Capturing Innovation: Turning Intellectual Assets into Business Assets

1. Capturing Innovation:Turning Intellectual Assets into Business Assets Justin Woo IEOR 190G - Patent Engineering Professor Tal Lavian Project #2 – Chapter Slides From Ideas to Assets – Chapter 3, pp. 65-81

2. Chapter Outline • Overview – Key Points • Problem in Predicting Futures • Investing in Patents • Risk in Investment timeline • Futures Game • Solutions • Internal – Market pull vs. Research Push • External – Design Around • sdf

3. Overview - Key Points • Idea creation should not be the main focus of a business • To succeed as a business, ideas must be turned into monetizable business assets • Failure to protect a company’s IP will result in lost revenue and/or being put out of businessby competitors

4. Problem – Predicting Patent Futures • Companies are unable to predict the future • Some patents succeed, some patents fail How to choose which inventions & intellectual properties (IP) to protect? • Costs can be high to patent all research • Earlier investment in patents equals greater uncertainty in patent outcome

5. Investing Early • Earlier investments = Higher Risk • Higher possible return value • Greater risk of wrong guesses • Essentially turns into a game of predicting the future How can a company reduce risk and increase probability for patent success?

6. Reducing Risk • Hire good researchers! • Allow them “play” within set boundaries of skills and interests • Recruit top-notch researchers in company field of interest • Hire supportive staff for research environment • Recognize differences in timelines between profit-driven and research-driven work environments within a company

7. Profit-Driven vs. Research-Driven

8. Reducing Risk • Pure researchers do not prosper in a development environment • Similarly, developers do not prosper in a research environment • Both worker types are needed at different times, depending on the stage of an invention

9. Capitalization: Late-Stage Inventions • Later-stage inventions are defined as those close to being used in a commercial environment • The closer an invention is to commercialization, the easier it is to predict future success • Potential profitability and commercial value of the innovation decreasewith later-stage inventions

10. Late-Stage Inventions: Play to Win How to play to win in late-stage environment? • Good invention review and analysis • Identify best inventions in later stages and commercial environments • Have proper staff for both environments

11. Earlier Identification How can one identify and capture a higher percentage of commercially valuable innovations earlier in the research and development process?

12. Market Pull vs. Research Push

13. Market Pull vs. Research Push • Traditional “Research Push”: researchers drive innovations outward into the market through products • Higher risk due to lack of specific knowledge within industry

14. Market Pull vs. Research Push • New “Market Pull”: marketers pull innovation through the organization and into the marketplace • Reduces risk because marketers & technology enablers (customers) are well-familiarized with industry

15. Design-Around • Design-Around: the practice of determining how competitors might design products to maneuver around your own patents. • Devote resources to analyzing the competitive environment • Focus on both your own products and your competitor’s alternate paths • Usually used for late-stage development • Requires anticipation of future growth and path of inventions • This is a pre-emptive technique in securing intellectual property as a company’s business assets

16. Ideal Development Environment Given all the separate considerations internally (within development) and externally (competition), what is the ideal environment for intellectual asset development? • A well-balanced combination of research, development, patent protection, and statistical coverage to hedge future bets • Highly dependent upon stage (early vs. late)

17. Processing Invention • A key aspect of the invention process is involvement of the inventor in it • Disclosure process: The more inventor-friendly the invention disclosure process is, the higher the likelihood that inventors will participate! • Process time: Shorter process times will encourage inventors to have active and more frequent invention

18. Quantity vs. Quality • Rule of 60/40: • 60% of the possible effort and resources will result in a patent that is completely acceptable in quality, while an additional 40% may be expended in a vain attempt to reach perfection • Key Point • Both quantity and quality are important, as predicting successes of patents is (once again) an unpredictable futures game

19. Importance of Timing • Timing is everything • Typical time from filing to issuance of patent = 24 months • In terms of development process, 24 months is very lengthy • Difficult to synthesize & bring together the development and licensing processes • Both patents and patents pending are capable of valuation; both have value to the company

20. Summary • Innovation is a key aspect to a business; however, it is just as important to turn innovation into protected business assets through patents. • Lack of doing so will result in financial and competitive loss to market competitors • To identify, develop, and protect assets requires a long-term perspective and development of processes carefully tuned to different phases of a business • Companies must develop processes and procedures to promote innovation and protect itself in the global marketplace.