thing.
It's a pejorative label. (Some people who used to complain about trolls allegedly have become trolls). But I don't think that it's helpful -- it's a slogan. It's a label. It's an excuse to not think carefully about the problem, as far as I'm concerned. It's like talking about ‘questionable patents.’ It's an excuse to not think carefully about the problem as far as I'm concerned. It's like talking about questionable patents. It's not helpful if we're going to try to diagnose the real illness and prescribe a useful medicine.
Besides, patents, like any other form of property, the essential element of property is it is alienable. You can sell it. You can sell it to anybody you want to for whatever price you want to sell it. Why should that be prohibited? Why should I be prohibited from buying patents if that's what I want to do, whether I invented them or not, whether I am going to practice them or not, whether I'm a research institution or a university or not? There might be some reasons. Maybe some of them are good, but it's not self-evident, at least not to me.
Then there's certainly the debate about motives. Well, they just want to acquire patents so they can squeeze royalties out of infringers. Well, yeah. Hey, this is commerce. This is about money. This is not an altruistic system. The whole constitutional idea was that the incentive of monetary gains would motivate innovation at a greater rate and to better ends than if the lure of money wasn't there, so I'm a little dismayed when I see it even creep into footnotes of Supreme Court opinions, that certain patentees were just trying to squeeze money out of the accused infringer. Well, all kinds of patentees are trying to squeeze money out of the accused infringer. That's what the lawsuit is all about, so come on. Let's be a little more adult about it than to worry about the greedy motive of the patentee. Of course the patentee is greedy.
Judge Michel is right on the money about the NPE argument! As Judge Michel properly asserts, there are many patentees, such as universities, that never intend (nor do they have the wherewith all) to ever make a product covered by the patent claims. Rather, their objective from patenting is to sell or license their rights. If another entity chooses not to buy or license their rights, that entity is effectively "stealing" from the university etc. and should be sued.
The view that NPE's are a burden on society is one promoted by those companies that must react to lawsuits (or threat of lawsuits) on a regular basis. And, clearly, this is an expensive proposition for these entities. As a result, in recent years, these manufacturers have banded together to develop a framework for making Congress, as well as the public, aware of the negative effects that NPE's allegedly have on the business community.
To this end, I sat in a Gathering 2.0 webinar this week where Dan McCurdy of Allied Security Trust ("AST") made the argument that only those companies that actually make a product should be able to sue for damages. This effectively means that only his colleagues (that is, those large technology companies who fund AST) and those other companies in roll of "manufacturers" should be allowed to sue for patent infringement. This is an viewpoint that is in opposition to the public policy with which the patent system is imbibed.
I think what is almost always lost in the "patent troll" argument is the fact that patents exist to disseminate information and promote innovation through public disclosure. People will not do so unless their self-interest is served by giving them exclusive rights to that innovation for a limited term in return for this disclosure. Corporations, along with their lawyers, have long considered patents first and foremost be a legal right to protect their products from competition. In short, corporations appear to believe that the Constitution provides them with a right if they make something that benefits society. This is a perspective of a monopoly right (that is, an affirmative right to sell something) as opposed to a broader exclusionary right.
In other words, public policy is agnostic to the fact that the patentee actually makes something, as long as the patentee meets the disclosure requirements of the patent laws. It is the exclusionary aspect of patents that allows the public policy of innovation promotion through patents to succeed, but it is this exclusionary aspect that provides universities and other NPE's to sue corporations when they do not actually make the product covered by their patent rights.
In my opinion, the battle against NPE's is at its core a battle against the public policy that serves as the foundational basis of our patent system--disclosures of innovations that "promote the progress of science and the useful arts." Those of us who believe that NPE's meet the objective and, as such, are not inherently "evil" must begin to reframe the argument and communicate the societal benefits of patent publication to those who set public policy. Of course, it will be difficult for the diverse interests of NPE's to come together in a uniform manner to present the arguments against corporations that today control the public argument. I hope that cooler heads will prevail as we move forward with patent reform in the current Congress.
