Sobering article from the Wall Street Journal: Web-Address Theft Is Everyday Event by Kevin Delaney. Has some important tips for protecting your domain name from theft. Most important: don't use free online email accounts as your primary contact with the domain registrar. Failure to use the account may result in its inactivation and theft by someone else. You'll spend years and thousands getting it back, in some cases.
Intellectual assets include digital assets such as domain names, and they need to be a key part of your IA strategy at an early stage as you develop new products and services. They are key assets that we help our clients with.
Blending IP strategy with disruptive innovation theory, this blog aims to help inventors, managers, and IP professionals improve their strategic edge.
Thursday, September 27, 2007
Toxic Fabrics Now Safe Enough to Eat: An Example of Innovation for Improved Profits AND Improved Sustainability
In Made to Stick, authors Chip and Dan Heath discuss the case of once-toxic fabrics used in Steelcase chairs. The Swiss company, Rohner Textil, provided dyed fabrics to Steelcase, but the trimmings of these fabrics could not be disposed of in Switzerland because they had a lot of toxic chemicals - they were classified as toxic waste that had to be shipped to countries with less strict environmental regulations such as Spain. Steelcase and Rohner wanted to come up with fabrics that were not toxic waste, but safe enough for babies to suck on. Rohner hired environmentalist William McDonough and his chemist partner, Michael Baumgart (see McDonough & Partners and MBDC--also see McDonough's Website). They went to the companies that provided dyes and asked to see their books in order to know all about the chemicals they used in their processes. They would not accept "it's proprietary". Sixty companies refused this kind of partnership, but one did: Ciba-Geigy, a Swiss chemical company. They went through the details of 8000 chemicals, and of these found 38 that were safe enough to eat. They found that they could make every color needed by Steelcase except for black. Rohner selected natural fabrics - wool and ramie - and ended up with a truly safe process. When Swiss inspectors came to test their effluent stream, they thought their instruments weren't working. The chemicals they were testing for weren't being detected at all. Then they went to the incoming water stream - Swiss drinking water - and got the normal small positive readings. The effluent was actually cleaner than the incoming drinking water, apparently being filtered by the natural fabrics, without release of harmful chemicals.
The resulting process was not just cleaner - the costs of the product dropped by 20%. They didn't have to spend money to ship trimmings to another country, but could sell them to local farmers to make mulch or insulation. Workers didn't need to wear protective gear to work with the fabrics. And Steelcase could sell furniture with fabrics safe enough to eat. Innovation, economic advantage, and sustainability/environmental responsibility were achieved.
Yes, it's possible to innovate for business growth and profitability while also improving your green, sustainable position and reducing your environmental footprint.
The resulting process was not just cleaner - the costs of the product dropped by 20%. They didn't have to spend money to ship trimmings to another country, but could sell them to local farmers to make mulch or insulation. Workers didn't need to wear protective gear to work with the fabrics. And Steelcase could sell furniture with fabrics safe enough to eat. Innovation, economic advantage, and sustainability/environmental responsibility were achieved.
Yes, it's possible to innovate for business growth and profitability while also improving your green, sustainable position and reducing your environmental footprint.
Tuesday, September 25, 2007
Stanford's Resource on Fair Use and Copyright Law
Many people wonder when they can use material from a copyrighted source under the Fair Use Doctrine. Stanford University's Copyright and Fair Use Overview resource on the Web includes an excellent chapter on Fair Use. Thanks, Stanford! Here's a brief excerpt:
In its most general sense, a fair use is any copying of copyrighted material done for a limited and "transformative" purpose such as to comment upon, criticize or parody a copyrighted work. Such uses can be done without permission from the copyright owner. Another way of putting this is that fair use is a defense against infringement. If your use qualifies under the definition above, and as defined more specifically later in this chapter, then your use would not be considered an illegal infringement.Some of our clients might benefit from considering their article, "Copyright Protection for Short Phrases" by Richard Stim.
So what is a "transformative" use? If this definition seems ambiguous or vague, be aware that millions of dollars in legal fees have been spent attempting to define what qualifies as a fair use. There are no hard-and-fast rules, only general rules and varying court decisions. That's because the judges and lawmakers who created the fair use exception did not want to limit the definition of fair use. They wanted it--like free speech--to have an expansive meaning that could be open to interpretation.
Most fair use analysis falls into two categories: commentary and criticism; or parody. . . .
Friday, September 21, 2007
Ten Overrated Business Books: Bnet.com's View
BNet.com has an article, "Ten Overrated Business Books." I agree strongly with most of the listed books, but actually find a lot of benefit in Covey's Seven Habits (but I'm biased!). Instead, I would suggest adding Fish! to the list of books that get way too much mileage in the business community. Purple Cow also.
