Earlier this year, the United States Patent and Trademark Office announced that IBM was awarded more U.S. patents than any other company for the 25th consecutive year. This is a remarkable record that is unlikely ever to be surpassed, and IBM has a lot to teach other companies. So we asked Manny Schecter, IBM’s Chief Patent Counsel, to explain some things the company has learned about managing intellectual property.
- Patent the right inventions
In evaluating an invention’s potential, companies need to consider three basic options in the context of their current and future business strategies:
- Retain as a trade secret. Does the invention offer such a substantial and unique competitive advantage that it might be best to prevent all disclosure?
- Does the demand for the invention justify the expense of, and need for, patenting?
- Publish or “give it away.” Is there value in promoting broader implementation of your IP through models such as open source (and simultaneously inhibiting competitive patents)?
Making such choices is not easy, especially when a technology’s life cycle may not be the same as its value lifetime. What’s important is to have processes in place to thoroughly analyze an invention’s potential value, then invest accordingly.
- Protect your freedom of action
Patents are not merely a means of protecting a great invention. Patents are also assets that can be leveraged to gain access to proprietary technologies of others. Cross-licensing should be an important consideration in any IP strategy, allowing companies to make use of each other’s technologies to build and sell their own products without fear of litigation or ongoing royalty obligations.
No doubt, owning a patented invention provides a powerful basis for negotiation. But it’s often just the tip of the IP iceberg. While the invention itself may be valuable, knowing how to apply the technology is often more valuable. Many of what we consider to be great inventions of history comprise enhancements working in concert with earlier patented technologies — only possible thanks to the disclosure function of patents. In many cases, licensing a patented invention to others may provide more value than manufacturing and selling a product yourself.
- IP isn’t about attorneys — it’s about culture
Any company’s intellectual property strategy should be hardwired into its overall business strategy and culture. This requires early education for new employees, along with daily business practices that encourage IP awareness and understanding. Inventors need to be encouraged and celebrated, whether their creations result in patents, trade secrets or publication.
Leaders who seek to cultivate cultures that value innovation must understand how their business processes and policies contribute to (or impede) invention and must focus on IP potential and protection. Just stressing the importance of talking to an IP attorney is insufficient. If other business practices or policies discourage or even penalize taking time to explore IP considerations, inventors will quickly figure this out and shift their focus to activities that are more likely to enhance their personal success.
- IP is now a global game
The world is a very different place than it was 20 years ago, which means companies need a broader, more global view of protecting IP.
China is gradually strengthening its patent system as it transitions to an innovation economy. In the European Union, changes may soon make it possible to more easily gain a single patent enforceable across the entire EU. Meanwhile, in the United States, recent U.S. Supreme Court decisions have negated large volumes of patents and patent applications that were in many cases granted in other markets.
In the past, merely filing for patent protection in the U.S. may have sufficed, but today companies have to choose whether to ante up additional budget to pursue patents in more countries, or carefully redistribute their limited resources to pursue patents in markets where they’ll be most valuable.
- Eliminate patent abuse
One of the most important lessons that IBM has learned is that it pays to be actively involved in shaping IP policy. Currently, a particular area of contention is how best to deal with the abusive behaviors of entities that do not themselves invent but instead acquire patents from others, as well as the assertion of patents for inventions many deem unworthy of patenting.
While adjustments to the patent system are needed to thwart this behavior, efforts to correct abuse have had the unintended consequence of weakening worthy patents and the system for enforcing them. That’s why the USPTO in particular needs to thoroughly examine patent applications to properly differentiate worthy from unworthy inventions up front. This will minimize the number of patents that are later invalidated after considerable resources are expended on litigation and post-grant challenges.
Prospective patentees can play a big role in this reform by ensuring that the IP they seek to protect adheres to high standards and helps advance new markets.
Manny Schecter is IBM’s Chief Patent Counsel. This article was prepared in partnership with IBM.