Overcoming Cognitive Bias in Patent Filing and Maintenance Decisions

During this turbulent era in the history of the U.S. patent system, many enterprises have pursued new models for IP strategy and execution. Others have taken a wait-and-see, business-as-usual tack. Change certainly is no stranger to patent systems around the world. Yet, some principles remain timeless and unassailable no matter how winds may shift. For example, we all can agree that patent filing and maintenance decisions should be sound, protecting the right technologies in the right places for the right reasons.

Technology companies face patent-related decision points around seemingly every corner. The consequences of suboptimal decision-making are troubling, including wasteful expenditures, missed strategic opportunities, and diminished shareholder value. Therefore, enterprises should not hesitate to continually reflect on the quality of their patent filing and maintenance decisions, and on the framework that supports them.

Cognitive bias—defined as “the collection of faulty ways of thinking … hardwired into the human brain”—can hijack patent decision processes just as it does every other area of human endeavor. As such, it can lead to suboptimal outcomes despite IP stakeholders’ sincere, dedicated participation.

IP leaders who recognize the pervasiveness of cognitive bias can take proactive steps to mitigate its influence over patent filing and maintenance decisions.

Cognitive Bias in General

Also known as psychological bias, cognitive bias has garnered increased attention in recent years. The 2011 bestseller Thinking, Fast and Slow, by Daniel Kahneman, describes two systems that govern our thinking. “System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical.” Cognitive bias affects both systems, having a “profound effect … on everything from playing the stock market to planning our next vacation.”

Numerous cognitive biases have been identified. If we’re honest with ourselves, visiting the cognitive bias Wikipedia page is like looking in a mirror. We see how our thinking, alone or in groups, commonly falls into traps despite our best intentions. At the end of the day, we may let cognitive biases override our desire and capacity to make rational decisions.

Cognitive Bias in Patent Decisions

Cognitive biases may drive decisions to pursue patent protection or maintain patent assets. They can impact decisions made by a host of IP stakeholders, including in-house IP teams, outside IP counsel, and corporate decision-makers, such as engineers, product managers, and marketing leaders. Contexts for faulty decision-making can be one person, a few or several persons, or larger groups (e.g., review boards or committees). Cognitive biases are not mutually exclusive; multiple biases can operate simultaneously.

The following is a non-exhaustive list of cognitive biases potentially applicable to patent decision-making. [Note: The italicized definitions are direct quotations from Wikipedia.]

• Anchoring: The tendency to rely too heavily, or “anchor”, on one trait or piece of information when making decisions. IP stakeholders may anchor their thinking on the general premise that patents are an important competitive tool for protecting their organization’s, or their client’s, technology. Consequently, they may be heavily biased in favor of filing patent applications and maintaining granted patents, glossing over details that warrant not proceeding.
• Pro-innovation bias: The tendency to have an excessive optimism towards an invention or innovation’s usefulness throughout society, while often failing to identify its limitations and weaknesses. Patent decision-makers tend to have a special affinity for technology. They may allow their fascination and enthusiasm for “cool gadgets” to color their assessments, failing to seek a more holistic view.
• Optimism bias: The tendency to be over-optimistic, overestimating favorable and pleasing outcomes. Innovative concepts may never reach their promised potential for a multitude of reasons, such as insufficient R&D investment, prohibitively high manufacturing costs, failed marketing campaigns, and paradigm shifts in the relevant industry. In choosing to forge ahead with patent filings, prosecution, and maintenance, IP stakeholders may entirely discount these and other eventualities.
• Overconfidence effect: Excessive confidence in one’s own answers to questions. During invention disclosure or patent reviews, questions may be raised about the applicable technology, patent scope, market opportunity, revenue profile by region, and competitive landscape. Unfortunately, board members offering answers may be overly confident, clouding the resulting deliberations. For example, a participant whose expertise is undisputed in certain areas may choose to weigh in on matters falling outside his or her domain expertise.In some cases, an inventor on a subject invention disclosure, pending patent application, or issued patent also is a board member; he or she may unconsciously favor patenting out of self-interest.
• Bandwagon effect: The tendency to do (or believe) things because many other people do (or believe) the same. IP stakeholders who speak persuasively, or whose status in an organization lends them de facto authority, may drive collective decision-making in the directions they dictate. This may have a chilling effect on the voicing of alternate perspectives within the group.
• Irrational escalation: The phenomenon where people justify increased investment in a decision, based on the cumulative prior investment, despite new evidence suggesting that the decision was probably wrong. After a company has invested significant resources in its cultivation, some decision-makers are reluctant to abandon a patent asset of questionable value. They reason that “we’ve already gone this far,” and let other biases skew their judgment. The result may be to throw good money after bad.
• Choice-supportive bias: The tendency to remember one’s choices as better than they actually were. In addition to reviewing submitted invention disclosures, patent committee meetings may focus on decisions to pursue foreign filings, or to pay maintenance fees or annuities, based on approaching deadlines. Patent pruning meetings may evaluate the continuing value of portfolios without regard to specific deadlines. In either case, participants must decide whether they wish to extend or maintain assets that, at an earlier decision point, were deemed valuable.Participants may rubber-stamp the rationale applied in the past, rather than question the wisdom of the choices made, and decide to approve additional filings or keep assets in force.
• Denomination effect: The tendency to spend more money when it is denominated in small amounts … rather than large amounts ….Decision points in the patent process entail differing levels of investment. For example, relative to the initial filing of a patent application, the cost to respond to an Office action typically is much less. The cost of a patent annuity to maintain a patent application in a foreign jurisdiction may be considerably less than the cost to respond to an Office action or file an application. Additionally, the costs associated with a patent asset or a family of related assets are distributed over approximately twenty years.IP decision-makers may focus on individual milestone charges, not appreciating the total life-of-patent costs, including the opportunity costs of not investing monies elsewhere.

