The sources of extensive waste highlighted in our previous report have led to a dramatic change in IP management. Best practice in IP value creation and capture results in a smaller patent portfolio, comprising stronger patent assets. Priority is placed on understanding emerging trends and competitive threats, and capturing the opportunities that they pose. It reflects a transformation in perceptions about intellectual property, including how IP management is framed and suitable IP performance metrics, organisational structure and implementation.
These core perceptions and implementation features include:
- new performance metrics that prioritise strong patents aligned with company goals;
- IP management perceived as a knowledge management process involving many company departments – companies adapt to competition in a complex global, fast-changing and crowded space;
- a common body of critical information and knowledge is needed which supports R&D, product development, IP filings and overall company IP strategy;
- a suitable decision-making structure that encourages communication between various stakeholders; and
- proactive policies that capture opportunities and minimise sources of IP waste.
New performance metrics Whereas traditional IP management made growth in patent filings and budgets a key performance metric, portfolio growth is less relevant in an era that prizes strong patents. A more meaningful metric now used by clients is whether key patents are ‘bulletproof’ against inter partes review attacks. Conducting a stress test of 10 to 15 key patents that support major products or innovations provides a realistic window into the strength of a company’s patent filings and IP process. This approach also highlights:
- threats posed by competitors;
- steps to enhance the IP filing process; and
- new entrants that were not previously on a company’s radar screen.
The traditional IP management approach operated within silos with limited information sharing (see Figure 1). An overarching concern of many corporate IP attorneys was to tightly control patent information to avoid wilful infringement. Therefore, R&D and product development teams operated in a vacuum with the expectation that innovative concepts and patents would flow from the bottom up by serendipity when employees had novel ideas. Since the goal was to increase patent filings, the patent concepts submitted received limited prior art scrutiny before being forwarded for patent prosecution. This approach worked well when measured against the criteria of avoiding wilful infringement and growing the patent portfolio, but had serious weaknesses. Operating in an ‘ignorance is bliss’ environment, staff were often late to learn of key opportunities or threats that affected their R&D efforts, or fully understand the ever-changing global patent landscape over which they needed to distinguish.
Figure 1. Traditional IP management emphasises silos
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IP management as knowledge management Best practice requires adaptation to a fast-changing, complex global landscape which poses a great risk of being blind sided. The challenge of monitoring and analysing this voluminous information, and translating it into actionable insights for their IP, product development, R&D and senior management teams is a huge hurdle. In response, best practice firms have organised as knowledge management companies around a core body of information and analysis essential to addressing key strategic issues underlying effective IP management, product development, company IP strategy and competitive analysis. This organisation structure and core body of knowledge is illustrated in Figure 2.
Figure 2. Best practice in IP management reflects knowledge sharing
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The underlying core body of knowledge must address the following key strategic issues:
- What patent art worldwide is germane to our next generation of products and how do we differentiate to create strong patents?
- What is our competitive position covering key new product features, on a claim-by-claim basis, in a crowded competitive space comprising over 3,000 patents?
- What opportunity and risk are posed by new technologies and how can we capture this window?
- What is the current technology and IP roadmap for our key products?
Proactive alignment of product innovation and IP strategy Knowledge management places a premium on being proactive and having accurate and comprehensive knowledge. Practitioners recognise that a picture of the global landscape that is missing 30% of the relevant patents undermines their entire process and creates a false sense of security. To achieve a solid foundation, these firms rely on a trusted independent source to ensure the accuracy of the underlying information and explore process re-engineering that yields stronger products and patents.
Organisation structure and prioritising communication Best practice in IP management requires a structure that facilitates:
- information sharing;
- communication between functions; and
- a core body of strategic knowledge and insight that drives effective IP decisions at each corporate level.
As illustrated in Figure 2, silos have been replaced by close two-way interaction between product development and R&D, as well as between product development and the corporate IP function. The common body of critical knowledge underlying this process allows more effective decision making by each group, while fostering interactions between R&D, product development and intellectual property that integrate the unique knowhow of these stakeholders.
The availability of such detailed IP-related information elevates discussions addressing:
- key opportunities to file patents;
- the impact of product and technology trends on future product direction;
- filing patents that withstand inter partes review;
- competitive benchmarking; and
- gap analysis.
It also extends the use of IP information in several unanticipated directions. Product development groups feel empowered by this information early in the design process covering their technology, product features, gap analysis and associated intellectual property. This interaction allows potential issues to be flagged at an early stage and design-around paths or invalidity options to be explored.
Brainstorming sessions with product teams are an effective way to guide the creation of strong patents. They allow teams to explore opportunities created by product and technology trends where patenting efforts should be focused. Participants’ exposure to the relevant patent art and the worldwide prior art database allows a focused discussion on how to capture these opportunities. Attendees relish the prospect of creating strong patent assets through this process, which augments their product development perspective. The traditional product development process is strengthened by integrating IP information with brainstorming sessions, which yield many critical patent assets.
Eliminating waste For a firm filing 100 patents annually, the ability to weed out weak patent applications (50% of filings) yields considerable immediate savings (eg, patent development expenses and filing and maintenance fees) of approximately $16.3 million to $23.8 million. The proactive knowledge management approach also yields a stronger patent portfolio and other benefits that exceed the savings on IP filing, drafting and maintenance fees. These ancillary benefits, which can generate considerable savings of between $36.6 million and $73.2 million and reduce IP risk from weak patents, include:
- avoiding IP litigation and licensing demands;
- an enhanced ability to protect the firm’s investment in product development;
- avoiding the expense of pulling back a new product from the market due to freedom-to-operate issues; and
- eliminating wasted R&D efforts that duplicate technology already available or outdated.
By identifying and eliminating waste, the best practice in IP management transforms the IP function, yielding substantial savings while significantly enhancing IP performance.
This article first appeared in IAM. For further information please visit www.IAM-media.com.