This is a true story. A highly innovative Israeli component manufacturer in the mobility space had a big problem. It employed some of the smartest minds in its industry who developed solutions that were incorporated into OEM products worldwide. By international standards, the Israeli company was small, but it punched far above its weight, so much so, that the last eight generations of OEM products incorporated the Israeli company's innovations.
So why was this such a big problem? None of the large OEMs purchased the Israeli company's products. Instead, year after year, the OEMs copied the Israeli company's innovations. The Israeli company thought its products were well protected with over 15 U.S. patents and many more patents worldwide. But its patents could not stop the copying.
This story is not unique to this particular company or this particular industry. Many companies in Israel and around the world have similar problems. Analysts report that more than 95% of patents are worthless-- not because patents as a class are worthless, but because companies fail to understand one simple principle that makes patents powerful. To understand, it is helpful to take a step back and first consider the differences between strong and weak patents.
Strong patents have one important function: blocking competitors from offering competing products. Achieving this is more difficult than it sounds because every time a company develops and patents a valuable new solution, smart competitors try to find ways to offer a similar product with a different solution that avoids the patents. Consider machine-vision driver assist systems. A number of companies offer competitive products, each using a different technical solution. In many cases, they have found ways to avoid each other's patents, because most of the patents are highly technical, and competitors are often able to find another technical solution to achieving the same goal. In other words, patenting specific technical solutions often makes for weak patents.
In contrast to weak patents that are technical in nature, strong patents are conceptual in nature. That is, those who are able to generalize their inventions to cover the goal itself rather than a limited technical solution for achieving that goal, can block all the competitors' pathways to offering a competing product.
Apple demonstrated this idea in a patent that it received for unlocking a cell phone using facial recognition. Apple realized that before unlocking the phone, it needed some indication of the user's desire to unlock. Otherwise, the phone might unlock if the camera picked up an image of the user's face while the phone sat idly on a table, for example. So Apple patented the concept of capturing the facial image only after the phone is moved in a manner indicative of a desire to unlock the phone. If Apple had specified the algorithm of motion detection, or specified a type of motion sensor needed to ascertain the user's intent, a competitor could have used a different algorithm or could have employed a different sensor to avoid the patent. This example demonstrates that patent value may be generated when the patent strategist steps away from the technical details, and realizes that despite the pride with which the inventors describe those details, including them in the scope of protection often provides competitors with an easy way to avoid patent infringement. Thus, the ability to conceptually protect an invention is often much more powerful than a typical technical approach to patenting.
Although the conceptual approach may seem like a logical way to patent, most companies fail to do it successfully. One analyst anecdotally reported that after examining over 3,000 patents from a few hundred startup companies, he could find only about three patents in the entire lot that had any appreciable value. The vast majority of patents tended to be too narrow to block competitors. This happens when companies use patenting methodologies that result in technical, rather than conceptual patents.
If your company is like most, the decision on what to patent is left in the hands of engineers. This leads to two challenges. First, engineers who arrive at brilliant technical solutions tend to focus on patenting those solutions. Many do not realize that patent law allows broader conceptual protection for the invention. The patent attorneys do what they are told, and write technical patents. In this way, companies can create expensive patent portfolios with very little value.
The second challenge is that the engineering leadership who make patenting decisions are often experts in their field. This poses a challenge because experts tend to quickly dismiss as unpatentable broad concepts that are in fact patentable. The author's clients regularly obtain valuable patents over the initial objections of engineers who see their own conceptual ideas as obvious. Under the law, a patent may be granted if the invention is not obvious to a "person of ordinary skill in the art." An expert's view on what is obvious should never be the litmus test for patenting decisions.
The solution is to adopt a business-driven approach to patenting where a hand-picked group of the company's technical and business visionaries shift the focus of patenting from what the inventors find most interesting to the revenue streams that need to be protected in order for the company to gain exclusivity in its market. Then, working together with a patent strategist skilled in conceptual protection, patents can be tested before they are written to determine whether, if granted, they are likely to accomplish a critical business goal. The concepts that pass the test become the company's key patent assets. Those that don't, are discarded. In this way, companies can avoid wasting money on patents less likely to make a difference, skewing the patent portfolio to the gems likely to drive higher valuation.
Engineers can contribute greatly to this process by asking themselves the question, "assuming my competitor were to get this patent , would it stop our company from competing in the market?" If the answer is, "no," the patent needs to be broadened before it is filed to define the invention more conceptually.
And engineers need to fight the inclination to view conceptual inventions as obvious. It's the Patent Office Examiner's job to raise objections, and it's the company's job to fight hard to obtain commercially valuable protection.
The Association of Engineers & Architects in Israel Newsletter
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