Thursday, September 20, 2007
Business Models to Avoid: Hijacking The Customer (Real.com's Rhapsody Example)
The power of disruptive innovation often comes from providing non-users and others with new levels of convenience. A successful disruptive innovation can be "worse" in some ways than other existing products if it excels in the dimensions of convenience, choice, ease of access, portability, or low cost.
On the other hand, there are "innovations" that are "anti-disruptive" in the sense of adding new burdens on the backs of consumers. "Improved" products that are less convenient or take away consumer choice and flexibility are the kind that are just begging for extinction - and often will face extinction when a disruptive innovation comes along with fewer bells and whistles but new dimensions of convenience. It doesn't even have to be much of an innovation when arrogant business models are implemented that ignore the customer experience.
Occasionally, a product "upgrade" comes along that is so inconvenient, so suffocating of customer choice, that it screams out for extinction. This is particularly so when the customer feel hijacked, forced to move forward with an unwanted upgrade the removes valuable features that out-of-touch businesses think can be jettisoned in favor of their new flavor. Customer hijacking is a warning flag that a company is out of touch and headed for the death spiral, or totally vulnerable for competitive disruption.
And that brings me to Real.com, whose music player, Rhapsody 4.0, is a classic example of customer hijacking that takes the customers to it's own version of Cuba where previous freedoms and conveniences are a thing of the past.
After being a loyal customer of Rhapsody for four years, a tool that has been valuable for my musical family, I finally canceled my subscription. But I begged for help, I begged to be allowed to stick with the previous version of Rhapsody which wasn't so buggy and slow as the new version, and which was far more convenient. But attempts to launch Rhapsody immediately forced us into an install of version 4.0 - without an explanation of the changes and new system demands, and without an explanation of how tediously long it would take to install the new software. It was a nightmare install, one that required lengthy waits, strange error messages, multiple restarts, and many calls to a truly out-of-touch foreign help desk that may have been speaking English at times. And after all the steps it took to install the software over a two-hour period, it still didn't work and hung up completely when looking at recordings of J.S. Bach. The clunky software simply can't handle artists with numerous albums, at least on the computer I was using. Tech support was able to reproduce the problem, but could not offer any help and didn't seem interested in helping. Tough luck.
Running Rhapsody 4.0 hijacked my computer in several ways, eventually hijacking the processor and taking 100% of the CPU for over 15 minutes before I gave up and killed it.
After waiting over 20 minutes to talk to someone to cancel my subscription and get a refund for their questionable overcharging (I found they had raised my monthly bill without my knowledge), I told them how frustrating my experience had been with the tech support staff. One person there, for example, refused to transfer me to someone else even though I really could not understand him and asked to be transferred, and then asked to speak to a supervisor. Truly annoying. The English-speaking customer service person told me that Real would value my feedback, and urged me to email real's feedback department (feedback@real.com). I explained my story and how pained I was as a loyal customer to feel forced to abandon Rhapsody after being hijacked with non-functional software. I expected that there would be some effort, some incentive or at least an olive branch offered to retain me as a customer. But no, I got a reply back from another person in India. After a superficial sentence saying he understood and apologized for the trouble, the response then became a form letter (maybe the whole thing was a form letter) regurgitating the alleged benefits of their crummy version 4.0. What ridiculous customer service. Out of touch.
When a company is so out of touch that they can hijack customers, provide tech support that can barely speak English, and ignore the complaints of long-time, loyal customers who are trying to find a way to continue on as customers, that company is begging for competitive disruption.
I don't think Real's Rhapsody offering is viable any more.
On the other hand, there are "innovations" that are "anti-disruptive" in the sense of adding new burdens on the backs of consumers. "Improved" products that are less convenient or take away consumer choice and flexibility are the kind that are just begging for extinction - and often will face extinction when a disruptive innovation comes along with fewer bells and whistles but new dimensions of convenience. It doesn't even have to be much of an innovation when arrogant business models are implemented that ignore the customer experience.
Occasionally, a product "upgrade" comes along that is so inconvenient, so suffocating of customer choice, that it screams out for extinction. This is particularly so when the customer feel hijacked, forced to move forward with an unwanted upgrade the removes valuable features that out-of-touch businesses think can be jettisoned in favor of their new flavor. Customer hijacking is a warning flag that a company is out of touch and headed for the death spiral, or totally vulnerable for competitive disruption.
And that brings me to Real.com, whose music player, Rhapsody 4.0, is a classic example of customer hijacking that takes the customers to it's own version of Cuba where previous freedoms and conveniences are a thing of the past.
After being a loyal customer of Rhapsody for four years, a tool that has been valuable for my musical family, I finally canceled my subscription. But I begged for help, I begged to be allowed to stick with the previous version of Rhapsody which wasn't so buggy and slow as the new version, and which was far more convenient. But attempts to launch Rhapsody immediately forced us into an install of version 4.0 - without an explanation of the changes and new system demands, and without an explanation of how tediously long it would take to install the new software. It was a nightmare install, one that required lengthy waits, strange error messages, multiple restarts, and many calls to a truly out-of-touch foreign help desk that may have been speaking English at times. And after all the steps it took to install the software over a two-hour period, it still didn't work and hung up completely when looking at recordings of J.S. Bach. The clunky software simply can't handle artists with numerous albums, at least on the computer I was using. Tech support was able to reproduce the problem, but could not offer any help and didn't seem interested in helping. Tough luck.
