The importance of locking down innovation in troubled times
TO MOST, A Poor Man’s Tale of a Patent, published in October 1850, remains one of Charles Dickens’ lesser-known literary works. Numbering but a few pages, this short essay tells the curious tale of a man (of humble means) and his troubled quest to patent an invention.
The process of obtaining a patent, we are told, leaves Dickens’ lowly inventor “quite wore out, patience and pocket”, and, “living sparingly, on account of fees…losing heart”. Reflecting on the experience, he concludes, quite soberingly, that :
“Thereby I say nothing of my being tired of my life, while I was patenting my invention. But I put it this: Is it reasonable to make a man feel as if, in inventing an ingenious improvement meant to do good, he had done something wrong? How else can a man feel, when he is met by such difficulties at every turn? All inventors taking out a patent MUST feel so.”
Although Dickens’ story does not make for entirely comfortable reading, his experiences are likely to resonate with some, even today. That said, few with any practical experience of it, doubt the fundamental role played by the patent system in protecting innovation. Indeed, for many companies, the “reward” provided by the exclusivity of a patent is a vital mechanism by which very substantial investments in research and development can be recouped, thereby fuelling the innovation of tomorrow.
But what of patenting in these troubled times of economic and commercial uncertainty? Do the normal rules apply or is a different approach required to avoid a fate such as those foretold in the Poor Man’s Tale?
At the time of writing, the UK, similar to other countries, has entered a further period of national lockdown. For many, a vaccination against Covid-19 remains the light at the end of the tunnel. A shift to remote working during the pandemic has transformed the workplace for many and prompted research-based companies to reconsider their approach to the R&D lifecycle in an attempt to maintain productivity. The impact on innovation of such change is inevitable, but new ideas remain the lifeblood of such organisations, without which future profits are not guaranteed. Put simply, standing still with a view to “weathering the storm” is a luxury that few innovative companies can afford, however tempting a prospect it might be.
My own experience working as a patent attorney, initially within the pharmaceutical industry and more recently within private practice, has taught me that one size rarely fits all when it comes to protecting ideas. For the small, fledging startup, building a modest patent portfolio from the ground up is often seen as a pre-requisite to future funding rounds. For the established corporate, maintaining, exploiting and, where necessary, enforcing a patent portfolio of considerable size and complexity generally comes with the territory. Protecting innovation with patents requires a considerable level of investment, but in terms of company resource and funds, on which there is no guaranteed return, even at the best of times. In times of economic uncertainty when, inevitably, the purse strings are tightened and boardroom appetite for risk diminishes, life gets more interesting still.
The ongoing pandemic has, in my experience, resulted in companies filing fewer patent applications generally. That is not to say that new filings have dried up completely and, in some sectors (such as telecoms), there appears to have been little observable change. Most companies appear, quite rightly in my mind, to be looking more carefully at whether new ideas merit patent protection and whether there is a sound business rationale for seeking such protection. Prior to filing a patent application, a reasonable question would be: “Will the resulting patent provide 'meaningful' (read, valid and enforceable) protection to a product for which there is a reasonable chance of future commercialisation?” Quality over quantity would seem an appropriate mantra for many at this time. In some (but not all) cases, the underlying innovation may be more appropriately protected as a trade secret or via another intellectual property right, such as copyright, a trade mark, design right, or a combination of such rights.
In addition to closer scrutiny of new inventions, periodic patent portfolio reviews are a common mechanism by which many companies evaluate whether existing patents are providing an adequate return on investment, or whether reducing their size (for example by non-payment of renewal fees in certain countries) is a sensible way to free up funds for investment in future technologies. Some caution is required here, however – several times over the years, I have had the misfortune of explaining to a client that, having made a conscious decision to abandon a particular family of patents to free up funds, they are now unable to reinstate them at a time when commercial interest in their exploitation has subsequently been revived.
In some cases, exploitation of an existing patent portfolio via assignment or licensing of the underlying technology can provide companies with an alternative means by which to recoup past investment. This approach can work well in circumstances where the technology in question is no longer a commercial priority for the company that owns it, but it retains a level of interest within the sector generally.
And so it is not all doom and gloom. Options do exist which can, if managed carefully, provide companies with ways to manage their patent property portfolios without unduly reducing future profitability in favour of increasing short-term cash flow.
Whilst the current pandemic is, in some ways, unprecedented, it is not the first example of its kind nor will it prevail indefinitely. History suggests that periods of significant economic downturn need not hamper innovation in the absolute sense. The Great Depression, which beset the US from 1929 to 1939 and is remembered as the greatest economic downturn the country has ever seen, gave rise to the electric razor, the car radio and Scotch tape to name but a few. Hard times it would seem, may prove fertile breeding grounds for creative minds.
It is of course inevitable during the current climate that some companies will need to find ways of managing their balance sheet in the short term that will entail adapting their usual practices of seeking protection for their inventions. There will be challenges along the way, but with an appropriate strategy in place, they should not prove insurmountable.
In my view, considerable care should be taken when seeking to balance short-term gains with actions that may give rise to future competitive advantage. Cull the dead wood? Sure. Litigate less? Maybe. Stop protecting your ideas? No! For there will be brighter times ahead.
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