Are some organisations trapped in a desire to “own” ideas that damages their ability to discover and address the best commercial opportunities?
Lucid Innovation’s Alistair Williamson argues that whilst intellectual property (IP) can be incredibly valuable, many organisations could achieve a better return on investment using innovation processes less focussed on IP, and more on fast, creative discovery of opportunities and ideas that address them.
Attempting to gain exclusivity is an attractive concept, so a lot of money is often spent by organisations on obtaining patents early. Three credible American sources put the economics of the process, particularly patents, in perspective:
Richard Maulsby, a director of U.S. Patent & Trademark Office, claims that there are around 1.5 million patents in force in the USA, of which about only 3,000 are commercially viable.(1)
Gene Quinn, a patent attorney and founder of www.ipwatchdog.com reckons basic US patents cost between £3,000 and £10,000.(2)
The University of Houston found that patent owners fail in 75% of the cases brought against infringers.(3)
So only 0.2% of patents ever make a return, they collectively cost billions to acquire, and only a quarter stand up in court.
What is the attraction?
Patents make good sense if you have thoroughly investigated a lucrative and long-term opportunity, developed great ideas that you can get to market, and if you are certain that you could afford to defend your intellectual property if a dispute ever went to court. Managed well, patents have the potential to make their owners a fortune. As an example, Lipitor, Pfizer’s cholesterol-lowering drug, was the most valuable patent in history. In the fourteen years between the product launch in 1997 and patent expiry in 2011, revenues exceeded $105 billion.(4)
The relevance of the Lipitor story to most businesses, however, is questionable. No doubt Pfizer worked in secret before filing its patent. The company then needed six years to get Lipitor to market. Today the pace of competition is so fast that few opportunities remain unsatisfied for long periods of time. Few could match Pfizer’s legal budget, its R&D resources and even fewer attempt to address opportunities on the same scale.
So is the typical “patent, develop and attempt to market” approach appropriate for lean, agile businesses today?
To qualify the value of IP to the majority, we need to debunk a common misnomer – the concept of “IP protection”.
Owning a patent doesn’t “protect” anything. It is like going through a process to be allowed to lease an island, on which there could be “gold”. Your patent asserts ownership for a limited period. It sets a clock running for you to seek recognition for your ownership world-wide. If you can afford it, apply in time, and pay regular fees to authorities all over the world, many will acknowledge your rights.
The patent tells the world that you value the island and it gives others a map of how to get to the gold. In theory, if others want it, you may be able develop a mine yourself, then sell or rent rights to exploit the reserves at a profit.
In reality though, the likelihood is that most people probably won’t value what you believe is gold. Others might prefer alternatives to your “gold”, or will be inspired to develop something that addresses the same opportunity or market demand differently. You may even find organisations trying to steal your gold. Unfortunately the statistics show that defending your IP is more likely to enrich your lawyer than it will yourself! Worse still – tightly-defined or badly-timed IP can limit the scope in which you exploit any exclusivity.
So how can agile organisations avoid the patent trap?
Asking ‘what if’ and accepting that in the process of developing a good idea, many ideas will fail, is critical. As Linus Pauling, scientist and two-time Nobel Prize winner, said: “To have a good idea you must ﬁrst have lots of ideas.”
Multiple ideas managed well don’t have to mean high costs. Accepting that in developing ideas, the underlying opportunities need rethinking to be viable, is part of a good innovator’s psyche. Trying out ideas in groups, in the form of rough models, role-play and sketches, means more intelligence to pursue the idea or move on quickly. This is what Lucid’s engineers and designers do every day.
Lucid Innovation has developed ID, a rapid process that balances evaluation with creativity. ID quickly enables our team to collaborate with yours; exploiting know-how that develops products and services that could result in more robust, valuable intellectual property.
ID is split into two stages. In the first stage we work with clients to evaluate an opportunity and develop ideas from a lateral, independent perspective. If we agree an opportunity is worth pursuing we’ll move on to the second stage, which consists of a qualified IP search, a market overview and “what if”, collaborative idea generation sessions.
Armed with lots of options and focused on commercial results, businesses can design better, scale faster and risk less. Best of all, the process can be completed within a matter of days and costs less than many patent applications. Put simply: with ID, you can risk less and achieve more quickly.
To find out more, please contact us here.
(3) (Paul M. Janicke, University of Houston Law Center and Lilan Ren, University of Houston, “Who Wins Patent Infringement Cases?,” American Intellectual Property Law Association Quarterly Journal, Vol. 34, p. 1, 2006)