Introduction:

When invited to give a talk for an American Corporate Council Association (which changed its name to the Association of Corporate Council) in 2004 I was asked to speak on “patent strategy.”  When I complained “That is a pretty big topic, can you narrow it down a little for me?”  the answer was “No.  You are a great person to speak on patent strategy, just do the best you can with it.”

So, I invented an eight step analytical framework to make sense of all the kinds of patent strategies I had been involved in while the patent portfolio manager at HP, as well as an IP consultant with other clients.  Six years later, I am still using the same eight species of IP strategy in my IP consulting and teaching, and I’ve found that clients and students see this analytical framework, and then immediately snatch it out of my hands and apply it to their situations in order to frame their problems.

As we work through our first book from BasicIP’s consulting practice experience running 450 invention workshops around the world, I’ve found this framework to be indispensable to laying out a step by step argument about why IP programs need invention workshops.  The eight species framework has become the foundation on which new analytical frameworks are being built.  So, just to be sure this framework isn’t shot full of holes I’ve been tricking local law firms in Boise (Zarian Midgley Johnson, Hawley Troxel) former bosses, the IP manager training guru for the Licensing Executive Society, and even a local law school dean (Yes, Boise is getting its own law school!) into looking over this framework and seeing if they can see anything wrong with it.  So far, no problems.  So, the purpose of this blog post, is to work out the Eight Species IP framework in format that is a little more formal than the PowerPoint decks it has until now, called home.

The Framework:

Figure 1 displays the eight species of patent strategy.  I derived these eight steps from the steps that a successfully licensed patent follows in its life cycle.

Figure 1

The steps a successfully licensed patent should follow over its life cycle are as follows:

1. A defined business model.  Principle: If you don’t know how you are going to monetize a patent before you apply, you are never going to monetize that patent.  Beginning with the end in mind is a Steven Covey principle.  Beginning with a profitable end in mind is closer to a law of nature when it comes to patents.  Example patent strategies that come out of defining IP business models might be IBM’s shifting to a for-profit IP business model under Gerstner (see 149 in his excellent book W.S.E.C.D.) to justify investing in research.  Or, a startup that has been small but that is becoming larger, may need to change business model from “hiding in the shadows of an industry” (a great place for every small company to start) to “buying oligopoly membership” as it grows.
2. Targeting profitable IP.  If the IP management team is not specifying what it wants inventors to invent, then it won’t get what it needs.  Typical engineering management is very busy, not that confident in its IP knowledge or strategy ideas, and so the tyranny of the urgent crowds out making a list.  Example targeting strategies related to patents while I was at HP was Steve Fox’s mantra of “future looking, competitively preemptive, and gap filling” inventions that were wanted. While these are great general goals for targeting IP, the wise CTO will take these goals one step further and specify specific technologies from them.  For example, while I was at HP Boise in Y2K, we continued to receive halftoning invention disclosures – by then an “old” technology.  And when halftoning disclosures were filed as patents they cost more, took longer, and ended up capturing less, than an equivalent investment of money and inventor time in a future-looking technology like internet printing.  So decommissioning halftoning as an invention disclosure target would be a second example of a patent targeting strategy.  For a great example of making patent targets specific, see Steve Fox’s chapter (11) in Patrick Sullivan’s PROFITING FROM INTELLECTUAL CAPITAL.
3. Generate and capture IP.  Generating and capturing involves training and dragooning.  If you look at how inventors come up to speed in your organization, you will find that about half of them require writing four to six invention disclosures before you can tell how good an inventor they will be.  The other half writes great disclosures from the start.  Training involves how you reach the non-instant-on half of your employees and providing them with the deliberate practice necessary for them to come up to speed inventing.  The dragooning involves everyone.  You can dragoon people into inventing in an infinite number of ways: with a simple “IP strip-mining” exercise, with an intensive off site brainstorming exercise, or by telling them they don’t get their paychecks until they fill out 6 enabled invention disclosures.  Or, you can give away iPods randomly to people filling out invention disclosures.  Whatever strategy you choose will be better than not having a strategy to dragoon inventions from people.   If you don’t have a dragooning strategy, you will capture =log(of what you should be seeing).  Most patent attorneys in companies have complained about “not seeing enough” from their inventors.  But few strategically dragoon their inventors.  Get a training and dragooning strategy.  They work well together!
4. IP triage is what happens after an invention disclosure has been turned in, but before it is acted on.  The default triage strategy in most IP organizations is to sit around a table and read the invention disclosures and then invent rules for how to disposition the disclosures.  Every quarter another meeting is held, the rules are reinvented from a new set of invention disclosures.  The process repeats four times a year.  An improved triage strategy includes developing four 1 to 10 rating scales that each disclosure is rated on, having two or three independent raters rate all the disclosures, and then automatically dispositioning the disclosures without group discussion if they fall below X or above Y.  Then, the group discussions can be focused on defining what each of the four ratings scales mean, and discussing disclosures that generate ratings variations.
5. Prep and process.  This is the stuff of patent agents and attorneys.  Prep and process is one of two species of patent strategy where every IP department scores at least a B is in prep and process.  This is craft.  Quality.  Goodness to attorneys and patent agents. So, I don’t talk much about prep and process strategies.
6. Portfolio management.  There are many kinds of patent strategies involved in portfolios.  For example, international patenting.  Nobody can afford to file in every country, so a natural patent portfolio management strategy is a factorial design of IP across countries to cut down patent costs but to maintain enough coverage to protect products internationally. Another portfolio management strategy example would be to build a strong portfolio in a specific area to feed a licensing program. Another might be to defensively publish heavily around big patents that are obtained to preempt other companies from capturing improvement patents.  Portfolio management strategies are truly legion.  But today, almost all the contact most IP organizations have with portfolios is in deciding on patent maintenance fees.
7. Litigation.  A second “B or above” patent strategy area for every IP organization.  Please note that litigation is the only species of the eight kinds of patent strategy, taught in law school.  Also note, that none of the eight species of patent strategy are taught in business schools.  In fact, the eight species of patent strategy are something of a “no man’s land” where companies have to paste together business processes the best they can to cover.
8. Monetization.  Deciding how you are going to make money with your patents is one thing.  Cashing checks from IP is another.  There needs to be a lot of feedback between monetization and IP business model.  Business models that are so heavenly minded that they are no earthly good need to be tested and refined into monetizable business models.  Checks will not come back to your company for IP unless you have a strategy on how you are going to monetize the IP.  Managers need their feet held to the fire.  Business processes need to be set up, run, fed, refined, and refactored.

The next post in this series will talk about how IP strategies evolve in the wild of the electronics industry starting with stage one where a growing company has no IP strategy (see Figure 2).

Figure 2