Running Rhapsody 4.0 hijacked my computer in several ways, eventually hijacking the processor and taking 100% of the CPU for over 15 minutes before I gave up and killed it.
After waiting over 20 minutes to talk to someone to cancel my subscription and get a refund for their questionable overcharging (I found they had raised my monthly bill without my knowledge), I told them how frustrating my experience had been with the tech support staff. One person there, for example, refused to transfer me to someone else even though I really could not understand him and asked to be transferred, and then asked to speak to a supervisor. Truly annoying. The English-speaking customer service person told me that Real would value my feedback, and urged me to email real's feedback department (feedback@real.com). I explained my story and how pained I was as a loyal customer to feel forced to abandon Rhapsody after being hijacked with non-functional software. I expected that there would be some effort, some incentive or at least an olive branch offered to retain me as a customer. But no, I got a reply back from another person in India. After a superficial sentence saying he understood and apologized for the trouble, the response then became a form letter (maybe the whole thing was a form letter) regurgitating the alleged benefits of their crummy version 4.0. What ridiculous customer service. Out of touch.
When a company is so out of touch that they can hijack customers, provide tech support that can barely speak English, and ignore the complaints of long-time, loyal customers who are trying to find a way to continue on as customers, that company is begging for competitive disruption.
I don't think Real's Rhapsody offering is viable any more.
Wednesday, September 19, 2007
Corporate Inventors: Don't Blame Opposition on Management Stupidity
Inventors around the world in large corporations are often amazed that management fails to appreciate the genius of their inventions. There is a real temptation for sharp inventors to assume that those in management are simply stupid when they decide not to commercialize inventive new concepts. Such thinking is usually unjustified and will only make life more painful than it needs to be.
Clayton Christensen's works on disruptive innovation explain how intelligent managers making sound business decisions based on successful past criteria will frequently kill the most important innovations they encounter. It's not their intelligence, but the corporate systems and culture that is at fault. Corporates become successful by listening to their customers and by pursuing sustaining innovations based on the established criteria in the market place that meet the needs of their most valuable customers. But these criteria are at odds with the occasional disruptive innovation that may be off-target for mainstream customers and off-base for established performance criteria, instead appealing to non-users or low-end users by offering new convenience or other features not demanded by the high-end users. Corporations need special systems and structures to deal with disruptive innovations - and the tendency to kill them can be expected until top leaders specifically address disruptive threats and opportunities.
Your management was smart enough, brilliant enough, to hire you and keep you on the payroll. Don't blame their lack of interest in your invention on stupidity. Rather, understand how corporate pressures and objectives may be a barrier, and learn how to work around those barriers. Spinning your invention as a way to avert a competitive threat is one such way. I'll give more suggestions in future posts.
Clayton Christensen's works on disruptive innovation explain how intelligent managers making sound business decisions based on successful past criteria will frequently kill the most important innovations they encounter. It's not their intelligence, but the corporate systems and culture that is at fault. Corporates become successful by listening to their customers and by pursuing sustaining innovations based on the established criteria in the market place that meet the needs of their most valuable customers. But these criteria are at odds with the occasional disruptive innovation that may be off-target for mainstream customers and off-base for established performance criteria, instead appealing to non-users or low-end users by offering new convenience or other features not demanded by the high-end users. Corporations need special systems and structures to deal with disruptive innovations - and the tendency to kill them can be expected until top leaders specifically address disruptive threats and opportunities.
Your management was smart enough, brilliant enough, to hire you and keep you on the payroll. Don't blame their lack of interest in your invention on stupidity. Rather, understand how corporate pressures and objectives may be a barrier, and learn how to work around those barriers. Spinning your invention as a way to avert a competitive threat is one such way. I'll give more suggestions in future posts.
Tuesday, September 18, 2007
Innovation Pathways: Encapsulation Technology Moving into Numerous Areas
I'm amazed at the many clever uses of micro-encapsulation technology in recent years. Over 50 years ago, researchers at NCR working with Appleton Papers (now just "Appleton") created a truly disruptive innovation that was the basis for modern carbonless copy paper. The technology was based on the clever use of microencapuslated reagents that, when ruptured by the force of a pen or pencil acting on an upper layer, would react and turn blue, creating in-situ ink from materials that were previously colorless. Brilliant!
In the food industry, encapsulation of baking powder or other leavening agents in shells of fat are the secret to self-rising pizza crusts. If the leavening were active in the dough before freezing, the dough would have very little rise left by the time it was cooked. But by keeping the baking powder separate from the moisture in the crust until the dough is heated - thus melting the shells around the encapsulated powder - the rising action is delivered just in time and provides the popular rising crusts of several leading brands.
