Creating a Global Patent Strategy: Advice from Silicon Valley

We have an amazing and diverse customer base at IPfolio that ranges from Fortune 100s to dynamic technology startups in the Silicon Valley and the north island of New Zealand.

The vast majority have already established themselves across the globe or are certainly looking at markets beyond their home countries. Not surprisingly, creating a global patent strategy and evaluating foreign filing opportunities and options are part of the internal planning and budgeting activities inside many of their IP departments.

plm-global-bom-supply-chain

As foreign filing and patent protection is an expensive and resource-demanding process, we asked one of our customers for thoughts and tips on how he approaches foreign filing and prioritizes a finite IP budget. While he oversees the IP program at a well-known components manufacturer, we agreed to cloak him in impenetrable anonymity.

Thank you for the time. Let’s start with the issue of timing: When do you go global? When is the right time?

Going global needs to be part of your discussion with the executive team. It must reflect and support your global business strategy and implementation roadmap, both in terms of geos and timeline. You need to tailor your foreign filing strategy to business goals to ensure freedom to operate, while maximizing return on investment.

 

Where do you specifically start? Start with why. Is there a business need? Ultimately, IP helps secure and ensure your company’s key financials. Freedom to operate connects to revenue, net income and profit. Where these metrics are dependant on specific countries or markets, what IP assets do you need to secure to protect them?

In my case, my company sells hardware components basically everywhere on the planet. My rule of thumb is if a particular product line in a given country doesn’t generate at least 3-to-5 million dollars in revenue, it’s probably not worth patenting in that country.

 

Are you considering cost when making this decision?

Not exactly, but in my experience the basic cost to get a simple patent family filed across five countries is probably about $150,000 over the 20-year life of the patents. This is a general estimate based on a very efficient prosecution practice, and a lot of money, particularly for young companies.

 

Although we all know that complex patents can cost substantially more than this number, I’m assuming prosecution without doing any appeals or anything like that.

 

What’s the sales strategy to pitch executives?

There are really two approaches to developing creating a global patent strategy and selling it:

 

The No-Plan or Faith-Based Approach is a very short, usually overly-enthusiastic exercise in guesswork. It may or may not work out, but “hey, this is going to be a great country, we should file in China now” isn’t a great foundation on which to build a successful career in IP.

 

The Strategic Plan is really the only way you’re going to tilt the odds in your favor. If you go ask for a foreign patent budget – particularly if you are a small and growing company – you won’t have infinite resources. Where do you spend your limited money? How do you get more money?

 

Create a good strategic plan built on a financial foundation and model that the CFO can understand. Start with the business unit, look at the cost benefit for the patents, and map how everything leads to enhancing the value of your business assets and your recurring net income.

 

Do you distinguish between offensive and defensive patents?

Absolutely. You can go global for defensive reasons. Let’s say that you need to secure manufacturing rights in a country. While you may not be selling in Taiwan, you may be contracting out manufacturing with someone there. If so, you better think about whether you have the protection needed to keep manufacturing in Taiwan. Where do you see your product or service revenue going in the future? This is an important evaluation of market evolution. Are there areas where you are likely to have IP wars in the future?

 

You can also go global as an attack strategy. For example, being strategic about licensing can be massively beneficial. Cross-jurisdictional arbitrage is a sophisticated strategy that I have used in the past and continue to use whenever possible. It starts by considering “where am I going to need to defensively cross-license or if I am in that mode to monetize?”

 

Can you give us a real world example of the kind of thinking needed?

Let’s begin with IP in China: In China, there are two kinds of patents, invention and design.

 

Design patents can only be hardware, you can get them in about six months, no damages and they can only be enforced for an injunction. There is only an examination of basic patentability and it’s not a complete exam. It’s kind of a half-patent, if you will, but you can get one in six months and get an injunction.  

 

Here’s a specific real-life example. It began with company A facing an assertion from company B. Company A had no patents they could use to fight back with so A filed a design patent in China. Company A really didn’t have any relevant business in China with this technology, but knew  company Bdid all their product line manufacturing there.

 

As soon as A got the patent, A went back to B and said ‘let’s talk about that a cross-license in the United States. If you want to keep manufacturing your other product in China, we need to reach an agreement.” The alternative for them was that A could have secured an injunction in China within six months.

 

Why did A file for a patent that wasn’t central to their core product lines? Because A needed a tool against company B that also had a similar business that they were making in China. It was just a way to arbitrage across borders to secure a reasonable global settlement.

 

Another reason, of course, to use such a strategy is licensing for money. Good luck getting a license if you have two or three weak patents in the United States. You can’t leverage weak patents in the United States to secure and enforce injunctions, and your ability to extract a license becomes substantially reduced as a result. However, if you have a nice German patent and your target company has business in Germany, then you have something to consider licensing in that family on a global basis.

 

In terms of licensing, this is very strategic, very big picture thinking and execution yes?

It really is. If you are going to do licensing, it is becoming vital to think about when creating a global strategy and who your likely competitors are. It’s only half of the battle, though. After you have identified where you might want to think about patenting, what are you going to patent? How much is it going to cost you? What’s the cost-benefit of doing it? These questions form the second half of the equation.

 

What’s the potential value of getting a patent? Even if you think “China is a place where we might want to be for some reason, or Germany is a place we might want to be,” can you get a patent that you can enforce there? If you do, what can you enforce it for? If you can only enforce it for injunction, and you are in the business of making licensing revenue, it’s not going to matter. In fact, if you are not in the business of making license revenue, but protecting your freedom to operate, injunction might be a good thing for you. How much does it cost? is it really worth the effort

 

Arriving at these answers, assessing foreign patent systems, and doing it in a way that you can sell it to your CFO and get money can be very hard

 

Any recommended methods to convince the CFO?

Something I’ve done in the past is to build detailed overviews by creating matrices of each country of interest that I identified. For each country, I create a color-coded matrix. I assess government policies and practices, and try to assess the patent office expertise, speed and transparency. I also try to assess whether the country patent bar has sufficient experience implying that we can actually get it done. Finally, I include costs and enforceability.

