Thursday, January 12, 2006

BasicIP's 6 Stages of Inventors

Today Rethink(ip) posted Bill Meade's part 1 of The 6 Life Stages of Inventors. As stated he does, on purpose, over simplify the article but as a result I think it causes a key point to be missed.

I think Bill definitely goes in the right direction with the start of his 6 stage. However, he seems to view one of the disruptive "off-ramps" from the bottom up where as I suggest a more prudent and long term view should be to address it from the top down in addition to Bill's bottom up approach.

This is where I thought he missed out on a key point: IP strategy needs to be supported from the top down and motivated from the bottom up. Simply motivating employees from the bottom up by giving them tools to overcome their anti-IP boss won't solve long term invention submission issues.
Contemplating short term fixes which include coaching the boss that people aren't "wasting time" by inventing doesn't seem to suggest that IP/Business training should be done at the manager and executive level. This should be done at, the very least, in parallel with employee training or incentive programs. Top level buy-in that IP is an asset to the company and should be taken seriously by everyone is a key success factor. I don't think merely stroking the non-supportive boss by making him a co-inventor makes long term sustainable advancements to the IP process. There needs to be an understanding that promoting and supporting IP furthers the business and long term value for the company. As well, just adding an inventor to make him happy may cause legal issues unless he really contributed to the invention.
War Story: Just by adding a boss to an invention caused huge litigation problems for a defendant in an IP lawsuit I was involved in. Simply "appeasing the boss" cost them an extra $10k or so in legal fees to sort it out a few years down the road once the other side found out about it.
I have found by spending time to really educate and promote the win-win benefits of IP to the management and executives, I have considerably more success in getting inventors to submit ideas and become involved in the patent processes. Why? Because the importance of IP and idea submission is preached to a wider audience (all staff) in several mediums (meetings, presentations, design reviews), all without a member of the IP Team there to remind them all.

On the inventor level while Incentive Programs motivate some, the enthusiasm fades quickly unless supported in parallel with fresh and innovative training programs. I have found success in doing both, but limited long-term success when I focus on just one.

BUT, all of the above is pointless unless quality ideas an innovations can be drawn from the inventors. Merely encouraging inventors to hit a quota of submissions does nothing for the value of the future patent portfolio. I am making an assumption by the title that Bill will address the quality of inventions in the "Calibration" stage.

I am looking forward to reading the rest of Bill's stages, and hope he addresses the quality/quantity issue.

And, for the record, I do like the cookie and T-shirt idea. I will try that one next time....

Saturday, January 7, 2006

Strategic Patenting Decisions and their Influence on Firm Patent Valuation

I finished my thesis in the area of patent strategy a few months ago and I will be posting revised and extended sections of it on this blog over the next month or so as I prepare it for publication. My research focused on the economic and business management side of IP, specifically related to small firms and their ability to positively influence their future patent portfolio value.

My interests were rooted in wanting to understand the business and economic drivers of IP in order to ensure more legal based successes in business practice.
Value can be measured in many different ways but I opted to use a relative "internal" value, using patent citation counts as the proxy for value. This is heavily used in research with academic IP focused Economic authors such as Manual Trajtenberg (Tel-Aviv University), Adam Jaffe (Brandeis University) and Bronwyn Hall (UC Berkeley).

Title: Strategic Patenting Decisions and their Influence on Firm Patent Valuation


The economic rents associated with patent portfolios are highly skewed with only a small portion having value. This leads researchers and industry to ask what early strategic patenting decisions around the patent itself will impact the future value of the patent, specifically within the context of small firms. To address this question the paper modeled these ex-ante strategic patenting decisions by using a common measurement of forward citations as a proxy for patent value. Six indicators were modeled with two of them, provisional basis and priority claim, not explicitly investigated in previous research.

A focus on the small firm as well as the two strategic patent decision indicators provisional basis and priority claim are areas that have not been explicitly investigated in previous research.

A stronger relationship was found for small firms with indicators of breadth and priority claims, as compared to a weaker relationship of only claim counts for large firms. Research also indicated that from a small firm management perspective the most potential valuable patent is one that covers a broad scope of technology is a new filing and does not claim priority to other applications.

I am working on a rewrite for publication , so any comments you have on the topic would be appreciated as they may influence my publication submission rewrite. In the mean time if you would like a copy for peer review, please let me know via email and I will send one your way.

Monday, January 2, 2006

Managing Intellectual Property & Business

I was asked to write a short summary of an article with some commentary, so I thought I would post it as well. I based the summary on an article entitled Intellectual Property - from Management to Litigation, as published in The Deal on April 25th, 2005. A PDF of the article can be found here on the Brinks Hofer Gilson & Lione website.