Encapsulation is moving to new heights - or temperatures - through the use of new temperature resistant technology in which the shell of a yeast cell is the body of the capsule. This Thermarome® technology from the Swiss firm, Firmenich, has exciting potential. The yeast encapsulation technology acquired previously from the UK firm MicCap, can allow high-temperature processing (e.g., frying)to be done without releasing flavoring agents, something not possible with other typical encapuslation technologies used in food. See some of the latest developments in this area in an article at NurtraIngredients.com.
Encapsulated flavors can pose the challenge of not being smelled until after they are in the mouth, reducing some of the user experience. But clever combinations of multiple technologies or different capsule types can help overcome this.
Is there a disruptive innovation beyond the encapsulation of aroma and flavor that may challenge the established players? Could active rather than passive delivery play an increased role in the future? Or could other matrix loading technologies provide the next big boost for flavor and aroma? Stay tuned!
By the way, the story behind the pursuit of patent protection for carbonless paper has lessons for innovators that still need to be taught today. The story is told briefly by Appleton in their article on Lowel Schleicher, one of the inventors:
In the food industry, encapsulation of baking powder or other leavening agents in shells of fat are the secret to self-rising pizza crusts. If the leavening were active in the dough before freezing, the dough would have very little rise left by the time it was cooked. But by keeping the baking powder separate from the moisture in the crust until the dough is heated - thus melting the shells around the encapsulated powder - the rising action is delivered just in time and provides the popular rising crusts of several leading brands.
Encapsulation is moving to new heights - or temperatures - through the use of new temperature resistant technology in which the shell of a yeast cell is the body of the capsule. This Thermarome® technology from the Swiss firm, Firmenich, has exciting potential. The yeast encapsulation technology acquired previously from the UK firm MicCap, can allow high-temperature processing (e.g., frying)to be done without releasing flavoring agents, something not possible with other typical encapuslation technologies used in food. See some of the latest developments in this area in an article at NurtraIngredients.com.
Encapsulated flavors can pose the challenge of not being smelled until after they are in the mouth, reducing some of the user experience. But clever combinations of multiple technologies or different capsule types can help overcome this.
Is there a disruptive innovation beyond the encapsulation of aroma and flavor that may challenge the established players? Could active rather than passive delivery play an increased role in the future? Or could other matrix loading technologies provide the next big boost for flavor and aroma? Stay tuned!
By the way, the story behind the pursuit of patent protection for carbonless paper has lessons for innovators that still need to be taught today. The story is told briefly by Appleton in their article on Lowel Schleicher, one of the inventors:
While at NCR Corporation, Schleicher began working with the Barry Green, a company scientist who introduced the first commercial example of a system of liquid-filled microcapsules dispersed within a solid coating. It was this microencapsulation system that was used to develop carbonless paper.Moral? There are several:
During 1952 and 1953 Schleicher and Green worked together to further develop and refine the microencapsulation system. They co-invented the system that is used to produce much of today’s carbonless paper and filed the patent on June 30, 1953.
During the patent application process Schleicher proved he was as capable of explaining his ideas as he was at creating them. "The examiner refused to believe that capsules existed and instead felt the paper contained nothing more than oil and water emulsion," said Schleicher. "So I put my equipment and materials on his desk and demonstrated the entire process right in front of him." The patent office approved his application.
Schleicher, Green and others at NCR Corporation collaborated with Appleton Coated Paper Company, the predecessor company to Appleton, to commercially introduce carbonless paper in 1954. Schleicher continued to work with Appleton and, after NCR Corporation acquired Appleton Coated Paper Company in 1971, he moved to Appleton in 1973 and was named Appleton Papers' director of basic research, a position he held until his retirement in May 1990.
- Examiner interviews are valuable tools for advancing the prosecution of a patent.
- Demonstrations can be powerful teaching tools in interviews (they require prior approval and must not use unsafe materials - discuss the proposed demo carefully with the examiner before the interview).
- Patents are stronger when inventors are closely involved in the preparation AND prosecution of the patents.
- Knowledgeable inventors who can explain their invention and teach others really make a difference. Invention without good communication will usually not realize the potential that was there.
Friday, September 14, 2007
Microsoft Patents the Uncrackable Digital Watermark?
InformationWeek has previously highlighted the impressive track record of hackers in getting past digital rights management systems. Now they point out that Microsoft may have developed and patented a truly robust digital watermark for audio files that can resist all (?) efforts to remove it. Good luck, Microsoft!
Microsoft (MSFT) may have just succeeded in giving the lie to claims by anti-DRM advocates that tech and record companies should forget about digital-rights management because they can never come up with something that's totally immune to cracking.
