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


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Although IP ownership and freedom to operate is critical to the ROI of innovation processes, few innovation teams incorporate patent information in the front end of their processes. This presentation, made at Papercon 2010 in Atlanta, presents reasons why patents are critical features in innovation processes.

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

  1. 1. Rethinking the Place of Patents in the Innovation Process:  A New Model for Improving Innovation ROI<br />Jackie Hutter, MS, JD<br />Decatur, GA<br />404-797-8124<br /><br /><br /><br />Twitter @ipStrategist<br />
  2. 2. How is corporate innovation like the journey of the Pilgrims to the New World?<br />Copyright 2010 Jackie Hutter<br />
  3. 3. Like exploration and settlement, innovation requires calibration of “instruments” at the front end of the process<br />Copyright 2010 Jackie Hutter<br />
  4. 4. Patents are critical calibration steps at the front end of innovation processes<br />Highly determinative of ROI<br />Information “hiding in plain sight”<br />Small modifications early can lead to big changes in destination<br />Copyright 2010 Jackie Hutter<br />
  5. 5. How can patent information enhance innovation processes?<br />Copyright 2010 Jackie Hutter<br />
  6. 6. Ownership of Innovation Output<br />Innovation ROI typically depends on ownership of output<br />Successful innovations will be knocked off & competitors will enter market at lower cost<br />Patent info on front end reveals<br />Can you own the fruits of our innovation efforts?<br />If so, how broadly?<br />Innovation not just invention!<br />Info allows to make alternate plans<br />Protect investment using other methods<br />Copyright 2010 Jackie Hutter<br />
  7. 7. Risk of Innovation Output<br />Regardless of ownership, must know early if will have freedom to operate<br />Go/no-go innovation decisions assume clear path forward not<br /> Litigation<br /> Injunction<br /> Royalty/license<br />ROI not met if third party patents in innovation pathway<br />Copyright 2010 Jackie Hutter<br />
  8. 8. Streamline Innovation Output<br />Can we jump-start efforts by using innovations disclosed by others?<br />Don’t reinvent the wheel<br />Start innovation process on 30 yard line<br />Reduce cost and improve speed <br />Use adjacent innovations<br />Likely patents do not cover your space and fully “baked” for your use<br />Copyright 2010 Jackie Hutter<br />
  9. 9. Enhance Innovation Output<br />Patent information can provide insights into<br />Partners<br />Strategic alliances<br />Suppliers <br />Can reduce cost and improve speed to market<br />Build on expertise of others<br />Can reduce risk through collaboration and cost sharing<br />Copyright 2010 Jackie Hutter<br />
  10. 10. Guardrails for incorporating Patent info in front end<br />Cannot tell you where/what to innovate<br />Standard innovation decision-making criteria applies<br />IMPORTANT: Only directional info as to patentability and clearance<br />No product exists yet!<br />Think of as validation/facilitation tool at “fuzzy front end”<br />Still need usual legal analysis for go-to-market approval<br />Copyright 2010 Jackie Hutter<br />
  11. 11. Case Study in the use of patent info on front end: Green Packaging<br />Large paper company interested in introducing biodegradable packaging for consumer goods due to Wal-Mart “green” initiative and general increasing consumer demand<br />Starch-based plastic<br />Innovation would require > $50 MM investment<br />Would change nature of company from tree-based paper to biodegradable paper company<br />Game-changing innovation pathway<br />Copyright 2010 Jackie Hutter<br />
  12. 12. Case Study in the use of patent info on front end: Green packaging<br />ROI depended on ability to own the innovation AND have freedom to operate<br />Just owning the specific invention would not justify scale of investment<br />Initial review identified 1000’s of patents potentially relevant to proposed product<br />Previous recognition of good idea, but no success in getting to market<br />Innovation pathway potentially blocked by previous inventors<br />Copyright 2010 Jackie Hutter<br />
  13. 13. Process for Obtaining Business Insights from Patent Data<br />Search-based analytics<br />Business Team Formulates Business Question: What ROI can we expect by investing in biodegradable food packaging?<br />Patent expert reviews master dataset: Few to 1000’s of patent filings discussing biodegradable food packaging<br />Patent expert performs multiple searches of patent database to provide master dataset for analysis<br />Business team consolidates targeted patent ownership data with other data to make business decision<br />Claim Type 3<br />Claim Type 1<br />Claim Type 4<br />Biodegradable food packaging<br />Dataset that reveals ownership and litigation risk of results of innovation efforts<br />Copyright 2010 Jackie Hutter<br />
  14. 14. Case Study in the use of patent info on front end: green packaging<br />Patent analysis revealed <br />Unlikely that broad ownership of innovation would be possible<br />Significantly increased probability that competitors could copy after market developed<br />Highly probable that infringement liability would result<br />Avoidance would require innovation pathway to be greatly narrowed and complicated<br />Adverse patent profile resulted in decision to kill project at an early-stage<br />Done before product even fleshed-out<br />Huge opportunity costs avoided<br />Copyright 2010 Jackie Hutter<br />
  15. 15. So, why is this so hard?<br />Should be a “no brainer” to include patent information on front end <br />BUT even while corporate innovation processes have been transformed at many corporation, but few have modified way they view patents<br />Copyright 2010 Jackie Hutter<br />
  16. 16. Traditional Corporate Silos Between Patents and Business<br />Patent experts retain control <br />“Create risk”<br />Gatekeeper needed to control costs<br />“Too complicated”<br />Business people choose not to handle<br />Don’t teach in B-school<br />“Too hard” for busy person to learn<br />Existing incentives<br />Lawyer status based on expert role<br />R&D = invention<br />Business not familiar with details of IP<br />Communication barriers<br />Lawyers, R&D = Mars<br />Business people = Venus<br />Copyright 2010 Jackie Hutter<br />
  17. 17. Cannot be successful in putting patents into front end of your innovation processes unless<br />Incentives properly aligned<br />Legal<br />R&D<br />Business <br />Patent experts “get” innovation<br />Ambiguity vs. certainty<br />Business people make effort to learn basics of patents<br />Make relevant to roles & responsibilities<br />Copyright 2010 Jackie Hutter<br />
  18. 18. US Patent System is for Innovators(Time to Take it Back!)<br />Copyright 2010 Jackie Hutter<br />
  19. 19. THANK YOU!<br />Copyright 2010 Jackie Hutter<br />