Wednesday, May 13, 2009
Want to Obtain Patents to Protect You from Competitors Knocking Off Your Innovative Products or Technology? It's Easy-Don't Be "Selfish"
Recently the CEO of a start-up asked me for the most important advice I could give before she filed a patent application directed toward protecting her company's core technology. In response, I said "don't be a selfish patent applicant." Few patent applicants obtain such counsel from their advisers and it shows: the vast majority of patents are written from a selfish perspective.
(Note that I am using "selfish," in the context that the term is used in marketing i.e., thinking that others see the same things in your product or technology as you do. When one selfishly markets her product or technology, she assumes that others will buy it for the benefits she sees, not for the reasons upon which consumers will base their purchasing decisions. So when I say that most patents are written "selfishly," I mean that applicants (both individual and corporate inventors alike) approach the patenting process with a focus on what they think are the important aspects of the product or technology, as opposed to what others will find innovative.)
A focus on the invention itself while drafting a patent application often means that the innovation is not adequately covered to prevent knock-offs by competitors. By "innovation," I mean the technological or consumer problem that is solved by the invention which is why someone actually buys the product or technology embodied by the invention in the first place. When such an innovative product or technology becomes successful in the marketplace, a competitor will certainly seek to copy those features that make it "innovative." But if the patent fails to properly cover the innovation, a competitor can mirror the successful product or technology with little fear of liability because the same problem can be solved using different design features than those set forth in the patent.
The key to preventing knock-offs of innovative products or ideas is for those responsible for drafting patent applications to look outside the perceived inventive aspects of a new product or technology to examine how others would view the problem addressed by the new product or technology. Put simply, the patent application drafting process must include an "unselfish" analysis of how others might try to solve the same problem to which the innovative product is addressed.
A good illustration of my premise here is the touchless towel dispensers that are now ubiquitous in public restrooms. These dispensers provide a towel to a user without her having to touch the dispenser. This enables a more hygienic experience for the user and also significantly reduces the amount of towel material used. The number of touchless dispensers in use today means that this product solved a significant market need. However, if one examines these products closely, she will notice that there are now several different manufacturers of these products in addition to the original innovator Georgia-Pacific ("G-P"), which introduced its EnMotion(R) dispenser several years ago. (Full disclosure: I was employed in the patent department of G-P, but I was not involved or knowledgeable of any business or legal decisions regarding the EnMotion towel dispenser product.)
A Google search for "touchless towel dispensers" indicates that there are at least 6 different manufacturers of these products for use in commercial restrooms. Each of the non-G-P dispensers appear to work using slightly different design features than the EnMotion branded dispenser. For example, one non-G-P touchless dispenser presents a towel to the next user upon tearing of a towel. This feature apparently gets around the G-P product's function to dispense a towel to the user when waving her hand in front of a sensor. Another competitive version requires the user to put her hand below the dispenser to activate a sensor instead of in front to obtain the towel for use. Presumably, the consumer does not care how she gets her towel dispensed from a touchless dispenser--that is, each of these 6 manufacturers of touchless dispenser provides the same consumer innovation, albeit using slightly different designs.
The question is why G-P's patent filing efforts relating to its touchless towel dispenser product (which were extensive) do not appear adequate to prevent these multiple competitors from copying its innovation. My answer to this is that it is likely that those responsible for identifying the inventive aspects of the G-P touchless dispenser prepared the patent filings from the context of what they invented, not what problem the product solved for the user. In other words, G-P's representatives selfishly patented the towel dispenser.
This is not to say that G-P's representatives did a bad job covering the touchless towel dispenser invention. Those responsible for G-P's patenting efforts competently drafted the applications with an eye toward how others would copy their invention--that is, what aspects of their fully-formed product could be knocked-off by others for inclusion in a competitive product. Certainly, the G-P patents cover the G-P invention very well, which can be inferred from the fact that none of the competitive products appear to mirror the specific operational features of the G-P touchless towel dispenser. Because of this patent coverage, the competitive towel dispensers must accomplish the same innovation i.e., hygienic dispensing and waste-reduction of paper towels usage in public restrooms using designs that were presumably not considered to be part of the G-P inventive design.