That's because two inventors working in Redmond, Darko Kirovski and Henrique Malvar, have taken concepts from spread-spectrum technology--used by the military for secure radio communications--and adapted them to the task of permanently inserting the owner's (aka content producer's) name within MP3 and .WAV files.
Microsoft was awarded U.S. Patent 7,266,697, entitled "Stealthy audio watermarking," on Sept. 4, for the duo's work.
As the patent's abstract explains it: "The watermark identifies the content producer, providing a signature that is embedded in the audio signal and cannot be removed. The watermark is designed to survive all typical kinds of processing and malicious attacks."
The stuff is probably the most thorough and complicated technology ever to be applied to 99-cent music files. It's robust enough to resist all attempts to remove the watermark from the clip, including changes in time and frequency scales, pitch shifting, and cut/paste editing.
Monday, September 10, 2007
Disruptive Health Care Trends: Intelligent Dispensing of Meds
A key to many disruptive innovations is finding ways to simplify life for the user. In the area of health care, one of the biggest challenges is compliance - ensuring proper medications are taken on schedule, for example. RFID and many other technologies have been applied to create smart packaging solutions that can track the taking of medications with the intent of helping home users, but the compliance monitoring tools don't necessarily increase the convenience experienced by the patient. Focusing on the convenience of medical care professionals is a different matter. A medication delivery system that helps them properly dispense and track medications through automated systems could make life simpler and more convenient for these high-stress jobs.
An example of a company that is pursuing such a business model is Omnicell (Nasdaq: OMCL). They provide medication cabinets that use barcodes and other tools to automate many aspects of drug delivery in acute care facilities. The are profitable, growing, and filling real needs in the marketplace. The stock is up about 30% in the past year, and rising nicely today while the rest of the market is struggling.
An example of a company that is pursuing such a business model is Omnicell (Nasdaq: OMCL). They provide medication cabinets that use barcodes and other tools to automate many aspects of drug delivery in acute care facilities. The are profitable, growing, and filling real needs in the marketplace. The stock is up about 30% in the past year, and rising nicely today while the rest of the market is struggling.
Sunday, September 9, 2007
Global Innovation Fatigue: The Demise of International Intellectual Property Rights
The protection of intellectual property rights in the US has arguably been a key factor in the explosive right of the American economy and strength of this republic realized in the dew short decades since its founding. The US Constitution itself is the basis for this protection. Article 1, Section 8 stipulates that "Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." It is the inventors--not those who first file a patent application--who should have the exclusive right to their inventions for limited times.
The notion of property rights is embedded in the language of the Constitution's "Intellectual Property Clause." Our Founders recognized that protection of these rights would promote, not stall, progress in science and the useful arts. When property rights exist, people are motivated to invest time and effort in developing that property, whether it is land, a business, or an invention. When such rights are not secured, when others can simply take what you build or invent, then the motivation to develop and invent is removed. When the only way to protect an invention is to keep it secret, then progress is stymied and we return to the Dark Ages, when inventions were not made public but hidden within the protections of archaic guilds, requiring years of apprentice work before one could be trusted with the secrets of technology. Such a system keeps nearly everyone in the dark and hinders scientific progress.
The beauty of the social compact in the US patent system is that inventors are offered exclusive rights for a limited time, if they will share their secrets with the whole world in the form of an enabling disclosure in the specification of a patent. Once their limited period of exclusivity expires (now 20 years from the date of filing), the monopoly is over. Inventors are motivated to invent and to share their knowledge, and progress can be incredibly rapid. But not when property rights are denied.
Sadly, intellectual property rights are not recognized or adequately protected in many parts of the world. And there are increasing global pressures to weaken intellectual property. Though collective rather than individual rights can sound appealing, the result of collectivist systems is often a far cry from the promise of politicians. Make drugs free for all, take away the property rights of those who take on the risk and expense of developing and testing drugs, and suddenly the incentive to discover and develop safe, effective drugs has vanished. Government can appoint and fund labs to do this work, but the inherent tendency of government to be bureaucratic, monolithic, and inefficient will result in pathetic results, on the average, compared to what inventors can do when their rights are protected.
"Innovation fatigue" is felt strongly in countries where corruption or poorly developed legal systems result in little or no protection for intellectual property. This has been cogently argued by Hernando de Soto, a Peruvian economist and winner of many awards such as the 2006 Bradley Prize for outstanding achievement from the Bradley Foundation and the 2006 Innovation Award from The Economist magazine (December 2, 2006) for the promotion of property rights and economic development. De Soto has shown that a key factor in keeping poor nations poor is their lack of property rights.
De Soto referred to the need for property rights for the poor to be able to rise out of poverty in his speech, "Most People Cannot Participate" given in Brussels, October 30, 2001:
As valuable as such property rights are, they are being eroded globally, and American businesses and leaders everywhere need to be more active in resisting this threat. In fact, I would suggest that it's the socially responsible thing to do!
