From the monthly archives:

October 2008

Patents as signals

by Andrew Watson on 29 October 2008

When might you need to patent to show off to others but not as part of your core commercial or IP strategy?

In my continuing quest to learn IP strategy from the ground up, I’ve been thinking quite a bit about having patents solely as a signal to others about your IP, but for no other key commercial reasons. For some people, having a patent says: “We know about the IP system, we use it, and we are protected.” Conversely, if these same people expect to see patents and don’t (or don’t see “enough”), then they may feel that the company is not doing enough in the IP area with connected negative connotations.

Admittedly, simply counting patents and equating that with sensible (IP) protection is an unsophisticated analysis. But given the specialist nature of IP, I don’t think that this perspective lacks adherents, even among (otherwise very savvy) investors. I’m wondering about when businesses may run into a need to cater to this point of view and how best to address it.

As a concrete example, Widget Company A (WCA) decides that the best way to protect their widget making process is through trade secrets with patenting only the parts that they believe competitors can easily reverse engineer. This IP strategy makes sense for them but means that they patent fewer inventions than they could. A potential investor (very sophisticated generally about investments but with little knowledge about IP) looks at WCA and compares them with other potential widget producing company investments and notes that WCA has a low patent filing rate. They see this and downgrade their analysis of WCA as a potential investment because they think WCA must not be doing something they should on the IP side of things (or maybe they think WCA is less innovative).

The problem would then be that WCA has lost an investment opportunity or has to fight that much harder to prove its worth as an investment because of an initial (negative) snap judgement on patent filings.

(Can you tell I’ve just finished Blink and have been thinking about Timothy Leary, RAW, and reality tunnels?)

Potential solutions could be:

  • Educate potential investors (and other communities) about IP in a way that changes their perception about patent filing rates (doesn’t address the immediate issue, not all that practical, and a long term strategy at best);
  • Find a way to present to the investor and explain why the rate is “low” and why you actually have a better strategy in place (assumes you have access to the investor and can change their mind); or
  • File patents so that your rate matches the perception of what a widget company “should” patent.

So what about the last option? One immediate drawback to patenting when not needed is cost — though you could simply not renew or not pursue an aggressive international strategy in order to reduce costs. This wouldn’t reduce costs in terms of staff time in getting the patent through however.

Another drawback: you could have to change to a sub-optimal IP strategy in order to increase your filing rate. This would mean an accommodation to the commercial decision on the patents vs. trade secrets trade off for some innovations. You could however patent in areas outside of the core bit you are looking to protect (for commercial reasons) with trade secrets as a way to compensate.

What about the times when the benefits of the perception of protection outweighs the costs?

I realize that the above is a bit theoretical and there are other practical considerations, but I also think that there are times when it makes sense to try to address the perception of IP protection. In this case, patents can be a key way to signal competence in intellectual property rights to certain groups of people. Afterall, as recently highlighted over at IP Think Tank, perception is a driver of value.

Any thoughts?


Future leaders IPI event – 28 October

by Andrew Watson on 28 October 2008

Quick note to say that I’ll be at the Intellectual Property Institute‘s Future Leader event tonight (Tuesday, 28 October) as posted over on IP Kat:

The Intellectual Property Institute (IPI), London, is interested to hear from enthusiastic young industrialists, professionals and businessmen who may thinking of taking a more active part in the activities of the IPI – or for that matter of any other IP representative body – and who would like to hear a bit about what it entails. The IPI would also like to test the water and see whether there is any support for young members’ groups within the various IP communities, from which the next generation of Council Members, honorary officers, movers and shakers may be drawn.

The event will be at the Old Nick, 20-22 Sandland Street, London, WC1R 4PZ, from 5-7PM.  If you are attending, please come up and say “hello”.


New LinkedIn group for IP strategists

October 24, 2008

I notice with some interest that IP strategist and blogger Duncan Bucknell started an IP strategists group on LinkedIn in early September, and it now has 46 members (as of today).  I wonder, is this the beginning of moves that may lead to an international organisation of strategists as well as setting standards among IP […]

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IPReader links for 23 October

October 23, 2008

New and noteworthy links from around the web for 17 -23 October: International bodies to discuss IP securitisation, leasing issues – UNIDROIT and UNCITRAL meeting that might have a profound impact on how IP gets treated as an asset class. What are the alternatives to patenting my ideas? Strategies for Intellectual Property Protection in a […]

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Pro geek hobbyists, innovation, and IPRs

October 22, 2008

When it comes to bleeding edge innovation, large companies are not often where it’s at.  This can be for a variety of reasons, but often larger companies end up innovating by acquisition or licensing rather than having large R&D budgets and doing everything in-house. Often larger companies will look to start ups or university tech […]

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Spore: DRM and commercial strategy

October 17, 2008

Just because you can legally and technically lock something down doesn’t mean you should. Earlier this week I wrote about DRM in the context of RealDVD and using it as a hook to provide other restrictions. The ongoing saga over Spore‘s DRM is an example of where maxmizing restrictions on users through DRM can backfire […]

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Google’s floating data centres and international IP

October 15, 2008

Google has filed patents on a floating data centre using wave power for electricity generation (HT to Naked Law Google Ahoy and a rainy day cleaning out my feeds). According to the Times (and bloggers),the floating data centres would help solve some of the staggering electricity costs involved in running the giant collections of servers. […]

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Beyond IPRs: strategy around DRM

October 14, 2008

I just finished reading the analysis by EFF‘s Fred von Lohman of the RealDVD case, Why Hollywood Hates RealDVD, and it highlights pretty well other strategies beyond using intellectual property laws directly to try to protect a position, specifically around DRM. The case involves software that creates a back up copy of a DVD onto […]

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IPReader links for 13 October

October 13, 2008

New and noteworthy links from around the web on Monday 13 October: Plunge in RIM’s shares could attract takeover bid | Deals | Reuters – Reuters speculates on Microsoft buying RIM in order to strengthen phone market (especially against iPhone). Wondering how Microsoft money and strategy would impact RIM’s IP. Twofish raises $4.5M to create […]

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Top IP strategists – further thoughts on IAM’s search

October 9, 2008

This is a guest post from fellow ipVA member and CEO Andrew Watson. Andrew will contribute to Tangible IP from time-to-time on areas of IP strategy and around contractual IP. As my first post onto our blog, I’ll first pay Jordan the compliment of having been so disciplined and persistent in getting this and our […]

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