Envisage to Optimize – The recipe to Monetize

When was the last time you thought of an idea and kept it at just that – an idea. May be last summer, last second or may be you are thinking of one as you read this. A few smart chaps go for the legal way and register their innovation as a patent. An innovation which can be claimed as their own and have an exclusive right on it. However unfortunate it may seem, there is a cost required to maintain this exclusivity of your innovation. Here comes the trade off, the question of to be, or not to be. Why should I spend my money on a piece of document just for the sake of having an exclusive right. Well, when you envisage the potential of your innovation is when you can realize the power of optimization of your patent portfolio.

With the advent of hugely advertised upcoming technologies that we may see in the market, we often ignore the innovations which are omnipresent. US patent 5,836,038 is a patent assigned to an individual inventor. The patent describes a magnet coupled eraser which may be used with a white board. The patent expired due to non payment of fees in 2002. Though the due diligence of the patent before considering it for expiration cannot be commented upon, however, let’s try to envisage the widespread use of the innovation.

Let us use approximation on a sample set for analyzing the worth of the invention. If we consider the number of whiteboard eraser manufacturers spread across the United States to be around 1000, each manufacturer may produce around 1 million whiteboard eraser units every year. Of these, let us assume that 50% are magnet coupled erasers which calculates to 500 million whiteboard erasers. Considering the cost of the whiteboard eraser to be $2 - $5, the cost associated with this innovation becomes $1 - $2.5 billion. Had the patent been active in US alone, imagine the licensing revenue it may have generated. Considering the fact that China is also an emerging market for such stationary items, had the patent covered other jurisdictions, the kind of patent monetization is immensely huge.

The Intellectual Property universe has witnessed the growth of the Non-Practicing Entities or the patent aggregators. The business models and the operational behavior of these entities are frequently debated and people have diverse sets of opinions on their ethics. However, if we zoom into the sector of small yet powerful innovations, these entities have set an example of nurturing the saplings to turn them to fruit laden trees. The differentiator has been the realization of the power of innovations and supporting them to exist. There has also been a significant streak of success with the patent interdealer brokers. These entities have also been a great supporter in nurturing the innovations by facilitating the monetization of patents. Well, in some cases, it also promotes the mantra of – A burden to one is a gain to some.

Innovation will never cease to exist. One has to envisage the potential of the innovation and optimize the cost associated with it. That’s the recipe which will stir up the aroma from your latent patent portfolio – the recipe of Patent Monetization.

A guide to Patent & Innovation Benchmarking

In this article, I am trying to outline some ideas and thoughts that should be kept in mind while conducting benchmarking studies. It is very common in corporations to benchmark themselves against their peers in the industry. It could be for variety of reasons for example, measure R&D effectiveness, cost control, find strategic insights etc.

Before jumping on practical challenges, there are some basic concepts that should be kept in mind before conducting these studies.

1.  What kind of benchmarking you are going to conduct?

There are two types of benchmarking

A. Internal benchmarking: These types of benchmarking studies are conducted to see how various divisions are doing in terms of protecting their products, utilizing budgets, etc. There could be variety of parameters on which divisions can be benchmarked and companies may seek to find best practice within each division.

 B. Competitive benchmarking: These types of benchmarking studies are conducted to see how company is performing in its task environment.  These studies may provide valuable insights if conducted accurately. These studies could reveal pattern, best practice employed by other players in the industry, impact of patents filed by the company etc.

2. What is objective of the study?
For any benchmarking study, analyst must freeze the objective of his/her study. Who is going to be seeing the report? What is it that you want to find out? What you want to show to your end customer? And finally what is scope of the study?

I found following practical challenges pertaining to these studies:

Availability & accuracy of data: One of the biggest challenges in conducting benchmarking studies is availability of sanitized patent data. It is very important to clean the data before putting in a nice fancy presentation.  For example, in the end result one wants to benchmark two companies in a certain country say the UK. Though, the problem statement looks very generic but it does not have a straight forward solution. One must look very deep into the data to get exact figures. Analyst will face challenges in getting EP granted patents designated in the UK or granted but lapsed, add acquired assets, discount divested assets, check correct assignee of publication, remove duplicates, and so forth. Unfortunately none of the commercial database to my knowledge gives error free data. Only solution to this problem is manual analysis!

Lack of understanding:  In some cases a superficial understanding of the parameter, nature of task environment, and legal intricacies could also lead to unfruitful study. A researcher should make a thorough understanding of key variables involved in the study.

Overlooking other factors & misinterpretation: Analyst should not Oversell patents! It is undisputed fact that patents play a major role in business. However, that’s not all. It is not recommended to credit or discredit patent benchmarks for organization performance.  Conclusion from benchmarking should be derived after looking at market, regulatory, legal and other business factors.

Too much statistics: It’s always good to have statistical validation of benchmarking. However, researcher must not throw statistical jargons to make things look sane. Follow the KISS! Keep it simple and sober.

Handy Skills: 

In my view these skills could add value in the analysis and somewhat important for conducting these studies (in no particular order)
1. Strong Business Research & Understanding of business 

2. Understanding of Patent laws & Data
3. Advanced Microsoft Excel
4. Visualization techniques
5. Understanding of Managerial Issues

Possible Audience & Possible applications

Patent and innovation benchmarking could have wide variety of audience and it is important to customize the result based on audience. Strategic thinkers, lawyer, R&D heads, marketing could derive endless benefit from such exercise.

Note: It would be great if readers could also leave their comments and share best practices and make this write up more interesting.