Bruce Lehman discusses some of the global IP challenges in his chapter, "Global IP in Crisis: The Threat to Shareholder Value" in Making Innovation Pay (Bruce Berman, New York: John Wiley & Sons, 2006, pp. 125-139):
The notion of property rights is embedded in the language of the Constitution's "Intellectual Property Clause." Our Founders recognized that protection of these rights would promote, not stall, progress in science and the useful arts. When property rights exist, people are motivated to invest time and effort in developing that property, whether it is land, a business, or an invention. When such rights are not secured, when others can simply take what you build or invent, then the motivation to develop and invent is removed. When the only way to protect an invention is to keep it secret, then progress is stymied and we return to the Dark Ages, when inventions were not made public but hidden within the protections of archaic guilds, requiring years of apprentice work before one could be trusted with the secrets of technology. Such a system keeps nearly everyone in the dark and hinders scientific progress.
The beauty of the social compact in the US patent system is that inventors are offered exclusive rights for a limited time, if they will share their secrets with the whole world in the form of an enabling disclosure in the specification of a patent. Once their limited period of exclusivity expires (now 20 years from the date of filing), the monopoly is over. Inventors are motivated to invent and to share their knowledge, and progress can be incredibly rapid. But not when property rights are denied.
Sadly, intellectual property rights are not recognized or adequately protected in many parts of the world. And there are increasing global pressures to weaken intellectual property. Though collective rather than individual rights can sound appealing, the result of collectivist systems is often a far cry from the promise of politicians. Make drugs free for all, take away the property rights of those who take on the risk and expense of developing and testing drugs, and suddenly the incentive to discover and develop safe, effective drugs has vanished. Government can appoint and fund labs to do this work, but the inherent tendency of government to be bureaucratic, monolithic, and inefficient will result in pathetic results, on the average, compared to what inventors can do when their rights are protected.
"Innovation fatigue" is felt strongly in countries where corruption or poorly developed legal systems result in little or no protection for intellectual property. This has been cogently argued by Hernando de Soto, a Peruvian economist and winner of many awards such as the 2006 Bradley Prize for outstanding achievement from the Bradley Foundation and the 2006 Innovation Award from The Economist magazine (December 2, 2006) for the promotion of property rights and economic development. De Soto has shown that a key factor in keeping poor nations poor is their lack of property rights.
De Soto referred to the need for property rights for the poor to be able to rise out of poverty in his speech, "Most People Cannot Participate" given in Brussels, October 30, 2001:
Over the last 6 years, my organisation, the Institute for Liberty and Democracy, ILD, has travelled all over the world, working directly with Heads of State, to determine how many of their citizens' assets can travel globally. Let me give you the example of Egypt which my Egyptian partners have allowed me to reveal.The Marxist ideal of no property rights has been demonstrated to be powerfully effective - not in liberating the lower classes, but in holding them firmly trapped in poverty. It is respect of property rights that has created the means for men to be equal - not in results, but in opportunity. The lone inventor can stand before the giant corporation, patent in hand, and declare, "This is my property, and you have no right to take it as your own for free."
After many years we determined that the poor in Egypt had accumulated an enormous amount of assets. In real estate alone they owned over US$ 241 billion in land and buildings. US$ 241 billion is more than 55 times the value of all foreign investment in Egypt over the last 200 years, it is 30 times the value of the Stock Exchange of Cairo, and it is 70 times the value of all foreign aid received by Egypt since the times of Napoleon, including the cost of the Suez Canal and the Aswan Dam. But none of it is titled in such a way that it can secure a loan, enforce a mortgage, and permit the sale of any of these assets on a global or even a national scale. Which means that most of the assets that the poor in Egypt own, even though they exceed the value of private foreign investment and public foreign aid, cannot reach the levels required to produce real wealth and be assessed globally.
The case of Egypt is the same as that of other developing countries. On average over 80 percent of the assets that the poor own in developing and former Soviet countries cannot enter the market through legally governed representations. So the first challenge globalisation faces is how to include the overwhelming majority of citizens of the world who cannot participate in the global economy, and who are therefore at a tremendous disadvantage.
To answer then the question of Prime Minister Verhofstadt "How can the poor benefit from globalisation?" the reply is through property law. The problem in the world is that there is a huge legal lag. We have forgotten that the capitalist economy is essentially a legal construct. Capitalism and globalisation is nothing else than a legal framework which through representations and rules allows us to interconnect. And over 4 billion people in the world have no way to interconnect because the law does not apply to them.
As valuable as such property rights are, they are being eroded globally, and American businesses and leaders everywhere need to be more active in resisting this threat. In fact, I would suggest that it's the socially responsible thing to do!