Several months ago the Grokster case was argued in the US Supreme Court. This 2005 case was to our digital generation to what the Betamax case was to 1984. The Betamax case answered for the affirmative when looking at if Betamax could be used for substantial noninfringing uses and thus legal for Sony Corporation to sell. Now we have new digital music and video files capable of being transmitted over any remote digital network. This means the issue, albeit more technical, appears to have come up again but in reality the peer to peer based Grokster case needs to be viewed from a different perspective than Betamax was. The content owners, who claim their intellectual property is being given away for free with these file-sharing sites, realize they can't stop technology and thus are simply trying to limit their use.

Balance between intellectual property protection and innovation can best be viewed through a blending of economic, intellectual and legal issues.
First, one must consider the fundamental reason for intellectual property protection was created to ensure the protection for innovators - through legal avenues inventors are given economic incentive to continue to invent. But at what point does old protected innovation stifle new innovation? Open competition is also required to prevent unhealthy economic monopolies and stimulate more business. It is this perspective of "fair use" that most proponents of technology over intellectual property state their cases on. As the global economy is starting to shift to more of a knowledge base economy, the there is a need for proactively managing a company's intellectual property protection and exploitation, instead of reactively managing within the marketplace.

To add a third dimension of complexity to the issue of protection & innovation the growth and change of a company's structure in today's working global environment should be considered. This suggests for mergers and acquisitions the intellectual property (IP) of a company is becoming more important to consider. One reason is due to the increased knowledge economy of software and other intangible literature. The second is some firms that are up for acquisition may not realize the potential of their IP, instead being too focused on their tangible products and their markets. IP also extends beyond the traditional business merger and can be used for two competitors to create a larger user base and thus a potential standard to which they can both benefit instead of fighting for the existing customer base. A third is the realization that global business is a necessity to stay competitive. Global outsourcing mixed with differing intellectual property legal protection across country jurisdictions can create a complex environment to structure an acquisition. Having IP enforced or protected differently in multiple jurisdictions where certain portions of a company's operations reside may impact the way product or services can be handled.

But with the cost associated with acquiring IP, one must be willing to enforce it.

One obvious component in enforcement is litigation, which has showed no signs of weakness in the past few years. While new technology cases such as Grokster are expanding into unchartered legal territory, many of the recent cases have honed current law. Recent casts have been clarifying more mundane, but necessary, portions of IP law, such as claim construction and willful infringement.

The most recent willful infringement case, the Festo case, deals with the issue of treble damages when a corporation is held to have willfully infringed a patent. Historically part of a successful defence to treble damages was to produce a good faith non-infringement opinion of counsel. This caused an issue of adverse inference for defendants if they chose to not use counsel for an opinion, or reveal the opinion in court. This means the judge or jury could assume an opinunfavorablevourable and award treble damages. With Festo eliminating this adverse inference rule, companies have larger legal latitude in their handling of potentially infringing patents at the time an opinion is drafted.

The recent Phillips case relates to the issue of claim construction. Presently claim construction is taken as a matter of law and defined by the judge and dictated to the jury. But with this being a point of law it resulted in over 50% of the patent cases tried in district court being overturned by the court of appeals. With a $2 to $5 million cost to take a case through litigation, it posed huge financial uncertainties for parties of the court as it moved to appeals. After accepting amicus briefs the Federal Circuit panel issues it's en banc ruling giving a detailed recitation of claim construction principles, but it did not address the differences applied to the district courts over the federal courts. This infers the issue of large amount of reversals in the federal courts may still stand for the time being.

So where does this leave us?

There are two common ways to manage a firm's intellectual property - from the business perspective of products and markets, and from the focused legal perspective of asset protection.

Within both views the goal is to ensure any existing IP is being utilized to its full potential. In either case IP is a complex issue to deal with and should not be considered as an afterthought or add on to corporate growth and strategy. Strict interpretation and enforcement of IP law is becoming more fluid as technology continues to evolve and mature, leaving many IP issues such as open-source software and peer-to-peer programs unguided by the courts.

As the courts and legal field have typically move slower than the technology growth of our generation, I suggest it will provide an interesting wild west type free for all at least for the next few years of IP business.

I think I'm gonna get me one of them there patent six shooters when I get back to work.

Sunday, January 1, 2006

ipResearch: Mission Statement

I have started this blog to codify my IP related knowledge base and information into one single point of reference.

To fully inderstand and employ Intellectual Property (IP) successfully in practice one must simultaneously balance the economic, management and legal perspectives. A considerable amount of the current academic research and business applications are focused on only one of these areas - I will fill the current gap by addressing all three points of view within my posts.
The goal of ipResearch is: to become a forum to share and exchange best practices, ideas and issues that arise within intellectual property management.

At the very least it will be my personal, one-stop, resource for the IP information I use in my work environment.