Patents: Everybody is doing it, why not we?
I must say The Singapore Entrepreneurs Blog is fast becomming one of my favourite blogs to read. Their recent post on patents has encouraged me to post my alternative take on patents. This is something that is actually practiced at my company, a SME (Small and medium enterprise) consumer electronics manufacturer.
Also this post is actually a presentation that I gave in Sept 2005 at The Design Pioneer Program, Design 101 Workshop for The Design Singapore Council. IPOS was involved at this workshop as well, and far as I could tell after my presentation they were not amused. How I love controversy!
Before I go into things, I like to indicate that to certain extent, creativity, design, art, entrepreneurship, are all closely related and part of the same family. They are all about a process of creating something out of nothing. However at my blog, the slant will be more towards a design, or more specifically an Industrial (Product) Design direction.
The organization that I worked for used to be a firm supporter of patents by patenting their Intellectual Property with huge costly worldwide blanket patents. The organization followed a traditional Japanese practice of patenting anything remotely worth patenting. But not anymore, we are of the opinion that we will only spend the effort and money on patents if we deemed the design or technology unique enough to be licensed for royalties in the future. Even as a creator of IP, it only took me a few minutes to see their rational.
I think the organization I worked should know what they are talking about as 10% of the total staff IS the legal department. Now that is big. Their reasoning is simple:
- It’s very expensive for small companies to obtain total world wide protection. We are talking in the 100K and upwards.
- If someone infringes on your patent, it’s a nasty affair and difficult to enforce. (10% is all they need, see below)
- Expiry date. Yep patents are not forever.
- Eternal Vigilance, you will need to be on a constant watch for infringement and this can be very tiring.
To understand this controversial and alternative approach lets look a little more about patents. We won’t focus on how to do it, but more a now I have it so what then?
Personally I feel that if the security of your business is based around a product patent you are in serious trouble. Why? Simply, as you can see from the 4 points above, a patent is only a speed camera or a road bump. It’s really only a deterrent. If you “copiers” are smart all it takes is a 10% modification of your original design for your patent protection to be useless. Fortunately most pirates are not so clever, and any designer of any standing will not walk this path.
What they don’t tell youâ€¦
However all is not lost. This is where I come in. So what now? How do I protect my stuff? The answer is actually what companies many companies like Apple or Sony do in addition to their patents. They own the “system”.
All successful companies have a system of a way of doing things that become a huge barrier of entry for competitors. This system or product strategy then becomes integral to the way you conduct your business. This therefore then spreads and applies to everything you do, thus making your products and services a hard act to follow.
In detail this system can be broken down into 4 categories, design, function, market and brand.
This is the key as it’s the biggest and most difficult thing to develop and thus the most difficult barrier of entry for a competitor if you have a strong brand. Basically a strong brand is eternal and your products now link to a greater thing that is your brand heritage. If you look at the Apple iPod for example, you can easily spot a fake a mile away.
Of cause all companies like to argue that they lose potential business to fakes. However the key word here is “potential” business. I won’t go so much into this as it opens a huge can of worms, but my feeling is if this was a customer that would buy a fake iPod in the first place, then he would never buy a real iPod anyway.
This applies more to if you have a tangible product. If you do then you need to develop some kind of strategic product solution. Strategic in a sense that the product needs to have a design language that is a unique reflection to your brand.
Again if you look at brands like Apple or Sony, there are certain elements of the product’s industrial design that allows you to identify it a mile away. Creating something unique that makes a statement will discourage competitors as people will associate that particular form with your brand.
This is another vital cog in the wheel. You should always study your market and understand your customer’s consuming behavior and how your product solves his/her needs. Know it so well that the competitors who try to follow will fail as they cannot get your marketing mix right.
Some other things that can help are large scale product introductions and launches (if you can afford), marketing awareness programs (guerilla marketing strategies, internet advertising etc.), winning international design awards are all ways to creating powerful product offering that becomes its own protection.
The idea here is to have a very good working relationship with your vendors. So much so that your vendors gives you leeway in your product spec and design that it does not with other competitors. Owning or controlling the supply chain is vital as you can create products that have unique materials that are hard to obtain, or gain access to technologies that are not mainstream.
Try here to re-interpret technologies in innovative ways. Do not base your product on specifications only. Otherwise your product will be out spec easily as that is the easiest thing to copy. Think Apple’s click wheel. Think different! Remember you want to create a product or service that is a fantastic experience to use and encompasses everything you believe in.
Conclusion and Disclaimer!
Ultimately you will have to decide if applying for a patent is for your organization or not, but even if you do apply for a patent, this strategic approach towards product development outlined above are good steps to further protect yourself above and beyond the patent.
However this strategy is not for all type of organizations or products. You will need to be aware and make a judgment call to see if it matches your customer, brand and product profiles. However from my experience if your product is in the global mass market is can and will be copied mercilessly if your product is a success.
Based on some of my recommendations and findings, the senior management at my organization has decided to channel their limited resources to adopting my strategic “system”, to creative time and to focus on getting more products out there.
This organization strategy focuses on generating sales and ultimately cash flow and revenue to keep us all alive. This system of renewal does have a lot of downsides, but what it does do is it keeps the organization and thinking fresh as well as keeping it moving towards the new. It’s really “who moved my cheese?” applied, and we all know that is good.