 

By doing this extensive research, I aggregate information and data that help me understand whether I can get a patent and enforce it, whether the enforcement actions will mean something and whether I can even afford to invest in a remedy. What are the current available remedies? What may change in five years when I actually have that patent in Germany, China or another country. Will I need it in a decade? Will my business even be there anymore?

 

What do you say to those that say it sounds speculative?

I understand. Some people reading this are probably saying “yikes, how in the world can I do all this work?” While nobody is an expert, I have found two companies that create reports that help me paint the big picture picture. I use them to fill in details for the people I need to convince. For me, they are helpful to answer questions from my boss such as “Why are we wasting time filing patents in China?’ I use the data to discuss where China is today, and where experts and market research suggest it will be 5 and 10 years in specific areas.

 

When you have third-party information and research, you can say “Don’t take my word for it; here is data from experts based on market surveys and extensive local research. Let’s talk about the value of the patents we might have, their enforceability and where the Chinese patent system is going.”

 

It’s an imperfect methodology but it’s a way to look at the cost-benefit of going global. I really encourage IP professionals thinking about creating a global patenting strategy, and the intricacies of budgeting to access market reports as part of their tactical planning.  

 

Thank you so much for your time and some fascinating wisdom on avoiding mistakes when creating a global patent strategy.

Everyone should understand that there is no infallibility in IP. Hindsight and looking backward will inevitably throw light on decisions that proved wrong. Although 100% success is 100% unlikely, extensive research and methodical planning will increase your odds.

The IP of the Fourth of July

Patriotism is on full display in the United States every July 4, and Independence Day is the highlight of summer for millions of Americans. The day is typically celebrated with parades, red and white bunting, Revolutionary War imagery and lots of food and drink.

As you would expect, intellectual property is found throughout the day’s festivities. We thought it would be fun to research the IP of the Fourth of July and look at some of the patents and trademarks that are part of what we do, drink, eat and enjoy together on this day.

 

1. BBQ grill scraper

 

The Great Scrape Woody Paddles scraping a grill clean

 

Patent Number: US 8741068 B2

Granted: Jun 3, 2014

Have you ever met anyone who actually enjoyed cleaning a barbecue? Whether gas or charcoal, barbecues and grills get filthy. Accordingly, the USPTO includes several patented inventions to help ease the task.

This invention, now marketed as The Great Scrape by Thompson Brothers and Company LLC., is modestly billed as The Ultimate BBQ Cleaning Tool, and an alternative to metal wire brushes. Available in three sizes, it is described as “a barbeque grill scraper and related methods of use that utilize a scraping end formed of a heat-responsive material to remove char and other debris from the grilling surface.” The Woody Paddle, the largest of the three models, is available for $34.95. Judging from very positive online reviews, it seems to work as described in both the patent application and marketing copy.

Additional Reading:

Examiner.com: The Great Scrape Woody Paddle BBQ Tool Review

Amazon.com Listing: New All Natural BBQ Grill Scraper by The Great Scrape

 

2. Frozen confectionery

Patent Number: US 1505592 A

Granted: Aug 19, 1924

“It is among the objects of the invention to provide a method or process for making a frozen confection of attractive appearance, which can be conveniently consumed without contamination by contact with the hand and without the need for a plate, spoon, fork or other implement.”

Rapid advances in manufacturing and refrigeration technology in the early-20th century enabled the American food industry to create myriad new cold and frozen food products. Ice cream and popsicls were two of the fastest growing categories.

In 1905, Frank Epperson left a syrupy drink containing a stir stick outside on a cold night in Northern California. He awoke the next day to find the original popsicle. In the early 1920s, he revisited the frozen-drink-on-a-stick idea, partnering with Loew Movie Company employees in 1923 to create the original Popsicle Company. Popsicles were an immediate hit at amusement parks and beaches that summer. Despite the success, Epperson waited a year to file for a patent, which was granted just before Labor Day. Hot summer days and nights, as well as decades of Fourth of July celebrations have been much more enjoyable as a result. The oldest patent on this list, our IP of the Fourth of July would be incomplete without it. 

Additional Reading:

NPR: How An 11-Year-Old Boy Invented The Popsicle

National Archives’ Prologue: The Frozen Sucker War: Good Humor v. Popsicle

The Atlantic: Don’t Use the P Word: A Popsicle Showdown

 

3. Water recreation device

Patent Number: US US8292681B2

Granted: Oct. 23, 1012

More commonly known as a wakeboard, the ZupTM board became an instant success in the watersports industry because it enabled anyone, including “Individuals who could not ordinarily partake in the activity of towed water boarding” to have fun. In its first year, it became the best-selling product in the history of Overton’s, the largest watersports dealer in the world. The reasons are easily seen in this customer review on Overton’s website; “We had 10 people go with us, and all 10 stood up, and it was cool to see the look of triumph and fun all wrapped up in one instant.”

Additional Reading:

IP Watchdog: Patented Wake Board Made in America by Inventor Company

Zup Board listing at Overton’s

 

4. Surfing Device

 

 

Patent Number: US 7261050B2

Granted:  Aug. 28, 2007

Note: Our IPfolio offices are located in Berkeley, CA, less than a mile from the shores of the San Francisco Bay. While sailing, surfing and kiteboarding aren’t part of the July 4th experience for Midwesterners, they are for Californians.

This patent provided the IP foundation upon which Sven and Rouven “Bufo” Brauers developed their Bufo and Hydroflex brands in Oceanside, CA.

Their invention enabled them to provide surfers with reliable, high-performance surfboards built without wooden stringers. Stringer-less surfboards promise greater customization options to tailor board design to the individual surfer’s preferences, lower wear rates, and longer service life. Watch the videos below to see the commercially available products.

