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

Chapter Outline 1.Overview – Key Points 2.Problem in Predicting Futures 1.Investing in Patents 2.Risk in Investment timeline 3.Futures Game 3.Solutions 1.Internal – Market pull vs. Research Push 2.External – Design Around 4.sdf

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 business by competitors

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

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?

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

Profit-Driven vs. Research-Driven

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

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 decrease with later-stage inventions

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

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

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

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

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

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)

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

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

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

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.