Bruce Lehman discusses some of the global IP challenges in his chapter, "Global IP in Crisis: The Threat to Shareholder Value" in Making Innovation Pay (Bruce Berman, New York: John Wiley & Sons, 2006, pp. 125-139):
While the 1990s was a time of strengthening of the global intellectual property systems, recent years have seen a dangerous shift toward weakening IP protection around the world. The thought is that those with patents have too much power or that the patent system is somehow broken and in need of a major overhaul. For example, in the current Doha Round of trade negotiations, developing countries are pressing for lowering the high level of IP protection reflected in the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights) that was achieved in 1994 in the prior Uruguay Round of trade discussions. An illustration of this pressure for weaker IP rights is a proposal by Brazil and 13 other developing countries to modify the charter of the World Intellectual Property Organization (WIPO) to establish the principle that a country's level of intellectual property rights should reflect its level of development. In other words, the poorer the country, the less it needs to recognize and enforce intellectual property rights. While this approach may seem fair to some, it is potentially very dangerous to innovation and world prosperity, not to mention shareholder value.Weakening intellectual property rights around the world bodes poorly for innovation and prosperity, while raising the spectre of increased "innovation fatigue" for prospective inventors, who only need a little recognition and protection for their creations in order to benefit us all with their work.
Another problem that has surfaced in WIPO concerns negotiations to harmonize the world's patent laws. For several years, WIPO has been attempting to formulate a new patent law patent law treaty. For the most part, negotiators from the United States and other developed countries have been experts from national patent offices, who are generally seeking to reach agreement on important technical and legal issues (e.g., prior art, grace period, novelty, and inventive step) to improve the efficiency and operation of national and regional patent systems. In contrast, the representatives from developing countries are largely trade diplomats who also deal with highly political trade issues. Rather than improving the coordination and functioning of national and regional patent offices, their goal is to extract concessions on trade issues. In addition, they actively work to stall progress on the technical and legal IP issue of interest in an effort to gain leverage in trade negotiations that are taking place in WIPO's sister organization, WTO.
Another disturbing development is the number of anti-IP non-governmental organizations attending WIPO meetings. . . . Their aggressive presence and lobbying at WIPO are making it more difficult to harmonize and strengthen the patent system. By contrast, there has been much more limited and ineffective participation by IP-dependent industries in WIPO.
Ironically, while the financial press is full of stories emphasizing the importance of global markets and developing economies to corporate growth, few corporate leaders today seem to be responding to these assaults on the system that protects their shareholders' intellectual property rights in these very same markets. If this assault on the international IP system is to be controlled, senior management of IP-dependent companies (practically every global 1,000 company) need to become more engaged, proactively working with their own governments and sending the message that strong IP protection and enforcement is worth fighting for.
Thursday, September 6, 2007
Design Patents: A New "Obviousness" Test?
Patently-O's story, "Design Patents: Novelty Requires 'Non-Trivial Advance Over The Prior Art'" raises a great question about the recent Egyptian Goddess v. Swisa case before the Federal Circuit. Does the stated requirement for a "non-trivial advance" over the prior art in a design patent go beyond the intent of lawmakers in introducing a new obviousness test for designs?
Could this be one more (small) step that weakens intellectual property rights for inventors?
Could this be one more (small) step that weakens intellectual property rights for inventors?
Disruptive Innovation in Health Care: Winners Announced
Changemakers.net recently sponsored a contest for Disruptive Innovations in Health and Health Care: Solutions People Want, in collaboration with the Robert W. Johnson Foundation. It just concluded on Aug. 29, 2007, and now you can see the winners or look at all 308 entries from 27 countries. Some tremendous concepts were submitted. Some don't seem disruptive, but hey, winners were selected by a popular vote and not necessarily on strict criteria related to disruption. Fascinating reading.
Innovation in Business Models: AxisPointe's SmartBuilder Suite for Home Builders
Innovation in business models is often more important than innovation in materials and products. After all, the key to disruptive innovation typically is the business model in which a product or service is deployed, rather than in the physical product itself. So it pays to keep your eyes open to clever new business models to understand what can be done and what might be applied to other areas.
As an example of an innovative business model, take a look at the services provides by AxisPointe, a company based in Utah's innovation corridor (a rising entrepreneurial region extending from Salt Lake City to Utah County in the south). AxisPointe's HomeBuilder Suite helps home builders and contractors by simplifying many of the post-construction service and support issues they face, including walkthroughs, inspections, troubleshooting, repairs, maintenance, etc. A central source is provided that brings together various providers, manages interactions, documents calls and responses, and makes life simpler for both the homeowner and the builder. A nice combination of software tools, support personnel, and contractural arrangements bring it together into a business model that offers convenience, ease of use, and cost savings. Could be a huge competitive advantage for those who use it.
If you've had experience with AxisPointe's services, I'd love to hear from you. Would like to see how this fares in this difficult economic time for the housing market.