How could G-P have reduced the amount of competition in touchless dispensers? The simple answer is by seeking to patent the innovation, not just the specific G-P touchless dispenser invention. The innovation of touchless dispensing is what the consumer cared about and this is what G-P's representatives should have endeavored to patent. This could have been accomplished by addressing the hygienic nature of the dispensing e.g., fewer germs after a number of uses or by identifying a reduction in the amount of paper used in a certain number of uses. In other words, to protect the G-P touchless dispenser innovation, G-P's representatives should have identified the functional benefits provided by the product because these functional features necessarily exist in knock-off products that solve the same consumer problem.
Of course, obtaining patent coverage that is broad enough to protect an innovation such as the G-P touchless dispenser is easier said than done. However, by drafting patent applications with an eye toward how others would attempt to copy the functional features of a new product or technology can put a patentee in the position of owning the innovation, instead of just one or more ways to address a technology or consumer problem. By approaching the patent drafting process from a "non-selfish" perspective, others will be less likely to knock-off the functionality that serves to solve the innovative problem.
(Note that I am using "selfish," in the context that the term is used in marketing i.e., thinking that others see the same things in your product or technology as you do. When one selfishly markets her product or technology, she assumes that others will buy it for the benefits she sees, not for the reasons upon which consumers will base their purchasing decisions. So when I say that most patents are written "selfishly," I mean that applicants (both individual and corporate inventors alike) approach the patenting process with a focus on what they think are the important aspects of the product or technology, as opposed to what others will find innovative.)
A focus on the invention itself while drafting a patent application often means that the innovation is not adequately covered to prevent knock-offs by competitors. By "innovation," I mean the technological or consumer problem that is solved by the invention which is why someone actually buys the product or technology embodied by the invention in the first place. When such an innovative product or technology becomes successful in the marketplace, a competitor will certainly seek to copy those features that make it "innovative." But if the patent fails to properly cover the innovation, a competitor can mirror the successful product or technology with little fear of liability because the same problem can be solved using different design features than those set forth in the patent.
The key to preventing knock-offs of innovative products or ideas is for those responsible for drafting patent applications to look outside the perceived inventive aspects of a new product or technology to examine how others would view the problem addressed by the new product or technology. Put simply, the patent application drafting process must include an "unselfish" analysis of how others might try to solve the same problem to which the innovative product is addressed.
A good illustration of my premise here is the touchless towel dispensers that are now ubiquitous in public restrooms. These dispensers provide a towel to a user without her having to touch the dispenser. This enables a more hygienic experience for the user and also significantly reduces the amount of towel material used. The number of touchless dispensers in use today means that this product solved a significant market need. However, if one examines these products closely, she will notice that there are now several different manufacturers of these products in addition to the original innovator Georgia-Pacific ("G-P"), which introduced its EnMotion(R) dispenser several years ago. (Full disclosure: I was employed in the patent department of G-P, but I was not involved or knowledgeable of any business or legal decisions regarding the EnMotion towel dispenser product.)
A Google search for "touchless towel dispensers" indicates that there are at least 6 different manufacturers of these products for use in commercial restrooms. Each of the non-G-P dispensers appear to work using slightly different design features than the EnMotion branded dispenser. For example, one non-G-P touchless dispenser presents a towel to the next user upon tearing of a towel. This feature apparently gets around the G-P product's function to dispense a towel to the user when waving her hand in front of a sensor. Another competitive version requires the user to put her hand below the dispenser to activate a sensor instead of in front to obtain the towel for use. Presumably, the consumer does not care how she gets her towel dispensed from a touchless dispenser--that is, each of these 6 manufacturers of touchless dispenser provides the same consumer innovation, albeit using slightly different designs.