Additional Reading:

Company Website: Hydroflex Supercharger Technology

Video: Bufo Hydroflex Technologies. Bufo gives Board Riders Review a behind the scenes tour of Hydroflex Technologies (March 2010)

Video: Bufo Hydroflex Surfboards: Bufo Brauers of Hydroflex Surfboards gives Board Riders Review a sneak peak at a few of his surfboards. (March 2012)

Video: Steve Ford tests a Bufo “Hydroflex”. Surfer/Shaper Steve Ford gives Board Riders Review a small peek at the secret “Bufo Hydroflex” surfboard, (March 2010)

 

5. Neck entry wetsuit

Patent Number: US 5898934

Granted:  May 4, 1999

In 1952, Jack O’Neill opened one of California’s first surf shops in his San Francisco garage where he sold early versions of wetsuits. More than 60 years later, O’Neill is the best-selling wetsuit brand in the world, the result of a steady investment in R&D. This patent, a continuation of two earlier applications, “discloses a neck-entry wetsuit with an expandable collar formed by a gusset insert that folds in on itself, but which allows both the collar and the neck region to expand when unfolded.” It is marketed as the Z.E.N. ZIP System Entry system. Consumers and product reviewers love it:

“The Psycho’s best trick, though, is the Z.E.N. back zip closure, which uses an internal layer—O’Neill calls it Barrier 2—that pulls over the head to channel away any water that manages to get inside the super-short zipper and Double Super Seal neck. Drain holes along the bottom of the Barrier 2 let the water drain out of the suit, so it never actually gets to your skin, where it can suck away heat.” Backcountry.com

Additional Reading:

VIDEO: O’Neill Psychofreak Wetsuit

 

6. Solar powered umbrella table

 

DSC_0811-464x485

 

Patent Number: US 20110265694

Granted:  Nov. 11, 2011

American inventors Matthew Portis and Obadiah Hampton developed an outdoor table to convert solar energy into DC voltage so that electrical devices and appliances could be plugged in and charged using electrical outlets installed directly on the table. The application also included a moisture detector to detect unsafe moisture levels and turn off the electricity in response. Portis and Hampton continued to develop their ideas into a company, and have now commercialized their vision using the SolGreen SmartTable brand. If you want to provide party guests with the ability to recharge their iPads and smartphones while they’re eating ribs, this is the table for you.

Additional Reading:

Video: SolGreen Evodia Mini SmartTable Outdoor Solar Table

Press Release: Sustainable Spartans Bring Solar SmartTable to Michigan State University

Georgia Southern University: New solar-powered tables funded by student sustainability fees

 

7. Grease drip pan and gas tank blocker for a barbecue grill

:

Patent Number: US 8347874 B2

Granted: Jan 8, 2013

Weber is synonymous with grilling and summer barbecues. Since introducing its first charcoal kettle to the post-war barbecue market in 1952, the Weber-Stephen Products Co. has continually evolved and improved its product line. This invention, protected by one of the 270 patents assigned to Weber, is an advancement in product safety; “the inventions disclosed herein relate to frame assemblies for gas barbecue grills which incorporate structures for preventing a consumer from storing replacement fuel tanks on the grill, in order to minimize fire and tipping hazards.” US patent 8347874 is used in Weber’s Genesis grill line.

Additional Reading:  

Weber Kettle Club: How to determine the age of your Weber charcoal grill

Law 360: Weber, Sears near settlement In grill patent suit

 

8. Dispensing valve with trampoline-like construction

Patent Number: US 4991745 A

Granted: 1991-02-12

A self-sealing valve is provided for fluid dispensing packages and the like, of the type which are compressed and decompressed to dispense therefrom liquids, pastes, powders and other similar flowable materials.” And thus the era of the upside down ketchup bottle began.”

In the early 1990s, Michigan inventor Paul Brown tried to figure out how to transform liquid silicon into flexible, one-piece precision valves. By working with a mold-maker, he arrived at a unique valve design:

“A little silicone dome with right-angled slits cut in its top. When the sides of the bottle were pressed, the dome’s slits opened, reminiscent of a flower’s petals, and the contents would be released. When the pressing stopped, however, the air would be sucked back into the dome, causing it to retract and the slits to close.” Davision blog

After Brown licensed his invention, Heinz introduced the upside down ketchup bottle to make summer barbecues more enjoyable and tidier. A year after the bottle’s debut, Heinz ketchup sales rose 6 percent, while the overall ketchup category increased only 2 percent.

Additional Reading:

Pittsburgh Post-Gazette: Heinz, Hunt’s battle over who’s first with upside-down ketchup bottles

Daily Mail: Heinz squeezed me out: Inventor sues company for ‘stealing his ketchup container idea’

 

 

9. Apple tree: Honeycrisp

 

 

Patent Number: US PP7197 P

Granted: Mar 20, 1990

“This invention is a new and distinct variety of apple tree. It was discovered by Applicant in September 1974 as part of the University of Minnesota apple breeding program to develop winter hardy varieties with high fruit quality.”

What is more American on Independence Day (or any other day) than apple pie?

The business of apples is built on IP innovation, patents, trademarks and brands. Get them right and you’re looking at decades of profits. With a long history in agricultural innovation, the University of Minnesota got it very right when it patented the Honeycrisp apple in 1990.

A standard plant patent, US PP7197 P protects “one of the five all-time highest-earning inventions at the university” according to a lawsuit later filed against the university. Before the patent’s expiration in 2008, the school received $1.30 for every honeycrisp tree sold by approved growers. Revenues continue, however, because the university continues to own the Honeycrisp trademarks and brand.

Additional Reading:

Fruit Growers News: Honeycrisp patent expiration not expected to change sales

Esquire: Why are honeycrisp apples so damn expensive?

NPR: If you want to grow these apples, you’ll have to join the club

 

10. Fireworks projectile having combustible shell

 

 

Patent Number: US 5526750 A

Granted: June 18, 1996

Harkening back to that original “bombs bursting in air” celebration, fireworks are probably the most identifiable part of July 4th festivities. They – the engineering behind the explosions – have been also been patented and protected via the USPTO since the mid-19th century.