Strategies for Overcoming Cognitive Bias

In Thinking, Fast and Slow, Kahneman acknowledges the obstructive power of cognitive bias: “The question that is most often asked about cognitive illusions is whether they can be overcome. The message … is not encouraging.” However, we can “learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high.”

To mitigate the effects of cognitive bias—thereby improving the quality of patent filing and maintenance decisions—enterprises can adopt a multi-faceted action plan. Recommended best practices include the following:

1. Educate and reinforce.

IP teams should provide training and guidance to stakeholders regarding IP fundamentals, including reasons for pursuing patent protection, claims and claim scope, patentability, the geographic scope of patents, alternatives to pursuing patent protection, costs at milestones, aggregated costs, and types of decision points and associated timelines. In the context of specific decisions, IP teams also can pose critical questions about the value of technology, its anticipated near- and far-term implications, and the likelihood of commercial success. And they can remind stakeholders that past decisions are not sacrosanct; changing circumstances or further scrutiny may validate course corrections.

By doing so, IP leaders can equip stakeholders to think critically, and to reject shallower rationales rooted in the perceived importance of patenting new technologies. Participation in IP decisions is notably a small part of most stakeholders’ day jobs. Thus, it’s essential to frequently reinforce IP concepts and effective models of IP decision-making.

2. Diversify and balance.

To improve the quality of patent decisions, the enabling framework should integrate a diversity of perspectives. For instance, engineers and other technologists can speak to the technical viability of inventions, while product managers can address product differentiation, market trends, customer preferences, and geographic strategies. Care should be taken to promote psychological safety, so that individuals feel empowered to vocalize opinions without fear of being marginalized by colleagues who disagree. Highly optimistic pronouncements about unproven technology or future market conditions should be tactfully challenged. Facilitators of patent committees also should be mindful of political dynamics, such as differences in seniority or status among group members, as well as issues of self-interest, that may taint discussions.

Ultimately, leaders should strive to adhere to established decision protocols and encourage members to thoughtfully consider the merits at each decision point. Absent diverse, balanced teams that offer well-grounded inputs and engage in constructive debate, decisions may be founded on missing information or flawed assumptions.

3. Leverage checklists and other tools.

To further fight cognitive biases, tools can be provided to lend structure and direction to the decision-making process. For example:

1. Checklists, infographics, or other reference materials can remind reviewers of relevant IP fundamentals and of criteria to consider when evaluating options presented.
2. Focused sessions can be conducted with appropriate personnel before plenary committee meetings, to improve the robustness of reviews.
3. Copies of technology or product development roadmaps can be circulated prior to final decisions being made, in order to highlight business priorities.
4. Invention scoring tools can be utilized, requiring reviewers to rate concepts against technical and commercial criteria.
5. Software tools, such as patent cost tracking or estimation software, or analytics software to assess patentability or patent quality, can supply data to complement stakeholder insights.

Such tools can help prevent decision-makers from straying far from the path of rationality.

4. Capture data for future use.

Teams should capture data in conjunction with patent decisions. Practicing this discipline can improve the quality of subsequent decisions during the life of a patent asset, as well as expedite the reaching of decisions. Exemplary data to collect include (a) the articulated reason or reasons for pursuing patent protection (e.g., to protect a current or planned product, to protect a technology that may foreseeably be commercialized in the future, to prevent competitors from entering a space, for licensing or cross-licensing purposes, etc.), (b) company products or product lines associated with the patent asset, and (c) key assumptions or observations undergirding the decision.

Without the benefit of historical data, IP stakeholders may be forced to expend resources searching archival records or duplicating completed but forgotten analyses. If unsuccessful in unearthing or recreating the necessary inputs, they may have no alternative but to act on the basis of incomplete information.

In sum, the absence of pertinent historical information may be an invitation for cognitive biases to step in—most likely to the detriment of the business.

5. Revisit and revise.

The North Star of any IP strategy is its alignment with an enterprise’s business strategy. When the above best practices are implemented, patent decisions are less likely to fall victim to cognitive biases. Still, the constantly evolving nature of an enterprise, and the day-to-day demands and distractions of doing business, inevitably can impair the quality of decision-making.

Accordingly, it behooves leaders to apply a continuous improvement mindset to patent decision-making frameworks. A proactive, adaptive approach can yield optimal decisions in the short and long term.

Cognitive Biases Can Be Beaten

Patent decision-making is susceptible to the same cognitive biases that infect thinking in other areas of our lives. Nevertheless, motivated IP leaders can draw from a palette of best practices to counteract the ill effects of such biases. In so doing, they can help foster patent decisions that are well-founded and consonant with corporate priorities.

This article reflects the author’s current personal views and should not be necessarily attributed to his current or former employers, or their respective clients or customers.

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