Everyone knows that you can’t add the flour after the cake is baked. The result is more than just a failed recipe. It represents wasted time, money and resources — the baker has no choice but to start over from scratch. Like the cake’s flour, IP strategy is a crucial ingredient in successful new product innovation. A well designed and executed IP strategy will help an innovation to achieve its fullest commercial potential.
Most companies know that they should not treat IP like an ingredient that is added either optionally or at any stage of product innovation. Yet they too often struggle to complete the right IP actions and at the right times. Like a failed cake with ingredients combined out of order or left out entirely, product innovation without deliberate and well-timed IP protection and risk management wastes resources and yields disappointing results.
Because even great innovations can fail to meet their commercial potential if IP review for risks and opportunities is delayed or bypassed, the most innovative companies take deliberate steps to infuse IP strategies into their product development efforts. They know that the trick to integrated IP strategies is just that — integration; namely, assigning IP counsel to development teams and incorporating IP tasks into development processes.
Innovative companies increasingly recognize integrated IP as a business imperative. They’ve learned firsthand that, without integrated IP strategies, development teams cannot identify IP risks early and manage them proactively. They can be caught unaware of patent, trade dress, trademark and copyright rights of others and unprepared to respect those rights. And when they address IP-related matters only as an afterthought — perhaps even on the eve of product launch — the development process is too often disrupted by eleventh-hour design changes and a general atmosphere of uncertainty as to how to move forward. Absent integrated IP strategies, development teams can also forfeit opportunities to secure comprehensive IP protection. Premature invention disclosures, inconsistent IP positions, and ill-timed patent filings will compromise the competitive advantage that can otherwise be enjoyed by successful innovations.
To illustrate inefficiencies of delayed IP review, consider a six-month development effort nearing completion. The product launch date has been broadcast, an inventory of components is on order, and custom mold tooling is being completed. At this late stage IP counsel is asked to review the proposed product to confirm that it is patentable and free from infringement risk, but IP counsel discovers a patent owned by a rival competitor. IP counsel also learns that the proposed product has been disclosed to component suppliers and customers without Non-Disclosure Agreements in place. Because of the infringement risk posed by the competitor’s patent, the decision is made to redesign the product (sacrificing the custom mold tooling, postponing the launch date, and repeating a significant portion of the development effort). Though better late than never, the late IP review left a significant risk undiscovered and cost the development team in terms of expense and time.
Companies can therefore strengthen their IP positions — seizing IP opportunities and avoiding IP risks — by integrating IP into their development efforts. Like following a cake recipe carefully to yield a predictable result, companies can ensure that the right IP tasks are completed at the right junctures by integrating IP. They can also ensure that strong IP positions are the organic byproducts of new product innovations. Done right, the recipe for success calls for assigning IP counsel to development teams — to ensure that the key ingredient of IP strategy is not left out — and incorporating IP tasks into development processes— to ensure that the IP ingredient is folded in at the best times.
Integrating Into Development Teams
Given that IP counsel has much to contribute to the development effort, just how is IP counsel best involved? The vast majority of top performing companies, a full 80% and growing, assemble cross-functional teams to develop new products. These teams are made up of individuals from key disciplines that collaborate throughout the development process from inception to launch. The represented disciplines vary depending on the industry, product category, and company structure, but each discipline’s criteria for product success are heard throughout the development effort. In the realm of consumer products, for example, the team typically includes representatives from engineering, design, and marketing that guide the development process toward a product that satisfies each discipline’s requirements.
An ideal model formally embeds IP counsel within the development team to layer IP criteria with those set by the other disciplines (see Exhibit 1). Like other members of the development team, IP counsel has predefined deliverables and ensures that steps are taken to identify and manage IP risks while securing comprehensive IP protection. In this role, IP counsel must act as a facilitator of new product innovation as opposed to a barrier to progress. Instead of impeding innovation, IP counsel — whether in-house counsel or outside counsel — must actively help the development team to commercialize the ideal product while protecting and respecting IP rights.
