Innovation Requires Imagination, Vision and Risk Taking

It typically isn’t a useful strategy to imagine a future and expect that the right technologies will be developed to achieve the imagined goal, at least not without a long time horizon, substantial investment and at least a little bit of luck along the way. Even when President Kennedy challenged NASA to put a man on the moon the pursuit was more geopolitical in nature, largely in order to spur America forward to catch up with the Soviet Union. Of course, along the way numerous valuable technologies eventually came from the Apollo Program, but this exception does not prove the rule. Most private sector companies simply cannot and will not spend seemingly limitless amounts of money over a decade to pursue what many believe to be a fantasy or scientific impossibility.

Unlike the United States government, which may invest limitless funds pursuing innovations for a variety of different reasons, corporations must answer to shareholders. Private sector corporations simply do not have the luxury of being able to blindly pursue innovation without having a reasonable anticipation of success. For that reason corporate decision makers tend to stay well grounded, typically pursuing innovation only after examining practicality, workability and production costs.

The larger and more established the corporation the more risk averse the corporation usually is, which is one of the reasons that most paradigm shifting innovations come from startups or are born out of university research. By its very nature innovation requires at least some imagination, a vision for the future, and risk taking. The key, however, is to have the right proportions of each, which is easier said than done.

Investors are the lifeblood of innovation, particularly paradigm shifting innovation. Despite the popular mythology that seems to think that innovation simply happens, in the real world innovation requires time, energy and money. Innovations simply do not fall off trees; innovations are created. Merely creating an innovation is the first step in a long journey to bringing the innovation to the market and ultimately making money.

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In order to guard against at least some of the risks associated with monetizing innovation, investors typically demand patents. This reality is often questioned by critics of the patent system, but even casual observers of the popular show Shark Tank know that one of the first questions the sharks ask is whether there is a patent and what the patent covers. Without some ability to create a barrier to entry simple laws of economics mean that if you make money there will be market entrants that seek to make money competing against you. Having a strong patent position makes it more difficult for competitors to cannibalize your market. A strong patent position also means the company has assets. If things go bad and the venture is not successful the investors will look to those assets as a way to recoup at least some of their investment.

Not having patents makes the already difficult task of raising money more difficult. Anyone that tells you otherwise simply isn’t being honest. But merely having patents isn’t enough any more, ate least in the current anti-patent climate. Filing broadly worded patent applications as a one-size-fits-all strategy will not work today. Even if you are able to get an overbroad patent past a patent examiner it won’t provide the barrier to entry you think it might, or should. Courts have been cracking down on the types of innovations that are patent eligible and tightening the description requirements for those innovations that remain patentable. Thanks to the America Invents Act (AIA) there are a variety of new procedural ways for competitors to challenge patents after they are granted. Thus, investors, portfolio managers and development specialists need to be intimately familiar with patent laws in this rapidly evolving environment and work to create strong patents that thoroughly define the invention with painstaking technical detail. That is the new patent reality.

Knowledge of the underlying technology that makes up the innovation is absolutely essential. Now more than ever a thoughtful, considered, knowledge-based approach to the technical field in question is an absolute necessity. It is also necessary to have a thorough understanding of the legal landscape and the realities of the technology sector as well. While it probably shouldn’t be the case, there are definitely technology areas within the Patent Office that are more innovator friendly. Knowing the underlying reality associated with which Art Units have higher allowance rates can and will allow for a more cost efficient creation of a meaningful patent portfolio.

Building a strong patent portfolio that meaningfully protects the innovation in question and continues to push outward into adjacent spaces, as important as it is, will only get you so far. The patent process is not the end goal, but rather a means to an end. Obtaining a strong patent or a strong patent portfolio must be viewed in the context of the greater business objective, which is to make money on the underlying innovation, which is not as easy today as it was even just a few years ago.