If you have ever seen the Disneyland fireworks display, which takes place nightly in Anaheim, CA, you know the Walt Disney Corp. knows fireworks. This patent is noteworthy because it focused on “a new method and system of presenting precision fireworks displays with a decreased environmental impact” and described potential applications in the accompanying images that included the ability to illuminate the night sky with Mickey Mouse ears.

Note: If you have ever wondered about the systems and methods for creating the pyrotechnic displays, basically how firework shows are created, the Background of the Invention section is well worth a read.

Additional Reading:

IP Watchdog: The business of patenting fireworks

IP Watchdog: Celebrating the Fourth of July with fireworks patents

Patent Puzzle: Fireworks are patentable

 

11. Squirt gun

 

 

Patent Number: US 4591071

Granted: May 27, 1986

“There are maybe three inventions I have that I rank as my top inventions that I’m most proud of. The robot I built in high school, the memory-protected circuitry for the Galileo and the Super Soaker.” Popular Mechanics

It’s July, it’s hot – really hot – in some areas of the country, and not everyone is close to a beach or pool. Kids and adults need to cool off. Since its introduction in 1990, the SuperSoaker has provided high-pressure fun for Americans of all ages. Invented by a real rocket scientist, Lonnie Johnson, it’s a lot more than “a toy squirt gun which shoots a continuous high velocity stream of water.” With sales close to $1 billion, The toy is ranked by TIME on its list of all-time great toys.

Additional Reading:

IPfolio blog: Individual Patents that Built Empires

Popular Mechanics: 7 Questions for Super Soaker Inventor Lonnie Johnson

Individual Patents that Built Empires

Whether addressed from a strategic or tactical perspective, few topics in IP receive more attention than the patent portfolio. Yet, for all the conference sessions and chatter about managing the aggregate, much of the value of any portfolio often resides in a few key individual patents, something Workday’s Head of IP Lisa McFall refers to as “gems.”

In this post, we’re looking at a handful of patents so valuable that they’re not simply gems; they’re the IP world’s equivalent of the Hope or Cullinan Diamonds. While our previous look at patents that launched billion-dollar empires focussed almost exclusively on Silicon Valley portfolios, we’ve cast a wider net beyond just the Apples and Facebooks to find individual patents that built empires for enterprising inventors who could execute or partner with someone who could. The first one is the origin of something you use every day

1. Improvement in Telegraphy

Granted: March 7, 1876; Patent Number: US 174465; Inventors: Alexander Graham Bell, Thomas Watson

The patent for the telephone is often considered to be the most valuable patent in history. By restricting competition during a time of massive economic growth, geographic expansion and adoption of technology, it provided the monopolistic foundation for the rise of Bell, one of the most dominant brands in American business. That Alexander Graham Bell was even granted the patent is the result of a long series of serendipitous events, much-litigated decisions, and chance. (Telephone Patent Follies is a detailed account).

Rapid expansion of the telegraph in the 1870s drove inventors to address the common problem of scalability – how to send multiple signals across one wire. Bell’s solution for sending multiple tones via a wire ultimately evolved into human voice transmission. Submitted on February 14, 1876, the patent was granted just three weeks later. Within a year, the patented invention was transformed into a business when seven shareholders incorporated the Bell Telephone Company. In 1878, the first telephone exchange opened in New Haven, CT. In 1899, the Bell Telephone Company was acquired by its subsidiary AT&T, which continued as a veritable monopoly until its forced breakup in 1982.

Bell the inventor could certainly see the future. In 1878, he wrote: “I believe in the future, wires will unite the head offices of telephone companies in different cities, and a man in one part of the country may communicate by word of mouth with another in a distant place.”

Portrait

Alexander Graham Bell’s Telephone Patent Drawing. Records of the Patent and Trademark Office, National Archives and Records Administration

Additional Reading:

Understanding how phones work 

Inventing the telephone

Chronological list of telephone and telegraph patents

 

2. Two-cone drill bit

Patent Number: US 930758, Granted: Aug. 10, 1909, Inventor: Howard R. Hughes

To a large degree, dozens of movies, the building of large portions of Las Vegas, the building of the world’s largest airplane, and, most importantly, oil drilling as we know it today, were made possible because of Hughes Tool’s revolutionary drill bit – and the creative mind that spud the idea.”

OilPro.com

Hughes two-cone drill bit  is an invention whose profound effect transformed oil exploration, enabling companies to drill through bedrock and drop holes thousands of feet into the Earth. A century after the patent grant, the invention was designated a Historic Mechanical Engineering Landmark by The American Society of Mechanical Engineers.

Until Hughes revolutionized the industry, the history of drilling into the earth had not changed much since the advent of the spring pole method. The discovery of commercial quantities of oil in 1859, however, launched an industry. New methods for searching for oil were needed and the next 50 years saw the gradual development of steam-powered rotary rigs. Cable-tool drilling using fishtail bits worked in soft and sandy soil, but was only marginally useful when encountering bedrock.

Enter Hughes, a Harvard dropout drilling for oil in Texas. In 1908, he paid $150 to acquire a roll bit patent that inventor Granville Humason had been unable to commercialize. Hughes and partner Walter Sharp improved the design and demonstrated the new dual-cone rotary drill bit in 1909. In front of astonished oilmen, they were able to drill down through 14-feet of hard rock in Galveston Bay, which no prior equipment had been able to penetrate at all.

The bit’s ability to crush and powder medium and hard rock ten times faster than any previous bit revolutionized the oil and gas drilling industry. Hughes and Sharp immediately launched the Sharp-Hughes Tool Company, which was inherited by Howard Hughes Jr. in 1924. For much of the 20th century, he was considered one of the richest men in the world. Roller-cone drill bits used worldwide still rely on the design principles introduced by the Hughes two-cone drill bit.

drill bit

Additional Reading:

Hughes Two-Cone Drill Bit: Designated a Historic Mechanical Engineering Landmark by The American Society of Mechanical Engineers

The History of Oil climaxed when the salt dome gusher, known as Spindletop, spewed Black Gold 150′ in the air!

