The basic principle in the Blue Ocean Patent Strategy is to exploit patents to achieve the value innovation by using the patented technologies to create a new value curve, and thus, to provide new products/services. Following figure illustrates the basic principle of the blue ocean patent strategy.For example, a company in the consumer electronics industry that wants to develop the IoT medical devices can exploit existing patents that cover the factors of the strategy canvas. By deciding which factors (that are covered by the existing patents) are really crucial, and thus, needed to raise and/or create the value curve, new medical devices that serve the customers in fundamentally different ways can be developed. Patents regarding superior UI/UX, compact/portable design, robust wireless connectivity are the good candidates for the BLUE OCEAN FACTORS. The exploitation of existing patented technologies not only allows the low cost IoT medical devices development but also provides the protection against competitors’ infringement.

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IoT Disruptive Innovation & Patent Exploitation
I. Disruptive IoT Innovation
HBS professor Clayton M. Christensen coined the concept of the “disruptive innovation.” Christensen explained
the disruptive innovation in his famous book “The Innovator’s Dilemma” as an innovation that disrupts an existing
market in ways that the market does not expect, and eventually create a new market. PCs replaced the mainframe
computers, 3.5 inch floppy disk drive replaced 5.25 inch drive and digital cameras replaced film cameras are some
examples of the disruptive innovation. Key features of the disruptive innovation that differentiate it from the
traditional (sustaining) innovation are as follows.
• The products/services provided by the disruptive innovation underperform demanded by the current
mainstream market. Thus, the incumbents in the current market ignore the opportunities provided by the
disruptive innovation. The speed of performance improvement of the disruptive innovation is, however,
faster than that of the traditional innovation supporting the current market demand. Thus, the
products/services provided by the disruptive innovation can serve the future market demand.
• The performance of the products/services provided by the disruptive innovation does not need to surpass the
performance of the products/services provided by the traditional innovation. The products/services provided

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by the disruptive innovation will create a new market by either offering comparable performance or meeting
the customer’s expectation at lower cost.
Interconnected IoT (Internet of Things) devices enable the development of the disruptive products/services by
meeting the customer’s expectation at lower cost. For example, a prefabricated house with built-in IoT applications
for the smart home can provide the comparable quality of life at lower cost. Interconnected IoT (Internet of Things)
devices also can provide the disruptive products/services by offering comparable performance. For example, the
telemedicine system equipped with interconnected low cost medical devices can offer comparable performance of
the traditional healthcare system with high cost and high performance medical devices.
II. Patent Exploitation for the Disruptive IoT Innovation
One way of exploiting patents for the development of the disruptive IoT products/services is to open patents owned
by the incumbents to the business ecosystem collaborators in diverse industries (the “Open IP Innovation”). By
letting the collaborators develop the disruptive IoT products/services exploiting incumbents’ patents, the
incumbents can keep focusing on the current mainstream market in addition to effectively prepare the emerging
market created by the disruptive IoT innovation. A practical method to exploit patents for the development of the
disruptive IoT products/services through the Open IP Innovation is to apply the new product/service development
methodology in the “Blue Ocean Strategy” (the “Blue Ocean Patent Strategy”).

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In “Blue Ocean Strategy,” the authors provide a framework and tool set for creating new products/services, and
thus a new market (blue ocean), through the value innovation such that maximize the value proposition and
minimize the cost to provide the value to customers. To achieve the value innovation the authors suggest the
companies ask the following four questions (eliminate-reduce-raise-create framework):
a. Which of the factors that the industry takes for granted should be eliminated?
b. Which factors should be reduced well below the industry standard?
c. Which factors should be raised well above the industry standard?
d. Which factors should be created that the industry has never offered?
These four questions can be converted into the strategy canvas (level of value proposition v. value proposition
factors) to create a new value curve. In “Blue Ocean Strategy,” the authors use strategy canvas to analyze the
competitive environment of the market (red ocean). Drawing a strategy canvas does three things. First, it shows the
strategic profile of an industry by depicting very clearly the factors that affect competition among industry players
(BLUE OCEAN FACTORS). Second, it shows the strategic profile of current and potential competitors,
identifying which factors they invest in strategically. Finally, it shows the company’s strategic profile- or value
curve-depicting how it invests in the factors of competition and how it might invest in them in the future.

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The basic principle in the Blue Ocean Patent Strategy is to exploit patents to achieve the value innovation by using
the patented technologies to create a new value curve, and thus, to provide new products/services. Following figure
illustrates the basic principle of the blue ocean patent strategy.

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For example, a company in the consumer electronics industry that wants to develop the IoT medical devices can
exploit existing patents that cover the factors of the strategy canvas. By deciding which factors (that are covered by
the existing patents) are really crucial, and thus, needed to raise and/or create the value curve, new medical devices
that serve the customers in fundamentally different ways can be developed. Patents regarding superior UI/UX,
compact/portable design, robust wireless connectivity are the good candidates for the BLUE OCEAN FACTORS.
The exploitation of existing patented technologies not only allows the low cost IoT medical devices development
but also provides the protection against competitors’ infringement.
For details regarding the patent strategy for the disruptive IoT innovation, please contact Alex G. Lee
(alexglee@techipm.com).
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