The Basics of Intellectual Property and Patent Strategy for Maximizing Business Value: The Good, the Bad and the Ugly So You Can Make a Fistful of Dollars
This IP Strategy Overview was presented at a conference of innovators at Georgia Tech's College of Architecture in October 2013. The goal of this presentation is to go beyond the usual lawyer-generated content to highlight not only the positive aspects of IP, but also to give a reality check as to the likely ROI of investment in protection. A basic overview of IP (patents, copyrights, trademarks, trade secrets) is provided. Additionally, commonly overlooked forms of intangible asset value are presented. A case study of an innovation protection strategy is highlighted. Recommendations for business relevant IP and patent protection strategies are also included.
Semelhante a The Basics of Intellectual Property and Patent Strategy for Maximizing Business Value: The Good, the Bad and the Ugly So You Can Make a Fistful of Dollars
How To Protect Your Company's Intellectual PropertySecureDocs
Semelhante a The Basics of Intellectual Property and Patent Strategy for Maximizing Business Value: The Good, the Bad and the Ugly So You Can Make a Fistful of Dollars (20)
Falcon's Invoice Discounting: Your Path to Prosperity
The Basics of Intellectual Property and Patent Strategy for Maximizing Business Value: The Good, the Bad and the Ugly So You Can Make a Fistful of Dollars
1. IP: The Good the Bad and the UglyHow to Create Value So You End Up
with a Fistful of Dollars
Jackie Hutter, MS, JD
JHutter@LeanLegalTeam.com
2. Take Aways from Today’s Conversation
Overview of the Types of IP
• Not just patents but a “whole toolkit”
Demonstrate that patenting is a business issue
not a legal or technical issue
• New model for creating long term business value
Introduce concept of patenting innovation vs.
invention
• Key to durable competitive advantage
Copyright: The Lean Legal Team 2013
3. My Perspective
• Almost 20 years as IP professional
– Law firm
• Prosecution and counseling
• Litigation
– Corporation
• Legal and innovation counsel
• Last 6 years as “IP Strategist”
– Put business issues before legal
issues
– “Validate your business, not just
mine”
– Truth telling, not risk mitigation
• Research scientist/inventor
– Insights from the trenches
Copyright: The Lean Legal Team 2013
4. IP Strategists?
•New breed of business
counselor who aligns client’s
commercial strategy with IP
protection
▫Beware lawyers who “do
strategy”
•IP and business expertise
•Driving principle: “IP is
worthless if it does not
support a viable business
strategy”
• Frequently in-house lawyer,
but not always
•Many not attorneys
Copyright: The Lean Legal Team 2013
5. The Good, The Bad and the Ugly of
Creating Value from IP
Copyright: The Lean Legal Team 2013
7. Patent vs. Intellectual Property
Patent
Copyright
Trade
secret
Trademark
“Intangible
assets”
Copyright: The Lean Legal Team 2013
8. Patent Types
1. Utility Patent:
patents on inventions which function in a new way or to
provide a new result
2. Design Patent:
patents on the aesthetic design or ornamentation of
something that already exists; no change for functionality
of the object, only gives it a novel appearance
3. Plant Patent:
patents on types of plants that may be reproduced by
grafts and cuttings
Copyright: The Lean Legal Team 2013
9. What Is a Utility Patent?
• Exclusive rights granted by a
government to anyone who
invents or discovers any new
and useful process, machine,
article of manufacture, or
composition of matter, or any
new and useful improvement
thereof
• Patent irrelevant to business
value, only demonstrates
meets legal requirements
Copyright: The Lean Legal Team 2013
10. US Utility Patent Data
PatentlyO.com
Copyright: The Lean Legal Team 2013
12. Where Can You Obtain a
Patent?
National
Patent Office
WIPO
• USPTO
• State Intellectual Property Office of
China
• Japan Patent Office…
• International patent application
office
• headquartered in Geneva,
Switzerland
• Still must apply nationally
Copyright: The Lean Legal Team 2013
13. U.S. Utility Patent Applications
provisional
application
non-provisional
application
Allow filling
without any formal
patent claims, oath
or declaration or
any information
disclosure
statement
Less costly
No real protection
“Saves place in
line”
Contains at least
a specification, all
the drawing
figures and at
least one claim.