Texas Primer: The Hughes Drill Bit (This is the invention that found most of the oil in Texas)

 

3. Method for node ranking in a linked database

Patent Number: US 6285999, Granted: Sept. 4, 2001, Inventor: Lawrence Page

Long before AdWords, Google Glass, Android and self-driving cars, Google’s original vision was to improve the quality of search results. PageRank was developed in 1996 by Stanford grad students Larry Page and Sergey Brin based on the idea of citations. The basic idea was that information on the World Wide Web could be catalogued or ordered in a hierarchy by “link popularity”; the more links a page had, the more popular it was, and thus should be ranked higher. US 6285999 is Google’s famous PageRank patent.

An early prototype of the Google search engine was then unveiled in 1998, after which Google Inc. was founded. The greater relevance or “accuracy” of search results soon convinced then-dominant Yahoo! to use Google to provide its search results, and people became habituated to the search results. Google was able to leverage when it launched its own self-branded search engine.

While it’s one of many factors that determine the ranking of Google search results, PageRank continues to provide the basis for all of Google’s web search tools. The patent is assigned to Stanford University but exclusively licensed to Google. Stanford received 1.8 million shares of Google in licensing fees, which were sold in 2005 for $336 million. Interestingly, a similar site scoring and page ranking method was patented in 1999 by Robin Li, founder of China’s dominant search engine Baidu.

US06285999-20010904-D00003

 

Additional Reading:

1997 abstract of in-development PageRank research paper

A very short history of Google’s origins

 

4. Safety razor

Patent Number: US 775134; Granted: Nov 15, 1904; Inventor: King Gillette

The future of shaving changed forever on December 3, 1901 when a salesman from Brookline, MA filed a patent based on a claim that he had “invented certain new and useful Improvements in Razors.”

The patent application detailed a revolutionary way of shaving:

“in which the necessity of honing or stropping the blade is done away with, thus saving the annoyance and expense involved therein……I am able to produce and sell my blades so cheaply that the user may buy them in quantities and throw them away when dull without making the expense thus, incurred as great as that of keeping the prior blades sharp.”

The first Gillette razors and blades were ready for sale in 1903. A Gillette Safety Razor Co. razor and one blade cost $5, and 20 replacement blades cost $1. An aggressive advertising campaign and retail distribution model were implemented, which put the razors into local drugstores throughout the country. Sales steadily grew until the company arranged with the United States military to provide every enlisted World War One soldier with a Gillette shaving kit. Sales immediately tripled. In 1918, 3.5 million razors and 32 million blades were sold.

Gillette’s patent enabled the company, to which he had assigned it and several later patents, to prosecute patent infringement cases against competitors. By the time of is expiration in 1924, Gillette was ready – much like pharmaceutical companies today whose blockbusters drugs are coming off patent – to leverage traction and brand affinity to pursue successful product and pricing tiers, in addition to introducing new category products.

safetyrazor

Additional Reading:

When King Camp Gillette introduced the first disposable safety razor

Gillette sues Dollar Shave Club for patent infringement

Gillette’s strange history with the razor and blade strategy

 

5. Squirt gun

Patent Number: US 4591071; Granted: May 27, 1986; Inventor: Lonnie Johnson

“There are maybe three inventions I have that I rank as my top inventions that I’m most proud of. The robot I built in high school, the memory-protected circuitry for the Galileo and the Super Soaker.”

  • Popular Mechanics

“A toy squirt gun which shoots a continuous high velocity stream of water.” A Super Soaker is so much more than this. It’s been the weapon of choice for kids on hot summer days and nights since it was introduced in 1990 with its original Power Drencher name. (The Super Soaker brand replaced it in 1991).

The story of the Super Soaker begins in the mind of its inventor Lonnie Johnson. A lifelong tinkerer, Johnson invented a 4 foot tall, remote-controlled robot in 1968 while in high school, He later worked on the Stealth Bomber program as a US Air Force (USAF) officer, then as a systems engineer at NASA’s Jet Propulsion Laboratory on the Galileo and Cassini missions. By 1982, he was back at the USAF and tinkering on the side at night. While working on the design of an environmentally friendly heat pump using xwater instead of freon, he realised the propulsive applications of his design.

Commercializing it was a much longer journey. Without the means to produce and distribute it, Johnson pursued licensing. Between 1985 and 1987, Johnson worked unsuccessfully with Daisy to develop a product line. He then signed a licensing deal with Entertech, which lasted until it declared bankruptcy two years later. Despite these false starts, he was able to improve the design-for-manufacture of his prototypes by incorporating blow-molding. Finally,  he signed an agreement with Larami Corporation in March 1989 to manufacture and distribute his invention.

In its first two years on the market, the Super Soaker generated over $200 million in retail sales, and became the number one selling toy in America. In 1995, Hasbro Corp., the second largest toy manufacturer in the world, acquired Larami Corporation. TIME later ranked the Super Soaker 91 out of 100 on its list of all-time great toys. Overall Super Soaker sales have totaled close to one billion dollars. Lonnie Johnson earned over $100M royalties.

 

ss_prototype

Additional Reading:

7 Questions for Super Soaker Inventor Lonnie Johnson

Alvin Davis, 78, businessman behind the Super Soaker

Super Soaker creator awarded $72.9M from Hasbro

 

6. A pantyhose undergarment and method for manufacturing

Patent Number: WO 2001076398; Granted: Feb. 14, 2002; Inventor: Sara Blakely

“Spanx founder Sara Blakely was getting ready for a party when she realized she didn’t have the right undergarment to provide a smooth look under white pants. Armed with scissors and sheer genius, she cut the feet off her control top pantyhose and the Spanx revolution began.”

