Trading value

You can blow the budget on Intellectual Property (IP) that misses the mark, says Mark Cohen, a technology consultant at technology management and product development firm Sagentia

You can be technologically perfect, but get nowhere fast if your IP is set up in the wrong way. Always take your cue from the market.

You might be lucky enough to have a platform technology that a major player wants to buy. Then go for an all-encompassing patent. But it is high risk for a strategy to depend on a single point of failure. All too easily, you can be left in limbo, as your comprehensive claims are whittled away by the examiner. You might also be creating prior art that rules out protection for any subsequent spin-offs and sub-systems that you develop.

It is generally better to take a layered approach. Resist filing too early, until you fully understand how your IP fits into the market. Then adopt a pick ‘n’ mix approach, driven by where you are genuinely novel and where you are adding value. By filing a series of specific applications, you are in a better position to trade your technology. You also make it more difficult for your competitors to work round you.

In practice, most innovation is now fragmented. More often than not, it is a bundle of rights put together from a variety of sources along the value chain. In the food industry, for instance, the search for a wonder ingredient is combined with innovation in processing, packaging and distribution. Your IP is likely to be more commercial if it is written for a specific application. How is your ingredient added to the yoghurt, for instance?

Once you have sold the rights in an idea, make sure that any improvements flow back to you. You want to retain control of the underlying technology and use any improvements to develop further applications.

After filing a patent, you are in the fortunate position of being able to talk to your customers and partners for 18 months without being visible to anyone else. Use this interval to full advantage. Anticipate how your competitors might respond. Then file to protect these concepts before they think of them themselves.

Remember too that the value in an application can lie outside the direct IP. You might be using off-the-shelf technology, which you have put into an innovative format. The value then lies in the surrounding knowledge. How do you make it? How do you package it? How do you use it? How do you dispose of it? These might be the points of difference that open up a £100 million market for you.

IP rarely sells itself. The difficulty always lies in justifying the upfront cost of acquiring it. The trick is to work out where you sit in the value chain. Then write your initial IP to fill that gap and focus on extending into your customers’ domains.