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Monday, 17 May 2010

Fear and Trembling: The MBA Slide on "Why Do People Patent?"

Few slides in my MBA course arouse as much interest as the slide--"Why do people invent and seek patent protection for their inventions?"--accompanied by a purposed list of reasons. More than once, but never often enough, either in the open classroom in after-class discussion, in response to the slides, a student will utter those major words --"I never thought about that before."

I suppose that one reason for the interest is the uniqueness of the question. After all, at least in the MBA context, we tend not to consider why people compose music or write stories (I can already see the brickbats being hurled my way from my copyright colleagues on this comment). As for trade marks, the issue is sufficiently different to beg comparison. At the most, we might get into a discussion of the different commercial and managerial functions that a trade mark might serve rather than a bald consideration of why people create and protect trade marks. Even so, the discussion tends to be less spirited than that which surround the issue of why do people patent and invent. If so, why?

The fact is that patents are central in the common perception of what constitutes valuable IP. Even if we succeed in disabusing students that IP is identical to patents, it cannot be denied that unless students make sense of patent protection, in their view, they will likely feel that the course has been a failure. As a result, as much as we might want, the degree to which we succeed in conveying the meaning embodies in that slide on "why people patent" goes a long way to determining how well we have done.

Against this backdrop, the challenge is to give focus to this question in light of the diversity of vantage points whence the question is posed. In a typical class, we will likely have a mix of inventors, R&D managers, product managers, company engineers, financial officers, human resource managers, financial loan officers and management consultants. Some of them may be in contact, sporadically or frequently, with IP-type lawyers and patent agents. Behind all of them is a phalanx of academic writing, legislative enactments and judicial pronouncements on the subject. Searching for a common denominator under such circumstances has a holy grail quality to it.

Only hubris grudgingly permits us to propose a list that might purport to account for at least many of the most important reasons why people are involved in invention. And yet, how do we find a way to provide a meaningful response to the question--"Why do people patent"?--ideally within a single slide, knowing that the students are expecting some kind of guidance on this issue. All of this uncertainty runs through my head when I stand before the audience. Should my answer differ depending upon the audience; should we focus more on that single slide, or should we use it simply as a catalyst for the sharing of student experience, even if the end game in giving free reign to such a discussion is uncertain?

With this in mind, permit me to propose the following partial list, not in order of importance, that formed the basis of my recent slide.

1. People invent and seek patent protection without any overarching strategy in mind.

2. Inventions are made and patents are registered at departmental level, but they are then overlooked due to corporate dysfunctionalities.

3. Patents are sought in response to employee compensation incentives.

4. Patents are a form of lottery, where there may be a hugh payoff for a small number of patents.

5. Patents are sought at the urging of investors, whether or not the patents are essential for the company.

6. Patents are used as a metric for evaluating the success of a department or division.
7. Patents are sought to send signals to consumers, competitors and investors about development directions of the company.

8. Patents are sought to send mis-signals and disinformation.

9. Patents are sought to for defensive purposes or to enable the company to seek effective cross-licences.

10. Patents are sought to protect the core technology of the company.

The moment of truth has arrived; I have reached the slide on "why do people patent". Will I succeed this time?

7 comments:

Michael F. Martin said...

11. Patents are sought to keep counterparties to collaborative projects honest about what contributions were made, by whom, and when. (As expensive as patent litigation can be, trade secret litigation is even more expensive.)

Gentoo said...

The MBA is an interesting qualification. I recall my economics class calling for fair and open competition, my marketing class discussing strategies on how to avoid it and my financial engineering class discussing ways to ensure it never happened.

In that context I am not surprised that there is a let's talk about patents class.

I am grateful to your blog for (indirectly) leading me to this:

http://www.baen.com/library/palaver4.htm

Although mainly about copyright, its truths remind us that property is nothing more than a confection arising from legal developments and state dispensations not some inalienable right.

Apart from the elegant and thoughtful language it could have been talking about matters today. It is a shame that Macaulay was not able to oppose the digital economy bill.

Pam said...

You have the corporate view. How about the garage inventor motives?

Patents are sought for an inventor's self-validation, that he or she has invented something unique in the world, or is very smart.

Patents are sought because an inventor believes that manufacturers will see the patent, license the patent, and the inventor will achieve financial success.

Steph said...

I have noted that the list is not ordered, however some of the entries appear to go beyond, or to not directly correlate to, the question.

Entries 3 and 5 to 10 are right on the money, obviously.

However, I feel that entries 1, 2 and 4 do not appear to answer why patent protection is sought, but rather how.

With the exception of entries 3 and 6 (optional, at the discretion of a company's HR practices) and 5 (dependent on a company's age, more the case with startups, less so with established businesses), many technically-involved businesses will at some or respective point(s) in time face all of the issues in connection with entries 7 to 10: in that context, the way I usually describe patents to business students, in general terms, is as a sort of 'corporate swiss army knife': a multi-purpose corporate asset, available to create or bolster opportunities, and leverage the corporate position in defensive or offensive situations as required.

Guy said...

Reference item 5. In my industry days a large amount of my employer's technology was highly secret. Inventors in the research laboratories wished their inventions to be patented so that their scientific credibility could be established; published patents name inventors. Due to the employer's commercial secrecy they were seldom if ever allowed to publish papers in scientific journals.

Anonymous said...

The private inventor or small company will probably find that a large company will not discuss his invention unless a patent has already been applied for. One reason is to avoid any subsequent accusations of the large company stealing the invention if the large company happened to have already been working on something similar.

Anonymous said...

'6. Patents are used as a metric for evaluating the success of a department or division.'

In fact, HP used to run an advert boasting about the number of patents it had applied for; perhaps suggesting it was at the forefront of innovation? There's a certain irony in that.

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