The world of shapewear hasn’t been the same since a young sales rep who was then selling  fax machines door to door in Florida wanted to look better for a social evening. Inspired, she started working with $5,000 in seed capital on the project as a side gig, researching patents and visiting clothing manufacturers on weekends.

Two years after the “Spanx revolution began,” she landed Neiman Marcus and Saks Fifth Avenue. The she sent some samples to TV host Oprah Winfrey. Oprah was smitten, loving them so much that she proclaimed Spanx as her product of the year for her popular “Favorite Things” episode. Why did Oprah, and why do millions of women love this brand? As the patent describes, “the overall design provides the user with a smooth, tight appearance when worn under clothing, without causing discomfort.”

Blakely couldn’t afford the full services of a patent lawyer so she visited the Georgia Tech library to learn all she could about patenting and IP. Although she hired a lawyer to write the monopoly claims, she handled the rest herself. Her mother created the patent drawing, and she filed for other IP protections including trademarks and copyright (she even registered her own name).

The first patent and early publicity from Oprah created one of the fastest growing clothing brands this century. With an adoring customer base, and total ownership of the company, Sara Blakely was named the youngest self-made woman on Forbes’ 2012 Billionaires List.

spanx

Additional Reading:

Sara Blakely and her Spanx® underwear invention

Spanx v. Yummie Tummie – Design Patent Lawsuit Takes the Fashion World by Storm

An ode to the Spanx design patent duel

Video: Sara Blakely: How She Started Spanx

How IP Leaders Can Win C-Suite Support – Interview with Bruce Elder of IDT – Part II

Continuing the latest installment of IP Answers, IDT’s Legal Director of Intellectual Property and Licensing Bruce Elder explains how in-house counsel can get attention and budget from the C-suite for their IP program.

In Part One, Bruce began by explaining how to position IP in the context of overall priorities, speak the language of the boardroom, and demonstrate an understanding of risk management and insurance. In PART TWO, he describes how to ascend the levels of the IP value pyramid, the interdependencies of asset groups, and recommends how IP heads can conclusively prove the value and contribution of their programs.

IPfolio: What is the IP value pyramid in the context of the larger business discussion?

 

I think of IP strategy alignment in some simple, perhaps overly simple, levels of alignment. The higher you are, the more aligned the IP strategy is to the business, meaning the more value the business can extract from the investment in IP.

Bruce Elder pyramid slide for blog post cropped

 

As I suggested earlier, a fundamental layer of any IP strategy is to think about your competition, and identify how you are going to create defensive protection around your company. If you don’t do this, you don’t have a foundation. This is where you have to start.

 

If you go up a layer, I think you need to start talking about operational excellence. Yes, this is a business school buzzword, but what it really means is that you are constantly thinking of how to do things better. It’s an ongoing and constant evolution, challenging assumptions and asking questions like: Am I spending my time and budget where it will have the most impact for the business, not just now but some years from now? This is also where actively managing the portfolio through activities like directed invention mining and active pruning come into play, and where the workflows and the supporting technology and software can be critical.

 

Success comes down to maintaining alignment with your differentiation and market strategy, then anticipating the future. What will you need from your portfolio and when? You make sure you have a plan to get it when you need it. Even better, you figure out how to do this ahead of time.

 

IPfolio: What comes next?

 

I would argue that turning the IP strategy into part of your company’s net income and profit center is the next step up.

 

Conceptually, you need to be thinking about how you are contributing to the value of your business. You can create value in a lot of ways; it’s not just going out and suing someone for license revenue, although this may be an option for some. Rather, I mean activities like identifying and selling non-core assets as a beneficial good so you can leverage your portfolio, or proactively helping your business secure a partnership or win a sale because you can show that working with you instead of a competitor gives them the comfort of superior patent coverage, or demonstrating that you’re the thought leader in an area.

 

The requirement to efficiently execute at this level is to know your IP inventory and appropriately categorize it.  This is where that prerequisite of deep portfolio knowledge really can pay off.  This is how you rise to the top of the IP Strategy pyramid. Yes, it is certainly rare and hard to do, but this is the point at which you become part of the fully integrated business plan of your company.

 

When you get to this level, the CEO isn’t reviewing the business fundamentals, the annual plans, or the three-year strategy plans without you participating at least to some degree. The Board of Directors is unlikely to talk strategy without you in the room or without, at minimum, having consulted you before. In truth, though, it is rare in my experience to achieve this.

 

Instead, you can too easily be the focus of reactive expectations. “My friend Joe at another company’s board said they are making a lot of money on their patents. I wonder why we aren’t doing the same thing.” The next day, someone might visit your office with a “there has to be value here; the board insists there is” sort of message. The truth may be that three years ago, there was indeed value, but some of it has since been lost. I know many IP professionals have had this kind of conversation, and it is never fun to be an “IP guy” who is suddenly and unexpectedly given a revenue target.

 

IPfolio: Where does IP find common ground with C-level leaders?

 

By creating value from the business assets – and critically – by communicating how IP is doing so. Here’s a great question to ask IP heads: Have you spoken with your C-suite about how you are helping to create value from the assets you control in the business? Have you had this conversation using their language? Sometimes, it can be even more preliminary. Do you even have the opportunity to have that conversation? I put it to you that the more IP leaders think and talk in the language of business value, the more likely they will get to this level of conversation and maybe even get more budget support.

 

IPfolio: How does IP talk about creating value from the assets they manage?

 

Drawing from my business background, I recommend understanding how assets fit together in the big picture. This is regardless of whether your company is a 60-person startup or a billion-dollar public company.

 

You have three legs of the stool that the organization is balanced upon. Start with capital, which is your cash, working capital, and fixed assets. Consider these your planting materials. Next, you have human capital, the great people who build relationship webs. They execute on all your wonderful ideas, which is the third leg. Every business has these three assets or legs.

 

IPfolio: Are the asset groups interdependent?

 

Absolutely. Most business school folks will tell you that there are three sorts of interdependencies that come together when creating value.

 

The first interdependency should be fairly obvious; this is leveraging and exploiting your assets to create recurring net income. You are in business to make a profit after all, or even if not-for-profit, you need to sustain and survive long-term. Think of this as the part of the business typically reflected on the income statement and cash flow statement.  If you are an early-stage start up, this really isn’t your immediate priority, however. In that case, you are burning cash and know you are likely not going to be generating net income any time soon. While you are dreaming about getting there sooner or later, you have other immediate priorities.

 

The second interdependent priority is to increase the value of your assets. How can I get more value from what I have or bring in more assets? Think of this as the balance sheet part of the business.

 

The third one is ‘How do I secure my income and my business assets?’ How do I keep someone from encroaching and taking away my net income and the value of my business assets? All these things work together, This is what your CEO thinks about. This is the language he or she uses. You should talk about IP in this context. Here’s a quick mental exercise: Which one is most critical to you today?

 

IPfolio: Any suggestions to answer the question?

 

Your priorities depend on your business’s maturity. It’s that simple.

 

Consider a private venture-backed startup or small company. If you are a startup, you are probably not profitable yet. Your priorities  are probably thinking more about increasing the value of your assets and setting yourself up for the next stage. The next stage could be X amount of funding, an exit strategy, or perhaps an acquisition. Maybe it’s going public. Profit is probably not the number one motive. Growing overall value perception of your business assets, increasing your valuation to get a better round next time, or justifying an offering are probably more important right now.

 

Will this remain unchanged in three to five years? Probably not. Hopefully by then, you will have reached some plateau where growing net income is important. Contrast this with Google, Facebook or Apple. Take Apple; it’s had a bit of an interesting time after the last earnings announcement. Apple had such an amazing and long stretch of rapid growth over many years, but there’s a limit to exponential growth of anything, even Apple. Now, it’s starting to become as much about securing the income and long-term value of the business and ensuring profitability that has already been achieved.

 

IPfolio: How does IP conclusively prove the value of what it does?

 

IP can seem really vague to some people in the executive suite. It’s sometime seen largely as an insurance type of cost, which they can measure fairly easily. Your department budget is clearly visible.

 

But how do the CXOs measure your value, not just cost? Short of going out and suing people and getting license revenue at the extreme, how do you prove IP value and what are you measuring? Is it just sheer numbers of IP assets? Yes, that’s one strategy. It’s an easily calculated and understood metric, but as I mentioned earlier, it’s a very inefficient one to show the value of an asset or portfolio to the business.

 

You have probably heard this before – ‘if you can’t measure it, you can’t manage it.’ This is a critical principle because every executive will ask you for proof. Their line of inquiry will be something like this: ‘How do I know that you are doing what you are saying? and What are the metrics? and What is the value?

 

I try to focus on expressing the degree of IP alignment to business priorities. For example, how IP prosecution is focused on directed invention mining in the high-growth or high-revenue parts of the business, while divesting or cutting non-contributing assets and efforts, and expressly pointing out why that helps secure net income or grow the value of the assets to the business. I also have used comparisons to illustrate where competitors and threats are active or may emerge, and try to show how the IP portfolio is being proactively adapted numerically and qualitatively to match those perceived threats.

 

I try to identify areas where IP can be, or has been, leveraged to secure a partnership or help in sales or marketing campaign. As much as possible, I try to do this using metrics and visuals or dashboards that make sense in a language and lexicon they are used to dealing with. Starting with a baseline, if you can show positive change over time, and positive business results that leverage the IP portfolio, then the executive team is going to be much more inclined to listen. When they start listening, you’ll have their attention and a better opportunity to lobby for the funding your contribution to the overall organization merits.

We’d like to thank Bruce for his perspective and time. In an IPforward Conference presentation that captivated attendees followed by this expansive Q&A, Bruce has definitely provided Heads of IP with a roadmap to produce a closer relationship with their company leadership. We look forward to presenting more of Bruce’s expertise in future IP Answers.

How IP Leaders Can Win C-Suite Support – Interview with Bruce Elder of IDT – Part I

No company – not even Google or Microsoft- has an unlimited Intellectual Property (IP) budget. It’s an ongoing challenge of fine-tuning strategy and prioritizing tactics, each  balanced against a financial reality that there’s never enough money to do everything you want. The opportunity, however, to do more of what you want often rests with your ability to solicit and secure the blessing of senior management.

In this installment of IP Answers, we’re talking with Bruce Elder, in-house counsel for Integrated Device Technology (IDT), one of Silicon Valley’s oldest semiconductor companies. We were very fortunate that he was available to speak at our recent IPforward 2016 conference as it’s rare to find someone whose biography covers so many lines on a company’s org chart. He’s ready to provide tips and recommendations to get attention and budget from the C-suite so you can fund your IP program.

bruce elder 5

In Part One, Bruce explains how to position IP in the context of overall priorities, speak the language of the boardroom, and demonstrate an understanding of the importance of risk management and insurance.

A candidate for Most Interesting Person in IP

IP attracts individuals who typically combine a mix of academic and professional experiences. Bruce’s background, though, is so diverse that he would certainly contend for any “Most Interesting Person in IP” prize.

With an academic background in aerospace engineering and early work launching and flying satellites in orbit, he can talk shop with engineers. He can chat knowledgeably about market development, product launches and cash flow priorities by virtue of a decade in sales and marketing roles at Sun Microsystems, followed by leadership positions at three VC-funded startups. He spent the early years of his IP law career at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC and Perkins Coie LLP, then went in-house as IP counsel at Silicon Graphics International Corp and MobileIron. An English Solicitor, a California Attorney, and admitted to the USPTO, his formal IDT title is Legal Director of Intellectual Property and Licensing.

IPfolio: First things first, Bruce, what’s your current role?

 

I’ve been at IDT since December 2014, creating and running global programs in IP, licensing, M&A transactions, and providing counsel related to company product and technology make/buy/license decisions. My role reduces fundamentally to helping the company devise and execute programs that can increase the business value of IDT’s technical designs and related IP. It’s something that uses a lot of my background. While I am admitted to practice as a patent lawyer, I have never actually prosecuted patents for a living, although I have litigated them several times. I have also raised venture capital and started small companies, and been the executive running sales and business development in both large and small companies.

