Last week I saw an article by Mike Masnick on Techdirt, TiVo Apparently Considering Patent Trolling As A Second Act:
… for big companies, who haven’t been doing much innovating lately, suddenly there’s a temptation to focus more money on investing in their patents, rather than on investing in actual innovation.
Having spent the last several years managing innovation and technology related to digital media solutions, I have personal experience with this situation. During my recent job search, I discussed with a company whose products were innovative when they were developed to address a new market over a decade ago. Now this market and the products developed for it are mature and the company’s management is planning for the future. They were looking for someone to help them analyze their patent portfolio with a view toward generating value from it.
Anyone who has spent any time in innovation will probably have heard of the Innovator’s Dilemma. The reality of it is more than just declining profits for shareholders and dwindling funds for innovation when technology and markets undergo rapid changes and successful companies are caught by surprise; there’s the very real threat of lay-offs for their employees. It’s also understandable that when the lifetime cost of a patent can run up to $100,000 or more, companies facing hard times will look for options to get value from that investment, even if they have also invested in innovation.
While I am sympathetic to the plight of companies and their employees who were left behind by disruptive innovation, I cannot help but remark that the patent system does not serve these companies well. Many companies do work hard to innovate, only to find that “obvious” solutions have been patented by trolls or competitors. Since patents protect inventions for up to twenty years, which is quite a long time compared to current technology life cycles, these companies end up spending even more to work around existing patents, or simply abandon their ideas if too many patents have been filed and no workaround can be found.
This situation doesn’t seem to benefit anyone, with the possible exception of patent attorneys. Surely the millions of dollars companies spend on building and maintaining their patent portfolios, most of which will serve as nothing more than deterrents to would-be competitors, could be better spent funding actual innovation projects.
I took a one-week Business Strategy course at MIT Sloan School of Management a few years ago. It was one of the best courses I’ve ever taken in any subject, and it changed the way I think about business and technology strategy. Led by Arnoldo Hax, the course followed his customer-based strategy framework, the Delta Model, that emphasizes mutually beneficial customer-supplier relationships as opposed to the more conflictual frameworks that focus companies’ energies on beating their competitors. “Make love, not war,” Hax taught us.
I think this advice should be applied to innovation too. Innovation, even patented innovation, can be so more powerful when it is used less selfishly. Mike Cane recently provided some wonderful examples of inventions whose patents were relinquished for a greater good in his post Glamour Doesn’t Change The World. When innovations are used in this way, everybody wins; except maybe the patent attorneys.
Of course, the premise of the patent system was to provide companies with an incentive to invest in innovation by granting them an exclusive access to the fruit of their investments during a period of time long enough to make a profit. Unfortunately, the system doesn’t effectively serve this purpose anymore in a world where startups launch and may go under in less than the time it takes for a patent application to be granted, where there is no such thing as “reasonable return on investment” and where companies are at war with each other.
I told the company with the patent portfolio position that although I was interested in working for them, the job was not for me.