Rethinking the Place of Patents in the Innovation Process: A New Model for Innovation ROI

1. Rethinking the Place of Patents in the Innovation Process: A New Model for Improving Innovation ROI
Jackie Hutter, MS, JD
Decatur, GA
404-797-8124
www.HutterGroup.com
www.PatentMatchMaker.com
www.ipAssetMaximizerBlog.com
Twitter @ipStrategist

2. How is corporate innovation like the journey of the Pilgrims to the New World?
Copyright 2010 Jackie Hutter
3. Like exploration and settlement, innovation requires calibration of instrumentsat the front end of the process
4. Patents are critical calibration steps at the front end of innovation processes
Highly determinative of ROI
Information hiding in plain sight
Small modifications early can lead to big changes in destination
5. How can patent information enhance innovation processes?
6. Ownership of Innovation Output
Innovation ROI typically depends on ownership of output
Successful innovations will be knocked off & competitors will enter market at lower cost
Patent info on front end reveals
Can you own the fruits of our innovation efforts?
If so, how broadly?
Innovation not just invention!
Info allows to make alternate plans
Protect investment using other methods
7. Risk of Innovation Output
Regardless of ownership, must know early if will have freedom to operate
Go/no-go innovation decisions assume clear path forward not
Litigation
Injunction
Royalty/license
ROI not met if third party patents in innovation pathway
8. Streamline Innovation Output
Can we jump-start efforts by using innovations disclosed by others?
Dont reinvent the wheel
Start innovation process on 30 yard line
Reduce cost and improve speed
Use adjacent innovations
Likely patents do not cover your space and fully baked for your use
9. Enhance Innovation Output
Patent information can provide insights into
Partners
Strategic alliances
Suppliers
Can reduce cost and improve speed to market
Build on expertise of others
Can reduce risk through collaboration and cost sharing
10. Guardrails for incorporating Patent info in front end
Cannot tell you where/what to innovate
Standard innovation decision-making criteria applies
IMPORTANT:Only directional info as to patentability and clearance
No product exists yet!
Think of as validation/facilitation tool at fuzzy front end
Still need usual legal analysis for go-to-market approval
11. Case Study in the use of patent info on front end:Green Packaging
Large paper company interested in introducing biodegradable packaging for consumer goods due to Wal-Mart green initiative and general increasing consumer demand
Starch-based plastic
Innovation would require > $50 MM investment
Would change nature of company from tree-based paper to biodegradable paper company
Game-changing innovation pathway
12. Case Study in the use of patent info on front end:Green packaging
ROI depended on ability to own the innovation AND have freedom to operate
Just owning the specific invention would not justify scale of investment
Initial review identified 1000s of patents potentially relevant to proposed product
Previous recognition of good idea, but no success in getting to market
Innovation pathway potentially blocked by previous inventors
13. Process for Obtaining Business Insights from Patent Data
Search-based analytics
Business Team Formulates Business Question: What ROI can we expect by investing in biodegradable food packaging?
Patent expert reviews master dataset:Few to 1000s of patent filings discussing biodegradable food packaging
Patent expert performs multiple searches of patent database to provide master dataset for analysis
Business team consolidates targeted patent ownership data with other data to make business decision
Claim Type 3
Claim Type 1
Claim Type 4
Biodegradable food packaging
Dataset that reveals ownership and litigation risk of results of innovation efforts
14. Case Study in the use of patent info on front end:green packaging
Patent analysis revealed
Unlikely that broad ownership of innovation would be possible
Significantly increased probability that competitors could copy after market developed
Highly probable that infringement liability would result
Avoidance would require innovation pathway to be greatly narrowed and complicated
Adverse patent profile resulted in decision to kill project at an early-stage
Done before product even fleshed-out
Huge opportunity costs avoided
15. So, why is this so hard?
Should be a no brainer to include patent information on front end
BUT even while corporate innovation processes have been transformed at many corporation, but few have modified way they view patents
16. Traditional Corporate Silos Between Patents and Business
Patent experts retain control
Create risk
Gatekeeper needed to control costs
Too complicated
Business people choose not to handle
Dont teach in B-school
Too hard for busy person to learn
Existing incentives
Lawyer status based on expert role
R&D = invention
Business not familiar with details of IP
Communication barriers
Lawyers, R&D = Mars
Business people = Venus
17. Cannot be successful in putting patents into front end of your innovation processes unless
Incentives properly aligned
Legal
R&D
Business
Patent experts get innovation
Ambiguity vs. certainty
Business people make effort to learn basics of patents
Make relevant to roles & responsibilities
18. US Patent System is for Innovators(Time to Take it Back!)
19. THANK YOU!