Most CEOs that I meet believe that IP protection is important in protecting their business. But when they’re faced with questions like, “Why are there so many competitors if your business is well protected?” and “Do you believe your competition is infringing on your patents?” They commonly answer with, “We are in a high-value market,” and “I don’t believe so.”
Are you sure that you aren’t developing IP that can be easily circumvented by your competition?
If you aren’t protecting your IP properly, then your IP can be easily circumvented by the competition and therefore brings no value to your business! What a devastating reality! Let’s pause that nightmare for a moment and review what circumvention means in a bit more context.
The value of your IP changes with your target audience. If you plan to sell or exit with a large S&P500 company then you need to consider their strength and ability to work around you.
For example, if you plan to sell or exit with a mid-market company, then adjust the cost number in the above figure by a factor of 10, e.g. $20M is $2M and so on. However, you cannot change the time associated with circumvention. Time and cost are two independent factors that need to be considered while you review your patent portfolio. Anything that can be circumvented in less than 2 years is considered to be easy to circumvent. So what you are looking for is to create patents that are hard and/or difficult to circumvent by your competitors. Now, to create a hard and/or difficult to circumvent patent must be valued within the context of your business. Thus, we arrive at the next question:
How well does your IP protect your value proposition?
Your value proposition is an innovation, service or feature or a combination, which you intend to use to make your company or product attractive to your customers. The value proposition is used to differentiate between a company and its competition in the same Serviceable Obtainable Market (SOM). So, are any of your patents unrelated to or add directly to the overall protection of your value proposition? If not, then you should consider them as a liability and you may even consider abandoning those patents.
This begs the question, “How do I know that a patent is protecting my value proposition?” This is a good question and the answer is actually pretty simple: If a patent or a portfolio of patents prevents a competitor from delivering your Value Proposition or a subset thereof to your clients, then you have created a valuable patent and/or portfolio.
Once you have identified how easily your patents can be circumvented and what your business’ value proposition is, you can begin thinking differently about your patent portfolio. Now, you must answer the 3 key questionsbefore developing your patent strategy:
- What is your business objectives context? This will help you define your circumvention criteria.
- Can your value proposition be protected? It isn’t always obvious that any business value proposition can be protected, in fact, based on my experience, some can and some cannot be protected.
- If you answered ‘yes’ to question #2, then: Is this patent that I am about to draft part of a cohesive and clear strategy that will protect my value proposition?
If you cannot yet answer these questions, then you should stop spending your time and money on patents that are most likely going to be circumvented by your competition and therefore worthless in protecting you and your business.
But never fear! If you think that you ready to develop a patent and are just unsure of your strategy, there are resources available that can support you. So when you are asked next, “Do you believe your competition is infringing on your patents?” you will answer with a confident, “Nothing is breaking through my patent strategy!”