Chapter 1

An Introduction to Patent Engineering

Patents have long been recognized as a vital tool in the business world. Patents are designed to give the owner or assignee of the patent a monopolistic position in which to practice the technology described in the patent. In years past, a few patents may have provided adequate protection. That is no longer the case. In today’s world, a solid patent portfolio that is the result of engineering and executing a focused patent strategy is vital to protect your business interests.

Moreover, patents should not be considered solely as defensive legal documents. Rather, they should be considered part of the marketable product stream emanating from your company. If the patent portfolio is good, it can be worth billions of dollars. If it is poorly designed, it can simply be an expense that divulges your technology to your competition.

It is the goal of this book to enable you to develop patent portfolios that both protect your vital technology and have commercial value without burdening your company with undue expenses. To begin this discussion, let us consider your night immediately prior to your big product introduction.

The Night before Product Launch

Your company is about to launch a new product. Perhaps that product will also launch your entrepreneurial company. Alternatively, that product may enhance the profitability of your established company.

The product has many key features that are lacking in competitive offerings. You should be able to capture a large segment of the market and offer your products at a premium price. You have filed patent applications, or perhaps even already obtained issued patents, on the key features. Yet, despite this, you are stressed. Why?

You know that no marketing window is open in perpetuity. It is only a matter of time until competitive products are offered, perhaps with additional features or at a lower price. You hope that your patents will prevent this, but do they?

In too many instances, the answer to the above question is no. Companies patent or attempt to patent what they perceive as solutions to problems. These solutions are often specific to their own technologies and do not extend to technologies of value to other companies. They also do not block competitors from developing and marketing competitive technologies that solve the same problems in different manners. In fact, a patent stemming from a patent application may not be allowed or issued. In this situation, the information put forth in the disclosure contained within the application teaches your competitors exactly how to solve the problem without affording you any protection. You have educated your competitor—at your expense.

It is important to realize that this is where most businesses make their mistakes. Most businesses patent technologies that are specific to their products. This is fine, as long as people want your specific product. The problem is, more often than not, people do not buy products—they buy solutions to their problems. When a person needs to sit down, which matters more—picking a bar stool over a bean bag, or getting off his aching feet? You may have patented the chair, but it’s only a matter of time before someone comes along with something better or cheaper. It can take years, even decades, for an industry to hit that combination of cost and functionality that makes consumers accept a new product paradigm. If you want to keep your business relevant long after your product has been surpassed, you need to stop patenting the product and start owning the problem. This is accomplished not by filing random patent applications but, rather, by filing patent applications that emanate from developing a patent strategy that allows your company to “own the problem” rather than simply specific solutions to a problem. The process of developing and executing that strategy is called “patent engineering”.

The Value of Patents

In the early 1980s, Xerox accepted a pile of stock shares from Apple in exchange for allowing Steve Jobs to go cherry-picking in Xerox’s nowlegendary Palo Alto Research Center (PARC). Jobs took what PARC had learned about graphical user interfaces and birthed a new era in computing, providing computers that were far easier to use than the DOS-based computers people had before.

Apple may have created a new market for personal computer use, but it did not get the patent coverage it needed to defend its space. When Microsoft muscled in and established a dominant market position with its Windows products, Apple was reduced to suing Microsoft in the fuzzier arena of copyright law, alleging that Windows stole their “look and feel.” Without hard patent documentation, the courts took one look at this case and decided that there was no cause of action. Apple was defenseless.

The Apple case was dismissed, and as a result, Microsoft Windows nearly destroyed Apple Computers. The only way Apple was able to regain a presence in the computer marketplace was to create a whole new user market by developing a brilliant, consumer friendly ecosystem, first in its desktop and laptop products, and later in its music players, smart phones, and tablets.

Smart phones had spent more than a decade in development before the iPhone came along and blasted the market open. The first smart phone was introduced by IBM in 1993, but it was expensive and impractical. For years, the marketplace was littered with failed attempts. There were lots of good phones that were bad computers, as well as bad phones that were good computers. There were a few devices that managed to do both well, but they were far too expensive for mass consumption. When it was introduced, the iPhone was like a revelation—a good phone and a functional computer in a sleek, affordable and (perhaps most important) attractive package.

For a while, Apple regained market dominance with its iPods, iPhones, and iPads, but they were only the first-movers in a new arena. Soon, second-mover competitors, like Google and Microsoft, entered the market with cost-competitive products that had a similar balance and user feel. By waiting until after Apple had created the market, these second-mover competitors were able to take advantage of both Apple’s research investment and the feedback of Apple’s customers. As a result, these second-mover products were able to have a price advantage over the breakthrough products and still yield a competitive return. In America today, there are more Android-based smart phones sold than Apple smart phones, even though the first iPhone reached the market more than a year before the first Android smart phone. Android’s primary advantage is clear—its phones just cost less.

And now we arrive at the real reason you are feeling such stress on the night before the product launch. You know that even though your product is incredible, your competitors do not have to copy its exact features to create a product or service that will attract your customers. All they have to do to compete with you is reduce the importance your product’s advantages while offering advantages of their own that will resonate strongly with consumers. Windows 3.1 might not have been as refined and efficient as the Apple Macintosh operating system with which it competed, but Windows was good enough to offer most of the advantages of Apple’s more-intuitive computing experience both at a lower cost and in the open environment of the IBM PC architecture trusted by millions of corporate IT professionals. The advantages of Apple’s interface were clear; Windows’ advantages simply outweighed them.

So what can you do to protect yourself? Like it or not, you know patents can be valuable and if you have not started filing, you probably will soon. Still, you’re not sure what makes a patent valuable. Is it the specific technology? Is it the number of patents you own? You need to know, because whether you own a large multinational corporation or run a small business out of your garage, your competitors are looking for any opening that they could use to force you to pay them large sums of money, force you out of business, or both.

You need a patent strategy, one that looks beyond the minute details of gear A and slot C, one that prevents you from throwing money away on useless patents with little value. To protect your bottom line, you need a big-picture patent strategy that will help you reap financial benefits from what may be your most valuable product—your intellectual property.

Implementing a Patent Strategy

So where do you start? The good news is that implementing a proper patent strategy—otherwise known as “patent engineering,”—is both time efficient and cost effective. In this book, you will learn that the strategy is all in the details as we guide you, step by step, through the choices you can make long before your patent application is ever filed.

We will show you how to boost your inventors’ patentable output in the time they are already spending on your products. We will guide you through the patenting process, highlighting the places where you can maximize your patenting dollar. Most importantly, we will teach you to think about product development in a whole new way. We will show you how to look beyond the nuts and bolts of your specific technologies and instead to lay claim to something far bigger and more profitable than any product could ever be—the problem they solve. You will have more than a product. You will have a solid plan that will allow you to prosper for years to come. Now, introduce your product with confidence.

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