Goes through
examination
Can be filed
multiple times
Copyright: The Lean Legal Team 2013
14. Utility Patent Application Process
Invention Identified
and Vetted for Filing
Expense
Application Drafted
and Filed by Attorney
$5,000-$50,000
Application Published
18 months
Final Rejection
Response by Attorney
Amendment of Claims
$3000-$10,000
Office Action
12-36 months
Allowance
$1500
Maintenance Fees
3.5, 7.0, 11.5 Years
$900, $2300, $3800
Copyright: The Lean Legal Team 2013
15. Patent Features
Exclusivity
• One patent per invention
• Without patent holder
permission no one can make,
market, use, import, etc the
patented invention
– Otherwise, regarded as patent
infringement
Territory
• Patent limited to certain country
• No effect on other country
Time
• Term of a patent is limited
• 20 years from earliest filing date
Copyright: The Lean Legal Team 2013
in US
16. Patent Business Basics
What Patents Are (and Aren’t)
• Given by government for
useful, new and unobvious
inventions
• Recognition that invention
meets the legal requirements
for patentability
– Checklist of statutory
obligations for both
invention and way patent
is written
• Only market determines
business value of invention
Copyright: The Lean Legal Team 2013
17. Patent Business Basics
Patents as a Property Right
• Not a monopoly
• A right to exclude
– Broader
• Can use
• Not use
• Keep others from doing
what they would otherwise
be free to do
• No right to practice the
invention claimed
– Inventor can be blocked
by other’s patent rights
Copyright: The Lean Legal Team 2013
18. Patent Business Basics
What are Patent Owners Rights?
• Improvements
existing patented
inventions also
patentable
• “Improvement”
patents
• If best way to
practice underlying
invention, can stop
first inventor
• Someone else can
improve on your
patented invention
and stop you so you
Copyright: The Lean Legal Team 2013
are both blocked
21. Other Ways to Protect Business Ideas
“The Regulars”
• Trade secret protection
– Good when idea cannot be
reversed engineered
• Coke® formula, customer
lists
– Can be licensed or sold, but
harder because often not wellrecorded
• Trademark protection
– For some business ideas, strong
trademark protection more
valuable than patent rights
Copyright: The Lean Legal Team 2013
22. Other Ways to Protect Business Ideas
“The Regulars”
• Copyright protection
– Good for software /logos
– Statutory damages of at least $100K
available if register prior to bringing
suit
• Design patent protection
– Protects ornamental aspects of
invention
– Can exist with utility protection
– Recent case law make stronger
• But not as strong as utility patents
– Inexpensive and quick
• < $2K and typically 1.5 years or
Copyright: The Lean Legal Team 2013
23. Other Ways to Protect Business Ideas
“Not So Regulars”
• Ride on coat-tails of another
patent
– Strategic alliances, joint
ventures
• Ex: If supplier has patent to
raw material and you obtain
exclusive rights to use , can
be almost the same as
obtaining own patent
• Commercial relationships
– Contractual-based market
exclusivity
Copyright: The Lean Legal Team 2013
• Many others!
24. Other Ways to Protect Business Ideas
“Not So Regulars”
• First Mover Advantage
– Sometimes first to market ends
up effectively owning the
relevant market, especially
when
• Limited distribution
opportunities;
• Short shelf life; or
• Only enough customers for 1
supplier
• Customer Traction
– “Traction is the new IP”
Copyright: The Lean Legal Team 2013
26. Who Makes Money from Patents?
% Probability that $ Obtained
100
90
80
70
60
50
40
30
20
10
0
Patent Lawyer
USPTO
Entrepreneur
Copyright: The Lean Legal Team 2013
27. Complete this sentence
• When all you have is a
hammer, everything looks like a
_________.
Copyright: The Lean Legal Team 2013
29. Do You Really Know What a
Patent is Good For?
• Many assume patent are
necessary step for
business
– Could be waste of
resources
• Money and time
• Many assume that not
necessary to create
business value
– Often wrong
• Lose exclusivity in
successful
business model
Copyright: The Lean Legal Team 2013
30. Patent Business Basics
Most Patents Worth Little
• Very few patents
worth what people
think they are
– Cover invention that
no one will buy
• Don’t understand
underlying value
proposition
– Is there IP? Check.
– False sense of
security
Copyright: The Lean Legal Team 2013
31. Patents: Not What People Think They Are
• Does not guarantee invention is
valuable
– Government recognition that idea
meets legal requirements of
invention
– Free market/business savvy
determines actual value
• If business value in idea, then
patent might be necessary (but not
always)
– Do we “fetishize” patents?
• Most filed before a marketable
product
– Issued patent often does not
cover actual product
– Lawyers recommend early filing 2013
Copyright: The Lean Legal Team
32. What You Need to Know Before Filing
• Contract with government
– Patentee discloses trade secrets
in exchange for limited exclusive
rights
• Repudiation of trade secret
protection
– Must “open the kimono”
• Patentee obligated to be truthful
– Disclose all information known
about invention
• Relevant times
– 3-7 years from filing to issue
– Lasts 20 years from date of filing
Copyright: The Lean Legal Team 2013
33. What You Need to Know Before
Filing
• Must be filed within 1 year of 1st
public use or sale
– Some flexibility
– Timing relates to THE invention
• Substantial ability to delay
filing if strategic about
process
• More patents not necessarily
better
– 1 with commercially broad
claims enough
• Must “cover the innovation
not just the invention”
Copyright: The Lean Legal Team 2013
34. What You Must Know Before
Filing
• Costly
– Minimum of $10K for simplest
technology
– $20K or more of moderately
complex cases
– Foreign filing in top line countries
can easily end up costing $250K or
more
• Lengthy
– Today average pendency in US is 3
years or more
• Significantly longer in foreign
countries
– No protection until issuance
Copyright: The Lean Legal Team
– Market often exhausted by time 2013
35. What You Must Know Before
Filing
• Systemic problems in Patent
Office enhance difficulties
– Even the most carefully
drafted and skillfully
prosecuted may never issue
– Costs cannot be recovered
if patenting efforts
ultimately fail
Copyright: The Lean Legal Team 2013
36. What You Must Know Before Filing
• When are Patents Worth
$$?