As an example of an innovative business model, take a look at the services provides by AxisPointe, a company based in Utah's innovation corridor (a rising entrepreneurial region extending from Salt Lake City to Utah County in the south). AxisPointe's HomeBuilder Suite helps home builders and contractors by simplifying many of the post-construction service and support issues they face, including walkthroughs, inspections, troubleshooting, repairs, maintenance, etc. A central source is provided that brings together various providers, manages interactions, documents calls and responses, and makes life simpler for both the homeowner and the builder. A nice combination of software tools, support personnel, and contractural arrangements bring it together into a business model that offers convenience, ease of use, and cost savings. Could be a huge competitive advantage for those who use it.
If you've had experience with AxisPointe's services, I'd love to hear from you. Would like to see how this fares in this difficult economic time for the housing market.
Wednesday, September 5, 2007
Why Publications?
I'm surprised at how few of the nation's leading companies aggressively use defensive publications to strengthen their intellectual asset portfolios. One major company I talked with recently told me that when they have a concept that they think should be published, they will write it up as a patent and file it with the PTO - paying big bucks to get a publication on file. Not to mention raising questions about knowingly filing something they don't think is really an invention. Doesn't sound wise at all! When I talk about the aggressive publication efforts I spearheaded at Kimberly-Clark, I get a lot of surprised looks. "Oh, we didn't think of that." "Didn't know you could do that so easily." "Hey, that really makes sense." But very few say anything like, "Right - we've been doing the same."
HP and IBM are vigorous publishers, to their credit. But much of the world really doesn't grasp how powerful publications can be. So why publish?
For one thing, defensive publications that create prior art can protect or even increase the value of your existing patents and applications. They can do this by disclosing numerous potential improvements to reduce the risk that others will get improvement patents on top of your estate. That strengthens your future patent clearance position ("freedom to operate" or "right to practice" are terms that others use). It also reduces the risk that a potential licensee will have to get lots of additional licenses from others to practice the art, thus preserving value in future licensing activity.
Publications can also be used to gain credibility for test methods or other tools that may be useful in your patents.
Publications may be used to reduce the value of competitive investments in certain technology areas, for you may be able to create prior art that reduces the potential patent territory that others can obtain in the future.
Publications can also confuse and distract competitors, as they struggle to understand if a publication from you reflects a serious investment in an area or is related to pending patent activity. To do this well, some of your publications should be based on actual patents you have filed, and others should look as if they are. And some should be anonymous but readily identifiable as your work, while others should disclose your identity.
There are several other things you can do with publications that we may discuss here later.
Where to publish? One venue that I strongly recommend is IP.com. This company has its origins in IBM's aggressive publication efforts, providing an opportunity for others to quickly and inexpensively publish a document that can be electronically searched by the PTO, and that is time stamped and archived with certain proof of its publication date, unlike most resources on the Web. Costs are low and ease of use is very high. It's one of the best ways to get prior art out there.
One of my publications at IP.com was recently cited by a PTO examiner against a case by IBM. Interesting! The PTO is increasingly using this resource.
If you want a holistic, broad approach to intellectual assets, you've got to do more than just file patents. At a minimum, you need to strengthen the patents you are seeking with additional publications. And there is much more you can do with that tool - just one of many tools beyond patents that must be part of a robust intellectual asset strategy.
HP and IBM are vigorous publishers, to their credit. But much of the world really doesn't grasp how powerful publications can be. So why publish?
For one thing, defensive publications that create prior art can protect or even increase the value of your existing patents and applications. They can do this by disclosing numerous potential improvements to reduce the risk that others will get improvement patents on top of your estate. That strengthens your future patent clearance position ("freedom to operate" or "right to practice" are terms that others use). It also reduces the risk that a potential licensee will have to get lots of additional licenses from others to practice the art, thus preserving value in future licensing activity.
Publications can also be used to gain credibility for test methods or other tools that may be useful in your patents.
Publications may be used to reduce the value of competitive investments in certain technology areas, for you may be able to create prior art that reduces the potential patent territory that others can obtain in the future.
Publications can also confuse and distract competitors, as they struggle to understand if a publication from you reflects a serious investment in an area or is related to pending patent activity. To do this well, some of your publications should be based on actual patents you have filed, and others should look as if they are. And some should be anonymous but readily identifiable as your work, while others should disclose your identity.
There are several other things you can do with publications that we may discuss here later.
Where to publish? One venue that I strongly recommend is IP.com. This company has its origins in IBM's aggressive publication efforts, providing an opportunity for others to quickly and inexpensively publish a document that can be electronically searched by the PTO, and that is time stamped and archived with certain proof of its publication date, unlike most resources on the Web. Costs are low and ease of use is very high. It's one of the best ways to get prior art out there.
One of my publications at IP.com was recently cited by a PTO examiner against a case by IBM. Interesting! The PTO is increasingly using this resource.
If you want a holistic, broad approach to intellectual assets, you've got to do more than just file patents. At a minimum, you need to strengthen the patents you are seeking with additional publications. And there is much more you can do with that tool - just one of many tools beyond patents that must be part of a robust intellectual asset strategy.
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