Recently ipCreate announced that it completed a successful merger with Article One Partners (AOP), the crowdsourcing giant that has amassed the world’s largest patent research community. ipCreate had previously acquired 31% of Article One Partners in a cash transaction, but has now acquired the remaining 69% of the company via stock-swap merger. Following the merger, Article One Partners will continue to maintain its own brand and business operations, while operating as a wholly-owned subsidiary of ipCreate.
ipCreate is an Invention On Demand® company that partners with global technology companies in the US, Europe and Asia to create patented inventions that complement those firms’ internal R&D efforts. Working with select leaders of industries undergoing rapid technological disruption, ipCreate employs its resources to identify promising innovation areas and then rapidly develops pioneering inventions at the chokepoints of disruptive market change. The company intends to fund and execute more than 100 strategic invention projects backed by thousands of foundational patents by the year 2017, and the merger with AOP is expected to provide strategic benefits in addition to revenue and cost synergies.
ipCreate plans on leveraging AOP’s enhanced patent intelligence, which is powered by sophisticated network technology that is used to connect more than 30,000 technical experts worldwide who participate in studies that search for prior art or that map brand new innovation areas for value. The patent quality services provided by AOP will be critical to ipCreate’s ability to rapidly develop pioneering inventions that have disruptive potential. Having a legion of highly educated and trained researchers to steer projects toward innovation “white space” and maximize the novelty of patentable inventions will help ipCreate deliver strong invention and patent portfolios to its industry partners.
Marshall Phelps, sometimes called the “father of modern corporate patent strategy” who led the global IP operations of two of the biggest tech companies in the world — IBM and Microsoft — has been involved with Article One Partners for several years. Back in 2012, Phelps explained to me that what made AOP so successful was that the community was completely agnostic when it came to patent research.
“You have to be rigorously honest about whether or not the prior art anticipates an invention,” Phelps explained. “A lot of companies don’t want to know what’s out there in the way of prior art — they just want the patents. We see things differently. We want to first of all develop real inventions that will become market-shaping products. And then we want to back those inventions up with the highest quality patents. To do that, you have to not only be very good at what you do. You have to be rigorously honest about the marketplace and about the prior art.”
Upon learning of the merger between ipCreate and AOP, I reached out to Phelps to discuss the merger and what to expect. He explained to me that the vision of ipCreate is much like what he and ipCreate CEO John Cronin did with the IBM patent factory a generation ago. Phelps said that it is a little unfortunate that it was known as a “patent factory” because the primary focus was on innovation and inventing, which when done right will lead to the creation of useful, patentable technologies. The IBM patent factory put IBM back on top, and when Phelps went to Microsoft he implemented a similar model with the practice of “forward inventing” at the tech giant.
Another way to look at ipCreate is to see it as a resurrection of the Bell Labs invention lab model, only in entrepreneurial form — and on-demand. The difference is that ipCreate is a private, third party that partners with global tech brands that need targeted research and development assistance to help them develop innovative new products for new markets that are outside their usual innovation area of expertise. This sort of invention on demand compliments R&D budgets, which has obvious appeal.
In fact, ipCreate’s Invention on Demand model enables its partners to overcome the budgetary limitations imposed by the structural requirements of traditional R&D. If you have X dollars to invest in Y technology, it can be very difficult for companies to operate outside of that defined budgetary bucket of funds when Y doesn’t seem to be working or needs to really go in a different direction in order to be maximized. ipCreate isn’t constrained by budgetary structure, and can help a company. “We are going to expand the circle they are working in cheaper than they can do it,” Phelps explained.
It will be interesting to see how ipCreate and AOP combine forces and even more interesting to see the technologies that come from ipCreate’s collaboration with global tech brands. ipCreate’s invention on demand model could also become an important vehicle for overcoming the widely-reported “innovation slowdown” in Silicon Valley, where many large tech companies no longer invent new products in-house but rather use their large cash reserves to buy other companies and their innovation. (See The Wall Street Journal on July 1, 2014: “Look around Silicon Valley and it’s hard to find established companies still devising their next products in-house. Seen anything new and big lately from Cisco , Yahoo or even Twitter ?”)
Against this backdrop, high-impact invention on demand — especially the sort practiced by ipCreate that generates pioneering inventions for new markets undergoing technological disruption — could become the Next Big Thing. And it could obviate the need for some of the expensive M&As that large tech companies pursue — especially in cases where the real value is in the innovation itself. Bear in mind, though, that an invention on demand program requires sophisticated research and analytic tools along with first-rate execution and coordination across the lifecycle of innovation — from the selection of innovation targets through the development of inventions that can be supported by gold-plated patents.
Finally, it should be noted that the ipCreate model also has implications for the larger policy struggle over patent reform. In a patent system that many believe has unfortunately been “weaponized,” ipCreate reminds us all what patents are supposed to be about — namely invention, not litigation.
You can learn more about how at IBM Phelps developed the world’s first multi-billion-dollar revenue stream from patent licensing by reading his book Burning the Ships: Transforming Your Company’s Culture Through Intellectual Property Strategy, co-written with patent strategist David Kline.