• When a current or future
viable business model is
covered by the claims
– Yours
– Someone else’s
• No business model
coverage = $ 0 value
Copyright: The Lean Legal Team 2013
37. What You Must Know Before
Filing
• But, even if viable
business model and
patentable, there are
times when don’t want
patent
– Will someone copy?
– Do you care?
– Can you use
defensively against
others?
– Interest in monetizing?
• Key inquiry: What is
ROI of patent to total
Copyright: The
value of opportunity? Lean Legal Team 2013
38. What You Need to Know Before Filing
• For patent attorneys risk arises
when clients wait to file
– “File early and often”
– One type of risk
• For entrepreneurs, risk arises for
waiting AND for filing before
business model validated
– Must balance risks
Copyright: The Lean Legal Team 2013
39. Patent Business Basics: Patents as Currency
• Patents have
transactional value when
cover business model and
marketplace exists
– Relatively few
business areas buy
and sell today
• Technology
• Biotech/Health
– Others non-existent or
still emerging
• CPG
• Chemicals
• “Stuff you drop on Lean Legal Team 2013
Copyright: The
40. Key Takeaways
• To determine whether you
need to generate your own
patents or acquire from
outside
– 1) Identify business model
(product, service etc.)
– 2) Determine whether patents
needed to obtain maximum value
from this business model or if it
is likely that competitors will use
patents offensively against you
– 3) If yes to #2, generate or
acquire
– 4) Put business team in charge
of execution and make
accountable
Copyright: The Lean Legal Team 2013
42. Case Study: Invention vs. Innovation
• Invention: 1st viable
“hands free” dispenser
• Innovation: Hygienic way
to dry hands in public
place
• Invented from scratch
– Sensor was key aspect
• 25+ patents on invention
• Created market demand
• Competition reacted by
designing around
– Now 6+ different options
– Price eroded market
Photo: GP.com
Copyright: The Lean Legal Team 2013
43. Case Study: Invention vs. Innovation
• What kind of
claims should GP
have sought?
• What was
innovation?
• Why do customers
buy?
• How would
competitors
compete?
Photo: GP.com
Copyright: The Lean Legal Team 2013
44. Innovation vs. Invention
• For platform
products, patent
coverage must be
innovation focused
– Problem not just solution
• Most patents only latter
• Take out of silo of
inventor and patent
attorney
– Traditional viewpoint
• Business team and
others must be involved
in patenting process
– How would others would
solve consumer
problem?
– Use your efforts as a
Copyright: The Lean Legal Team 2013
roadmap?
46. Getting Your IP Right
IP Strategy is Business Strategy
• Why you are protecting IP depends on
your business plans
IP Procurement is Legal Strategy
• How IP obtained depends on legal issues
• Proceed only if will allow successful
execution of business strategy
Copyright: The Lean Legal Team 2013
47. Getting Your IP Right
Business leaders need to learn enough
about IP process to be able to align
business goals with IP efforts
• Lawyers can guide the process, but must not drive
the process
IP Strategy (and intangible asset strategy)
is critical feature of generating exit value
• Just because “they don’t teach it in B-school”
doesn’t mean that IP is not the job of business
people!
Copyright: The Lean Legal Team 2013
48. Identifying Intangible Asset Value
• 1. What makes YOUR business
different from its competitors?
– What is your unique competitive
advantage?
• Identify each and every one
• 2. Would YOUR business be
harmed if this difference was lost
to a competitor?
– If so, you must capture and protect it
so that you can realize it!
• Important qualifiers
– Copying is legal and appropriate if
you don’t protect your competitive
advantage
– Some things are not protectable, but
knowing this is the caseLean Legal Team 2013
Copyright: The allows you
49. Possible Sources Competitive Advantage
Patentab
le
Invention
s
Others
Specific
to
Business
Model
Your
Busines
s’
Intangibl
e Asset
Value
Employe
es
Trademar
ks
Brand
Equity
Busines
s
Process
es
Custome
r/
Supplier
s
Copyright: The Lean Legal Team 2013