The question is why G-P's patent filing efforts relating to its touchless towel dispenser product (which were extensive) do not appear adequate to prevent these multiple competitors from copying its innovation. My answer to this is that it is likely that those responsible for identifying the inventive aspects of the G-P touchless dispenser prepared the patent filings from the context of what they invented, not what problem the product solved for the user. In other words, G-P's representatives selfishly patented the towel dispenser.
This is not to say that G-P's representatives did a bad job covering the touchless towel dispenser invention. Those responsible for G-P's patenting efforts competently drafted the applications with an eye toward how others would copy their invention--that is, what aspects of their fully-formed product could be knocked-off by others for inclusion in a competitive product. Certainly, the G-P patents cover the G-P invention very well, which can be inferred from the fact that none of the competitive products appear to mirror the specific operational features of the G-P touchless towel dispenser. Because of this patent coverage, the competitive towel dispensers must accomplish the same innovation i.e., hygienic dispensing and waste-reduction of paper towels usage in public restrooms using designs that were presumably not considered to be part of the G-P inventive design.
How could G-P have reduced the amount of competition in touchless dispensers? The simple answer is by seeking to patent the innovation, not just the specific G-P touchless dispenser invention. The innovation of touchless dispensing is what the consumer cared about and this is what G-P's representatives should have endeavored to patent. This could have been accomplished by addressing the hygienic nature of the dispensing e.g., fewer germs after a number of uses or by identifying a reduction in the amount of paper used in a certain number of uses. In other words, to protect the G-P touchless dispenser innovation, G-P's representatives should have identified the functional benefits provided by the product because these functional features necessarily exist in knock-off products that solve the same consumer problem.
Of course, obtaining patent coverage that is broad enough to protect an innovation such as the G-P touchless dispenser is easier said than done. However, by drafting patent applications with an eye toward how others would attempt to copy the functional features of a new product or technology can put a patentee in the position of owning the innovation, instead of just one or more ways to address a technology or consumer problem. By approaching the patent drafting process from a "non-selfish" perspective, others will be less likely to knock-off the functionality that serves to solve the innovative problem.
Friday, May 8, 2009
Why Does Your Company Fail to Treat IP Asset a Corporate Asset? A New Article Proposes Organizational Behavior as the Problem
While we can argue about the exact amount, without question, intangible assets form the majority of corporate value today. Matters involving IP are therefore predominately business issues, as opposed to legal issues or technical issues. For example, IP in the form of patents or trademarks (or both) frequently serves as a basis of the premium pricing that can be obtained from a differentiated product line. Also, IP directed toward a competitor's technology can legally limit the ability of a competitor to expand its offerings, thus decreasing its ability to compete. There are many other examples of the business value of IP, all which when strategically obtained and managed can greatly increase the overall financial position of the corporation using IP as a business tool.
Notwithstanding the substantial dollars associated with corporate IP decisions, most organizations leave questions of IP in the hands of their legal and technical teams. Of course, many corporate IP professionals realize that this is an outdated view of IP management and that corporate asset value cannot be properly maximized by maintaining IP issues in the traditional legal/technical silo. These IP managers nonetheless often face considerable difficulty getting their business teams to pay attention to IP issues as they would other issues imbibed with significant financial ramifications.
The question is why an otherwise sophisticated professionals would cede management of a substantial corporate asset to a lawyer or scientist, when they would not do the same for other business decisions. That is, would these same business professionals put lawyers or scientists in charge of product development or pricing decisions? Of course not. Clearly, there needs to be a way to get business managers to "get" IP.
My friend Jordan Hatcher and his senior colleague Andrew Watson at the IP Strategy consultancy IP Value Added have written a great article that addresses the structural impediments in an organization that can prevent the business team from understanding and managing IP as an asset. Significantly, Jordan and Andrew have placed impediments to an asset-based approach to IP management in the context of Insights Discovery (based on Jung's work in behavioral psychology), which is used to analyze organizational behavior and corporate culture.
