The IP balancing act – thoughts from the CEO
Intellectual Property encompasses not only published patents but also knowledge and know-how that may never leave the vaults of your company. The IP challenge for small companies is how best to generate value whilst minimising the cost to your business, particularly in the early stages when funds are tight.
Some companies with deep pockets will file patents on almost everything in sight, a typical strategy being a flurry of application patents around a central core technology – the classic “circle your wagons” approach. Many of these will trip and fall as soon as tested, but they may already have served their purpose and secured room to launch a product or test if an idea is commercially viable whilst under the protection of patent pending.
But if you’ve less resource, just three wheels on your wagon, how do you keep rollin’ along? What other means of protection are there other than patents?
Trade secrets and in-house knowledge are well-trodden paths; companies such as KFC, Coca-Cola and Philips are famous for the successful management of their secrets. Limited access – a “need to know” approach – and carefully worded employment contracts are vital to maintaining this position. A small company needs to identify these intellectual assets rapidly in order to establish the necessary protection culture early on. Trade secrets can be a very useful complement to your patent portfolio as by their nature they are not public and thus harder for competitors to unpick and work around. A patent application publishes after 18 months, so once you have disclosed something in a patent it is outside the wagon circle and accessible to all to research on. If you drop that patent anyone can use that disclosed technology.
Another option is that of intentional disclosure. It is unlikely, if you have some core patented technologies, that you will be able to think of every application, let alone file a decent patent on each, but a process of disclosure may allow you to remove the threat of later blocking patents, where someone else files a patent containing references to your technology, but in application areas that your current patents don’t cover. This can be a low cost route to managing your value space, but your underlying patents need to be strong and ideally already granted to avoid any potential risk. Disclosure can be achieved through your website, conference presentations, journals and industry publications, or even allowing patents to publish and then dropping them. However do ensure that you only disclose what you don’t want to patent – when it’s out it’s out and there’s no going back.
I heard of an academic who had a great idea. After some development he presented this to a lecture room full of students. Then he decided he wanted to patent it. The next few weeks were spent trying to get everyone to sign a non-disclosure agreement. Needless to say this was impossible; end of novel idea, end of patent.
Above all, look at your product from a different perspective. Do you need to worry about IP at all? Consider the purchase profile of your product; for example, some products may only be bought once, so if you focus on gaining that market advantage and getting your product on the shelf first then it may not matter if someone else comes along after with a near identical product. The consumer already has what they wanted, and if your marketing is good then you will be the company known for that product. Short-life products are also a good example of this – Formula 1® constructors rarely bother with patents as before the patent has even seen the light of day, the next improved component or software is already in next season’s car. Staying one step ahead can be just as or more important than protection.
Consider also the priorities of your customers. The age old case study of VHS vs Betamax is still worth a mention in this regard. Betamax was first to market and generally considered to be the superior product, both in the machines produced and the picture and sound quality available. However this time the first mover advantage did not result in success. The VHS format offered longer recording times and cheaper machines. These two factors turned out to be the key sales drivers for the consumer and as a result VHS dominated. Patents were essential in this competition, but arguably the superior product did not win; it was the one that recognised customer priorities.
So to keep your three-wheeled wagon rollin’ along when it hits stony ground: