Internet of Things (IoT) Strategic Patent Development 4Q 2015

Contents:

1. New Patent Development Opportunity Analysis

2. New Patent Preparation & Prosecution Strategy

3. Strategic Patent Development Exploiting Existing Patents

Link: http://www.slideshare.net/alexglee/internet-of-things-iot-strategic-patent-development-4q-2015

IoT Disruptive Innovation & Patent Exploitation

I. Disruptive IoT Innovation

HBS professor Clayton M. Christensen coined the concept of the “disruptive innovation.” Christensen explained the disruptive innovation in his famous book “The Innovator’s Dilemma” as an innovation that disrupts an existing market in ways that the market does not expect, and eventually create a new market. PCs replaced the mainframe computers, 3.5 inch floppy disk drive replaced 5.25 inch drive and digital cameras replaced film cameras are some examples of the disruptive innovation. Key features of the disruptive innovation that differentiate it from the traditional (sustaining) innovation are as follows.

·         The products/services provided by the disruptive innovation underperform demanded by the current mainstream market. Thus, the incumbents in the current market ignore the opportunities provided by the disruptive innovation. The speed of performance improvement of the disruptive innovation is, however, faster than that of the traditional innovation supporting the current market demand. Thus, the products/services provided by the disruptive innovation can serve the future market demand.

·         The performance of the products/services provided by the disruptive innovation does not need to surpass the performance of the products/services provided by the traditional innovation. The products/services provided by the disruptive innovation will create a new market by either offering comparable performance or meeting the customer’s expectation at lower cost.

Interconnected IoT (Internet of Things) devices enable the development of the disruptive products/services by meeting the customer’s expectation at lower cost. For example, a prefabricated house with built-in IoT applications for the smart home can provide the comparable quality of life at lower cost. Interconnected IoT (Internet of Things) devices also can provide the disruptive products/services by offering comparable performance. For example, the telemedicine system equipped with interconnected low cost medical devices can offer comparable performance of the traditional healthcare system with high cost and high performance medical devices.

II. Patent Exploitation for the Disruptive IoT Innovation

One way of exploiting patents for the development of the disruptive IoT products/services is to open patents owned by the incumbents to the business ecosystem collaborators in diverse industries (the “Open IP Innovation”). By letting the collaborators develop the disruptive IoT products/services exploiting incumbents’ patents, the incumbents can keep focusing on the current mainstream market in addition to effectively prepare the emerging market created by the disruptive IoT innovation. A practical method to exploit patents for the development of the disruptive IoT products/services through the Open IP Innovation is to apply the new product/service development methodology in the “Blue Ocean Strategy” (the “Blue Ocean Patent Strategy”).

In “Blue Ocean Strategy,” the authors provide a framework and tool set for creating new products/services, and thus a new market (blue ocean), through the value innovation such that maximize the value proposition and minimize the cost to provide the value to customers. To achieve the value innovation the authors suggest the companies ask the following four questions (eliminate-reduce-raise-create framework):

a. Which of the factors that the industry takes for granted should be eliminated?

b. Which factors should be reduced well below the industry standard?

c. Which factors should be raised well above the industry standard?

d. Which factors should be created that the industry has never offered?

These four questions can be converted into the strategy canvas (level of value proposition v. value proposition factors) to create a new value curve. In “Blue Ocean Strategy,” the authors use strategy canvas to analyze the competitive environment of the market (red ocean). Drawing a strategy canvas does three things. First, it shows the strategic profile of an industry by depicting very clearly the factors that affect competition among industry players (BLUE OCEAN FACTORS). Second, it shows the strategic profile of current and potential competitors, identifying which factors they invest in strategically. Finally, it shows the company’s strategic profile- or value curve-depicting how it invests in the factors of competition and how it might invest in them in the future.

The basic principle in the Blue Ocean Patent Strategy is to exploit patents to achieve the value innovation by using the patented technologies to create a new value curve, and thus, to provide new products/services. Following figure illustrates the basic principle of the blue ocean patent strategy.

For example, a company in the consumer electronics industry that wants to develop the IoT medical devices can exploit existing patents that cover the factors of the strategy canvas. By deciding which factors (that are covered by the existing patents) are really crucial, and thus, needed to raise and/or create the value curve, new medical devices that serve the customers in fundamentally different ways can be developed. Patents regarding superior UI/UX, compact/portable design, robust wireless connectivity are the good candidates for the BLUE OCEAN FACTORS. The exploitation of existing patented technologies not only allows the low cost IoT medical devices development but also provides the protection against competitors’ infringement.

For details regarding the patent strategy for the disruptive IoT innovation, please contact Alex G. Lee (alexglee@techipm.com).

©2015 TechIPm, LLC All Rights Reserved

http://www.techipm.com/

Patent Strategy under Legal Uncertainty

I. Strategy under uncertainty

In “Strategy under Uncertainty” (Harvard Business Review Nov. - Dec. 1997 Issue), the authors insisted that the traditional approach to strategy cannot apply to the uncertain business environments because the predictable outcomes are the presumption of the traditional strategy development. The authors of “Strategy under Uncertainty” identified four levels of business uncertainty and provided the frameworks for developing strategy according to the level of uncertainty:

Level one (clear enough future): The precise prediction of the future is possible, and thus, the traditional approach to strategy development is applicable.

Level two (alternative futures): A few potential outcomes can be predictable, and thus, the traditional approach to strategy development is applicable for each scenario that explains the potential future outcomes.

Level three (range of futures): A spectrum of potential futures can be identified, and thus, the traditional approach to strategy development is not applicable because any potential outcome may lie anywhere within the range of the spectrum.

Level four (true ambiguity): Any prediction of the future is impossible, which is quite rare situation.

II. Legal uncertainty in the patent system

Recent rapid changes in legal environment surrounding the patent system cause extensive legal uncertainties. Almost all of the players in the patent system contribute to the formation of the current legal uncertainties:

Judicial Uncertainty: Recent Supreme Court decisions’ flexibility principle has driven the legal uncertainty in the interpretation of the patent laws, rather than providing the “bright line rules.” The Alice v. CLS Bank decision regarding patent-eligibility has caused a huge concern regarding the future of software patents.

Legislative Uncertainty: Represented by the “Innovation Act” and the “Patent Act,” the Congress is now driving new bills to reform the patent system. The anti-patent rights characteristic of the new bills has made a doubt regarding the enforceability of the legitimate patent rights.

Administrative Uncertainty: Invalidation through the PTAB’s post grant review procedures has given rise to a question regarding a patent as the property rights.

Statutory Uncertainty: Newly adopted "first-to-file" system in the “America Invents Act (AIA)” caused the AIA rewrote several essential terms in the 35 U.S.C., and thus, the uncertainty of how the USPTO and courts will interpret and apply the AIA.

III. Patent strategy development under legal uncertainty

Risk aversion is the typical characteristic of a person. According to the explanation of the WIKIPEDIA, risk aversion is “the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower, expected payoff.” Thus, considering the fact that patent strategy is developed mostly by the risk adverse lawyers traditionally, the “wait and see” and “go just in time” are the natural choice of patent strategy subject to current legal uncertainties.

However, in “The Attacker’s Advantage: Turning Uncertainty Into Breakthrough Opportunities," the author said that intelligent risk takers are the true winners of the business world of uncertainty. According to the “Strategy under Uncertainty,” the legal uncertainties in the current patent system can be classified as the level two uncertainty, and thus, a few potential outcomes can be predictable for each identified legal uncertainty. Thus, the traditional approach to strategy development is applicable for the specific objectives (creating new patent portfolios, enforcement against competitors or exploitation for monetization etc.), once scenarios that explain the potential future outcomes are developed (for an example of patent strategy development methodology, please see “Forecasting & Strategy Development for Post-Smartphone (Wearables & IoT Devices) Patent Wars” http://techipm-innovationfrontline.blogspot.com/2015/06/post-smartphone-wearables-iot-devices.html)

For details regarding the patent strategy development under legal uncertainty, please contact Alex G. Lee (alexglee@techipm.com).

©2015 TechIPm, LLC All Rights Reserved

http://www.techipm.com/