 

I think what I really bring to the IP table is a very business-centric approach. While my work on our small in-house legal team does, at times, take on elements of a more traditional legal role focused on risk management, compliance or even day-to-day transactions, I spend most of my time working with the management teams here to support technology development and business growth initiatives. It is really fun, too! It is impossible to be bored when you’re lucky enough – sometimes in a single day – to be involved in such diverse areas as corporate development, overseas M&A transactions, advanced technology strategy planning, and even global tax strategy. Not always what you might expect someone with my title to do.

 

IPfolio: Your resume clearly differs from most in-house counsel.

 

I’ve sometimes thought perhaps I do things a bit backwards. When I went to law school, many of my younger new lawyer friends were hoping to evolve their new law practice from junior associate to someday perhaps become a VP of business development. My last job before law school was VP of business development, which I left to become a junior associate. A result is that my IP perspective starts from the point of view of someone who has run P&Ls, a business, worried about payroll, and tried to figure out how and where to grow sales. It’s generally not starting from the legal ‘IP Guy’ perspective.

 

The reason I was so happy to speak at IPforward is because this IP-business intersection is critical for every in-house counsel to understand as deeply as they can. They need to understand the priorities and challenges of the CXOs to win them over. It’s vital for counsel to understand this simple imperative – if you want to grow your portfolio, you have to get alignment with your C-suite and you need to get a budget. That’s the bottom line.

 

IPfolio: How do you do this effectively?

 

Aligning IP and business strategies is the key, of course. Irrespective of whether they’re actually meeting this goal, everyone at least understands its importance. This said, so much time and effort is spent in the IP field today – especially patenting – on operational aspects. I call this “Doing Things Better.”  Not as much time is spent on the strategic alignment, or “Doing Better Things.” Every business needs both to thrive.

 

There are two critical prerequisites to achieving this alignment;  the first is awareness and vocabulary, and second is actionable knowledge.  I can’t emphasize enough the importance of vocabulary; the way we as humans put concepts into words frames and structures our thinking to an amazing extent.

 

Does your way of talking align with the way your CEO thinks? If you speak about patents, for example, in the language of risk management – warding off competitive assertions, leveraging cross-licenses or defending differentiation – then you’ve already framed the discussion in an “insurance” context. Insurance is a necessary item for the C-suite, but always a cost and burden to be minimized and mostly forgotten.

 

Then, once we master speaking – and conceptualizing – IP more strategically as a valuable business asset, the next critically important tool to achieve alignment is gaining deep knowledge about the business strategy, and about your IP portfolio, especially. If I could add a third point, it’s also critical to understand that nothing is fixed; IP strategy evolves over time as your company does.

 

IPfolio: Can you elaborate on the last point?

 

I have been at a 60-person early stage startup, and I have been at an $18 billion public technology company. I helped take a mid-size company public. Today, I work at a 36-year-old, very established mid-cap public company employing 2000. The IP needs of each require radically different initiatives and strategies. The ability to make the transitions and adjust your IP strategy at the right time is a really important and valuable skill for in-house counsel to nurture.

 

Early stage startups should be all about focus on that one competitive differentiation that will compel an early customer to take a chance – and protecting it with IP so a VC will fund them.  Pre-IPO companies are about amassing enough of a portfolio in their core market-disruptive areas so they can survive the leap to profitability, without being crushed by established players trying to halt the new guys taking market share. More established companies with evolving products lines are likely more concerned about keeping in sync with changing product lines, active portfolio pruning, and so forth.

 

IPfolio: So where do you begin to frame IP  in the context of the larger business discussion?

 

The essential prerequisite is this: gain deep knowledge of your IP portfolio, and the business strategy.  

 

Without deep knowledge, you really are left to play the numbers game for strategy, and instead spend your energy primarily focused on the operational aspects of getting the most for your IP dollar.  For example, you might try to patent enough. You can then be ready when a time comes that you must rely on your portfolio for some critical business situation like defending against an aggressive competitor, and by sheer volume may have a couple gems that can survive litigation and read on your likely competitor.  That’s expensive and inefficient, obviously, so you’ll certainly need to be constantly budget-conscious.

 

In this scenario, you’ll be defending the IP budget regularly because this is really an “insurance” model, writ large. You should also be ready to go to the C-suite for a patent acquisition budget if facing key litigation and you didn’t get lucky enough to have the gem you needed organically in the portfolio.  I don’t mean to minimize defensive patenting or budget management, obviously these are key fundamentals, but I think IP can be more valuable to the business if it is taken to the next level.

 

IPfolio: Are there alternatives?

 

Certainly. You can invest budget and effort now. It is not an easy task to do well with a portfolio of any size or complexity. To  really understand your patent portfolio, you have the ability to develop it more strategically. Look at each asset, and map critical metadata to the assets or asset families.  I try to anticipate the questions I might need to answer about our patents in support of business goals, such as technology area or concept coverage, competitor reads, standards essential patents, or product instantiations.  

 

For example, can you quickly pull from your portfolio a list of patents that read on a particular high-threat competitor? This obviously implies other questions. Do you know who your high threat competitors are now and likely to be in a few years’ time? Do you know what features drive significant revenue for their products that your patents might read against, and therefore be potentially valuable against them?

 

In parallel, of course, you need to be gaining a similar understanding of the business strategy.  The most fundamental concern of any CEO should be how to create value from the assets of the business.  Every successful CXO has an immediate, near-term and longer-term strategy to achieve this, As an effective IP leader in an organization, you’ll need to understand it in some depth.

 

If you’ve done the homework, then you can start to progress up the IP value pyramid, aligning your IP strategy more to the business strategy, and delivering greater business value as a result.

Thank you Bruce for your time. We will be back with Part Two in a couple of days.