Undoubtedly patents represent, today, a major criterion in making investment decisions and in firms' competitive advantage. Yet, the way we deal with designing patentable inventions does not reflect their strategic potential. Patents are strategic assets in theory but mainly secondary activity in practice. What if they were not an outcome but an input to craft your company's' future? Examples from the semi-conductor industry propose a new design method to design patents, C-K invent, and suggest new, valuable ways to integrate patentability into strategic thinking.
The face of innovation has evolved significantly over the last decades, bringing a new era of open innovation and complex knowledge trading. The role of IP has changed “from being a technical topic within small, specialized communities to playing a key role in firm strategies” (WIPO 2013).
Every year, the number of patent applications filed by companies is increasing. Solely in France, the number of patents filed in 2014 increased by 4%. The IP based market counts around 10 millions of patents today and IP based market transactions go up to 12 milliards of dollars per year. These numbers clearly indicate that IP is, more than ever, an important asset for companies.
Indeed, large established companies often set clear quantitative goals to their teams in terms of patent applications filed per year. Likewise, in the start-up world, patent holders have higher chances in raising money during the long VC process. As a matter of fact, a France Brevet study demonstrates that ventures who had patents before the respective VC campaigns increase their long term chances to succeed by 30%.
Along with providing legal security, patent existence generally shows third parties that an inventive step was achieved and a company in this area acquired certain expertise. For instance, Procter&Gamble Connect+Develop partner seeks for ideas externally to incorporate these ideas into P&G’s product portfolio. A transfer process for both parties appeared to be much easier when the technology is protected by patents.
Undoubtedly patents represent, today, a major criterion in making investment decisions and in firms’ competitive advantage. To ensure these, companies should both manage properly their IP development processes and leverage on their inventions. Yet, the way we deal with designing patentable inventions does not reflect their strategic potential.
Patent applications are at stake when technology is under development. They are often seen as a support activity and appear as a logical outcome of R&D processes. In this case, patents are filed once a technology is developed or proof of concept is obtained. To determine the scope of the invention, it is necessary to evaluate the overall product design and to decide what should be patentable.
Eppinger and Ulrich depict the process of preparing an innovation disclosure as formulating a strategy and then deciding on the timing of the filing, the type of application, and its scope. In practice, it means that you expect your best experts and engineers to propose patents during their R&D works and you organize financial incentives to foster inventions quantity and quality. You then evaluate an invention regarding its patentability internally in case a company disposes an internal IP prescreening process, or send to the external company that assists businesses and project leaders in protecting, developing, defending and strengthening their innovations. But at this stage the invention is already designed.
Following this strategy, you do not necessarily ensure that there is a potential for new technology commercialization (so-called ‘free zone’), or that future inventions don’t infringe existing patents. At this stage you do not necessarily verify whether the future IP proposals covers the core value of the invention and secure strategic market place.
This situation might result in exactly ‘someone else has patented this before’ problem. Furthermore, we all constantly repeat that it is not the idea itself that counts but a way of exploiting, defining and building our strategy based on this invention.
Prior IP infringement checks and strategy crafting can be conducted before and during the design and exploration process. There is a need to pay more attention to the interplay between the way we design inventions and the patenting process itself.
Strategic patent design
In fact, the IP process can be done the other way around. IP infringement checks and IP strategy crafting should be conducted even before any R&D projects are launched. Overall, the real challenge is not necessarily to increase the number of patents in the overall portfolio but to ensure patentability of ideas and coherence of future patent portfolio.
Then, why to invest in R&D projects without considering their corresponding IP potential right at the beginning? Can patentability appear earlier in the development process? What if patents are not an outcome but an input to craft your company’s’ future?
The existing literature mostly focuses on intellectual assets per se, on the capacity to appropriate them and ensure their competitive advantage.
Still there exist studies that demonstrate that companies could proactively generate their intellectual assets to protect and strengthen business opportunities by focusing on the discovery phases. The discovery phases require design capacities and in order to better manage them design driven principles should be taking into account. There are some methods that consider IP design: TRIZ, design by-analogy, genetic algorithms, though it is not yet evident how these methods perform and the expected results are hard to characterize.
Recent research led within Mines ParisTech Chair of Design Theory and Methods for Innovation proposed a theoretical framework of patent design that demonstrates how the process of inventing can be managed and characterizes the performance of methods for patent design. It shows that one critical issue is actually to characterize how to design an invention with a true “inventive step” (following the legal criteria of patentability). The paper presents a new method for patent design – C-K Invent. This method relies on C-K design theory to support a process to rigorously design a “high quality” patent portfolio on a given innovation field. Moreover the paper reports on a series of experiments that were made to test the method. The results, summarized below, are astonishing.
C-K invent was tested within one of the leading European semiconductor manufacturer. A study of IP management practices in this company has begun in 2010. Semiconductor industry was chosen since it is highly research and highly innovation driven. Similar to the process described earlier, patents normally result from research activity. Each idea, once elaborated, is presented to the special patent committee, which evaluate the ideas, help to enrich them and decide whether the patent application process can be pursued. The panel of committee members includes various experts, IP engineers and external IP examiners.
Given the pressure for innovation within the semiconductor industry and innovation pace, the company was interested in exploring the patentability of their potential discoveries at the beginning of their R&D explorations and design for patentability. Overall, four empirical cases were examined in various technological areas.
These four explorations were launched with the aim to design strategic patent portfolios with high number of valuable inventions. Each experiment was conducted during 3 – 6 months period with teams in charge of developing relevant technological blocks. Teams comprised engineers, researchers, doctoral students who participated in ideas generation, IP experts and responsible for R&D portfolio, Business units representatives. Coordinator and facilitators – experts in design driven methods were in charge of the first step – invention discovery.
The issued propositions were later discussed and presented to the service in charge of the IP deposition and valorization. All four cases have resulted in a number of inventions and patent proposals were filled.
The results indicate that the patent proposal quality depends on the capacity to extend the existing knowledge bases. The latter is not limited to the knowledge combinations but requires expanding the knowledge bases of the person skilled in the art and ensuring sufficient inventive steps and novelty.
What appeared interesting during this exploration is a high rate of acceptance of these inventions by the patent committee internally and by patent examiners later. The inventions generated following this process appear to be of high quality and originality. An explanation for this partially comes from the ability to control the reasoning associated to the person skilled in the art’ that patent examiners use to qualify inventions novelty and inventive step.
By understanding the reasoning of ‘person skilled in the art,’ participants increase the basic level of expertise considered to be common in the field and thus, are capable to design inventions that are hard to be challenged for their lack of novelty or originality by patent examiners.
This work also helps understand that patentability is an important element to be integrated into a company’s strategic thinking and can help to craft the company’s strategy by shaping patentable ideas and transforming them into products. Different users (e.g., R&D experts, professionals that orientate strategic R&D development, experts who shape a company’s future research direction and make decisions on IP portfolios) could benefit from the use of the design principles for patentability.
Decision makers should be aware of these strategic issues. And employees too should be educated on the role of IP into the overall strategic management process of the company.