In a previous blog posting, we talked about the importance of having an IP coordinator on the team and how this role fits into an organization.
We identified the role of the IP coordinator as including:
- knowing or able to understand all of the issues and requirements in order to ensure that there is good IP hygiene within the firm
- acting as the guardian of the intellectual property within the firm
- understanding what should be done and seeing that things are done on a timely basis
- communicating with outside legal professionals
- being present when your patent lawyer, trademark lawyer, litigation attorney etc. speaks at a meeting, and explaining what was said once the professional has left
- maintaining cost control over your IP expenses
This person was summarized as being your contact with the IP universe, your scout, your guide, your Man Friday in matters IP.
Returning to more micro details, what sort of knowledge should an IP coordinator possess? We will start this review from the viewpoint of understanding patents.
Why intellectual property is profitable
There are three principles that apply if the objective is to obtain meaningful patents:
1. Right invention
2. Right circumstances
3. Right procedures
Patent attorneys typically speak about the third principle. That is they address following right procedures. But a good patent always starts at the beginning, with the good invention.
Who in the firm will be able to verify when an idea is a “good invention” in terms of serving the organization’s bottom line? Probably, this is not a decision that can or even should be made by one individual. In a startup situation this may occur by necessity and from the intrinsic nature of a startup. But once a company is over the threshold of having, say, 20 or more employees, it is highly desirable for several individuals to participate in making this evaluation. There is a real learning opportunity here.
Who is to lead the discussion? What are the principles that define a “Right invention?” Intuitively, the founder, senior executives and old hands may know a winning opportunity when they see one. But who will spell out the criteria that define a winning opportunity for the benefit of new or younger staff that are still learning the ropes? What are those criteria? Here’s my take on answering the first test as to identifying a right invention.
Defining the ‘right invention’
A new product opportunity has to involve something that the public will want to buy. It has to be manufacturable and deliverable to customers at a price that consumers will be willing to pay. This may sound trite but it’s worth thinking through.
Sony thought Betamax was the best technology for a video tape recorder. So it built the product, put it on the market, and charged a premium price. Its pricing policy was backed up by serious patent protection. It marketed its product on an exclusive basis. Then along came the VHS format which was adopted by others and the public chose, eventually, VHS. This shows that price matters when the difference in quality is insignificant. If this was a winning opportunity, it was fumbled by Sony.
Long ago, in the dim memories of everyone’s recollections before digital technology arrived, Philips brought out the miniature tape cassette. Anticipating the potential error inherent in the Betamax path, the company didn’t attempt to obtain or enforce exclusive rights on this new audio tape format. Rather, it wanted to popularize the new cassette design and actively encouraged other manufacturers to provide recorders and playback machines using the new format.
Philip’s intent was to establish market acceptance for a new format which Philips felt it was well placed to address. It was right. The public approved the format and long before digital recorders became available, desktop taping machines and handheld recorders were using the Philips-type miniature tape cassette. Many of the units sold were produced by Philips, and Philips sold numerous cassettes. Philips created a winning opportunity by avoiding the exclusive rights path. But this started with recognizing a winning opportunity.
Flops to remember
The history of marketing is littered with apparent winning opportunities that have failed. Walletpop.com lists the biggest product flops of all time. These include “New Coke” (a product for which there was no real need), the Edsel; the DeLorean (car); the smokeless cigarette by R.J. Reynolds (while free of tar and nicotine, the product was said to “produce a smell and a flavour that left users retching”); and bottled water for pets (sold under the trade name “Thirsty Dog”). All of these products should have been put to the test: does the public really want it?
No matter who in management thinks a new product opportunity has winning potential, the reasons for this conclusion should be documented. Indeed, they should be debated. The proponent for such initiatives should not lead that debate, especially if it is the president. This is true even if the president holds all the shares. If a company is large enough and can afford to have an IP coordinator, this is an ideal function for this courageous individual.
The Apple Newton is said to have failed because it was ahead of its time. Initiated in 1993 as a personal data assistant, the Newton was faulted for the supposed inaccuracy of its handwriting recognition capacity. However, others have said that it flopped partially because of its high price ($700+). Hence the second half of the first test for identifying the right invention is: Can it be produced and delivered to the public at a price that the public is willing to pay?
Essentially, product is not simply a product. It is the tangible product combined with the price for the product. Consumers purchase the combination.
This may seem to be a discussion which is remote from the topic of intellectual property, particularly as it applies to patents. But the theme that I want to express is that good patenting starts with good inventing. We’re not even near the patenting issues yet. There is a second topic to be discussed next, namely, “Right circumstances.” That will be the subject of the next part in this series and will continue the process of addressing the question: Is this technology really worth patenting?
As part of our ongoing series examining the ecosystem necessary to bring technology to market, David French, a senior Canadian patent attorney with 35 years of experience, now provides the third of his commentaries on the importance to a company of protecting its Intellectual Property.
David French is the principal and CEO of Second Counsel Services, which provides guidance for companies that wish to improve their management of Intellectual Property. For more information visit www.SecondCounsel.com.