The article is very interesting, and I think that those seeking to understand why their business team does not "get" IP will find Jordan and Andrew's analysis illuminating. The article does a great job describing the traditional (rights-based) approach to IP management and the more modern (asset creation focus) view.
Traditional--IP is a legal issue:
Notwithstanding the substantial dollars associated with corporate IP decisions, most organizations leave questions of IP in the hands of their legal and technical teams. Of course, many corporate IP professionals realize that this is an outdated view of IP management and that corporate asset value cannot be properly maximized by maintaining IP issues in the traditional legal/technical silo. These IP managers nonetheless often face considerable difficulty getting their business teams to pay attention to IP issues as they would other issues imbibed with significant financial ramifications.
The question is why an otherwise sophisticated professionals would cede management of a substantial corporate asset to a lawyer or scientist, when they would not do the same for other business decisions. That is, would these same business professionals put lawyers or scientists in charge of product development or pricing decisions? Of course not. Clearly, there needs to be a way to get business managers to "get" IP.
My friend Jordan Hatcher and his senior colleague Andrew Watson at the IP Strategy consultancy IP Value Added have written a great article that addresses the structural impediments in an organization that can prevent the business team from understanding and managing IP as an asset. Significantly, Jordan and Andrew have placed impediments to an asset-based approach to IP management in the context of Insights Discovery (based on Jung's work in behavioral psychology), which is used to analyze organizational behavior and corporate culture.
The article is very interesting, and I think that those seeking to understand why their business team does not "get" IP will find Jordan and Andrew's analysis illuminating. The article does a great job describing the traditional (rights-based) approach to IP management and the more modern (asset creation focus) view.
Traditional--IP is a legal issue:
- IP is a handled elsewhere (down the corridor, second on the left, through the door marked “Legal”)
- Lacks board visibility and will struggle in competition with every other business initiative to gain attention
- Too caught up in the process behind acquiring and maintaining rights without focusing on taking risk and getting results for the business out of its IP
Analytical, objective, controlled, planned, balanced, deliberate, questioning and formal.
- What is the end result of acquiring IP within our business (WHY are we getting IP and WHAT are our competitors doing with IP?)
- Asset creation requires risk taking, so what risks are we taking with our IP assets?
- Are we being dynamic, creative and innovative around how IP can be used as a part of the business strategy?
Of course, it is one thing to identify the need for organizational change, but it is wholly another to actually be able to effect the change needed to treat IP as an important corporate asset. In this regard, I agree with Jordan and Andrew that an organization's CEO will not "get" IP unless someone who commands their attention and respect talks to them about the substance and importance of IP to the value of their business.
To this end (and I can report from experience that this is true), corporate IP managers--who are normally far down the organizational chart from from the CEO--are not likely to be able to have the credibility and forum to effect the degree of re-structuring needed in most companies. Jordan and Andrew indicate that the following persons are best equipped to get the attention of the CEO and others who need to understand and embrace the value of IP to their organization in order to make the necessary change happen:
- chairmen
- non-executive directors
- advisory boards
- investors (funding sources and debt providers)
- analysts
- his or her direct reports – the C-level management group
Jordan and Andrew also propose IP structures that can result in successful IP value creation through proper management processes. I agree that the actual corporate structure is less important than the person who is put in charge of IP business assets. That is, the person can be a lawyer with a strong business sense or it can be a business person who has been deeply involved in IP matters such that they have obtained a substantial working knowledge of IP issues. What matters more is that the reporting structure and incentives are directed toward maximizing IP as a corporate asset, not merely to keep the costs of IP procurement and management low (as is typically the case in the traditional corporate IP structure).
Corporate IP managers who are experiencing difficulty in convincing their business teams that IP should be at the fore of their business considerations would be well-served by considering Jordan and Andrew's perspective on organizational impediments that prevent a company from treating IP as a business asset. They are to be commended for this thoughtful article and I look forward to additional substantive analysis of IP management issues from the IP Value Added team.
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