IP counsel completes preset functions to the benefit of the development team. One critical function is the early identification of patent literature (patents and published patent applications) that exposes the development team to the state of the art, sparks new ideas, and identifies potential infringement risks. When relevant patents are identified, IP counsel helps the development team to screen out risky product concepts that may infringe others’ patent rights, thus allowing the team to focus its lean resources on viable product concepts. Once a product concept is nearly “frozen,” IP counsel conducts a targeted patent search to identify patents of particular relevance to proposed product features and helps the development team navigate, or “design around,” patent rights of others, thus reducing infringement risks proactively.
IP counsel also sets strategies to secure comprehensive IP rights, utilizing all available modes of IP protection. IP counsel protects new technology with utility patents or implements measures to protect trade secrets, and uses the exclusive rights afforded by design patents to help secure design rights and the brand identity needed for trade dress protection. IP counsel also secures foreign patent protection in countries where a product will be made or sold, where competitors may be active, and where value can be derived from licensing to foreign companies.
Integrating Into Development Process
Assuming that IP counsel is properly embedded in the development team to perform IP tasks, when are those tasks best handled? Even if all necessary cake ingredients are available, the recipe will fail if they are combined in the wrong order. Companies have learned that inefficiencies arise not only when development teams delay IP-related tasks but also when those tasks are handled too early. Completing a targeted pat- ent search well before a product design is “frozen,” for example, means that later-added features have not been searched and could introduce unanticipated risks. Innovative companies therefore seek to perform IP-related tasks at appropriate junctures in the development process.
Virtually all effective product development processes share the characteristic that they progress through sequenced stages from their inception to product launch. The well-known StageGate® process exemplifies a staged process. Development processes vary depending on the industry and product category, the culture of the company using them, and the size of the design effort — ranging from incremental to platform to breakthrough innovations. A typical development process may, for example, include four sequential phases: concept generation, feasibility, development, and commercialization (see Exhibit 2). Ideally, companies schedule IP-related tasks to be completed in each of these phases, at just the right times. To do so, companies must review their development processes, identify the specific IP actions that should be conducted, and schedule exactly when they should be completed in the processes. In this way, companies deliberately incorporate the key ingredient of IP strategy into the innovation process.
Early in the concept generation phase, for example, IP counsel ideally conducts a “state-of-the-art” patent search, thus exposing the development team to prior efforts of others for ideation, identifying potential IP minefields, and revealing potential IP-related opportunities such as licensors or acquisition targets at the outset of the process. Later, in the feasibility phase, IP counsel helps the development team to screen out any risky product concepts, “design around” any identified infringement risks, protect selected product concepts, and complete Non-Disclosure Agreements if a design concept must be disclosed (for example for Voice of the Customer (VoC) review or to communicate with vendors). Because the product is well-defined in the development phase, IP counsel conducts a targeted patent search to identify any patent claims of specific relevance to proposed product features, evaluates the scope of such patent claims, and suggests design modifications that place the ultimate product outside the scope of others’ patent rights. In the commercialization phase as the product is being readied for launch, IP counsel documents the assessments it made in earlier phases (non-infringement and invalidity analyses for example), ensures that IP protection has been pursued and remains on target, and facilitates formal legal clearance and confirmation that any risks associated with the product launch are tolerable to management. The specific timing of these tasks should also be dictated by milestones such as capital investments (for example mold tooling, inventory, and manufacturing equipment purchases), product launch announcements, and significant strides in technology innovation.
IP-savvy companies aspire to develop product innovations that are superior to prior offerings, that do not infringe IP rights of others, and that enjoy the valuable competitive advantages brought by solid IP protection. By implementing truly integrated IP strategies, innovative companies enable their development teams to complete predefined IP actions and to do so at the best times, thus seizing IP opportunities and managing IP risks proactively. Such careful planning ensures that product innovation efforts, like a well-executed recipe, will efficiently and effectively meet the standards of robust IP review so that the resulting innovations will meet their commercial potential.
Please contact RatnerPrestia’s Joshua Cohen for more information about the integration of IP strategies into product innovation pro- cesses. Joshua is also President of the Greater Philadelphia Chapter of PDMA (Product Development and Management Association).