Technology Notables – Part 3: Verifying Benefit Superiority

Earlier articles in this series are available here: Part 1, Part 2.

Most long lists of software features come from large software organizations that have their act together on the engineering side.  The software features go in, mostly from ideas cooked up by the software engineers, and that are gated by software engineering manager preferences.  In theory, customers have input to software development, but in practice, this does not seem to happen.  My experience with software engineering management and customers, is that the software engineers see the customer’s requests and pedestrian or irrelevant.  Customers see software organizations on the other hand, as  bureaucracies that don’t care.

The best way to isolate the value of features, is to expose them to real customers.  Not just in focus groups or surveys.  Valid marketing information comes from working with real customers, in real contexts of purchase and use, with a real product.  Marketing research in strong software companies, however, is usually a mess.  The focus isn’t on validating customer requirements or the business model for a product.  The business focus is on creating a long term software feature manufacturing engine.  So, the problem for effective marketers in strong software companies, is to take the features in the product, and define value in use, and then find a way to test the hypothesized value in use on the real marketing channel and real customers.

As Steve Blank says, inside the building are opinions, outside the building are facts.  So either we have to get outside the building or we have to trick the facts into finding their way back to us.  Notables are a good way to trick facts into backtracking their way to the company when you are in a large ossified bureaucracy.

So your new product is progressing through software development.  You are in marketing, how can you tell what what the big features in the product are?  Answer: By writing a notables on for the features that are most likely to be big. Each notable you write, has to guess at what the benefit superiority for a feature is.  When you write a notable, you make up benefit superiority from hope, thin air, and economics.  Big features need to be believed in before they are seen, and a notable is how you guide your research into use models, and then articulate belief in a feature’s value.

If your feature makes customers big money or, prevents them from losing big money, doing the math of the feature’s economic value in use will magically paint benefits into your notable.  Economics gets you into the ballpark of a good solid starting value proposition for a feature.  In the notable I wrote for the Mopier 320′s usage page, reflecting back over a decade, I can see today, how I could have articulated the feature’s value proposition more sharply.  But perfection is not the point of a notable.

Good enough is enough.   The usage page notable was good enough for everyone down the marketing channel from HP Boise, to see that the Mopier 320 was on to something.  The Mopier 320 was behind on paper counting technology, but it was ahead because it measured toner use and we were able to work out a way that toner use could be fairly charged for.

The big economic moose on the Mopier 320′s table, was toner.  Toner was a 20:1 cost risk over paper.  Copier dealers knew that they were running open loop to toner costs on printers and copiers.  And they knew that this open loop enabled customers to exploit the copier dealer if the customers used more than 5% page coverage.  The usage notable was not perfect, but everyone could see that pixel counting was a lot better than nothing.

Gilb’s Law is that there is always a way to measure, that is superior to not measuring at all.  Ironically, HP’s engineers resisted calls to measure toner toner use because the pixel counting methodology was “only plus or minus twenty percent accurate.”  Wait, what?  That is, because there was a 40% potential swing in accuracy between pixels and toner, customers were left exposed to a 20:1 toner risk.

Pixel counting as a proxy variable measurement of toner use, shows how Gilb’s law works.  Remember a 100% black page has about 20 cents worth of toner on it.  The average page at this time was assumed to have 5% coverage.  Actual coverage was 6.5% which represented a 30% increase in revenue for copier resellers when they began measuring actual toner coverage.  Without working through the simple math of toner economics, a 40% error swing seemed more important to avoid to the engineers, than an unknown cost swing for customers.  Ratios hide things, writing the notable forced the economic magnitudes and risks into daylight, so that business managers could rebalance the value proposition for toner measurement, correctly for the market.  Copier dealers vastly preferred plus or minus twenty percent accuracy to having their largest variable cost running open loop.

So, given that you are a product manager who is consulted about features only as an after thought.  How can you use a notable?

1. To give a feature, its best shot at finding its benefit superiority.  Given that the feature is already in the product, it becomes marketing job to figure out how to pull value out of the feature by comparing the feature to customer needs and competitive offerings.
   1. When you are drafting your feature’s notable, ask yourself “Who in the world is this feature worth the most to?”  Make a guess, and then …
   2. Construct a day in the life of how the feature affects a user, and do the simple math computing economic value.
   3. Answer the five questions.
   4. Then show the notable to your most unfriendly critics.
2. To put down on paper, the back story of a product so that everyone in the company can work together to do inside-out market research:
   1. Step 1: Arguing
      A product management team needs to argue about what the real value for a feature is.  A two page notable, draws the team’s thinking together.  It provokes the marketing team into telling one another stories about their secret prototype customer.  *Note* individuals in strong software companies unguided by marketing research, will do their own market research by picking a customer that they design features to.  These prototype customers, however, are not shared across functions.  Secret prototype customers are undiscussable, and their undiscussability is undiscussable because for some reason, using them seems “unprofessional.”
   2. Step 2: Converge
      Over successive revisions of the notable, arguments will converge.  And once you have a converged story for the feature, your marketing will be come aligned, and will be more powerful as your organization speaks with one enthusiastic voice about the feature.
   3. Step 3: External test
      Once you get a converged notable that works within your marketing team, then you start showing it to customers, your sales people, your advertising and PR firms, and channel members.  Use the notable to draw the thinking together down your channel, just as it drew minds together inside the company.
   4. Step 4: Hypothesis test
      A notable that has been through arguments and enthusiasm inside your company, when it gets into the hands of customers, will tell you if your benefit superiority hypothesis is true or false.  If the customer isn’t provoked, or empowered, or excited by the notable, you’ve got a vestigial feature, or a small feature.  And this is OK.  Not all features are big features.  Each product is lucky to have two big features.

The purpose of writing notables is to separate wheat features from chaff, and to sharpen marketing of the big wheat features to the point of armor piercing effectiveness.

While working on the Mopier 320 I also wrote notables on JetSend which at the time, was a dying technology.  The usage page notable filled up my voice mail with enthusiastic praise and killed competitor sales.  JetSend excited nobody.  Provoked no field sales or customer responses.   The key product of the JetSend division was the HP Digital Sender 9100c.  And I wrote a notable for the 9100c and it, like the usage page notable took off.  Within months, we had Digital Sending built into the Mopier 320 and all medium and high end MFPs.  The notable did not make Digital Sending happen, but it did articulate clearly why the 9100c was a winner and why the rest of the company needed to adopt the 9100c technology ASAP.

Lessons Learned:

1. Notables are hypotheses for feature value.  If you can’t write a convincing notable, the feature has no value or you don’t know your customer.
2. Value has to be believed to be seen.  Encourage your notable writers to ignore doubt and focus on finding one or two killer attributes that deliver value for someone down the marketing channel.
3. If your notable finds a big feature, you will hear about it from the people you share the notable with.  Even cynical field sales people who you think hate you, will light up when you articulate real benefit superiority.  When they read a notable, they will also say “Wow, I feel like a part of the company again!”
4. Even junior marketeers in a company can trick the current bureaucracy into doing marketing research on big features with notables and a willingness to suck down.

Technology Notables – Part 1: What is a Technology Notable?

This is part 1 of a series of blog posts on technology notables.  Part 2 is available here.

While I was working in product management at HP I was asked to draft a “Technology Notable” for the usage measurement in the Mopier 320 (may it rest in peace).  Technology Notables were single-issue briefs that were given to field sales people, channel partners, and prospective customers.

An HP technology notable at that time (1998) had three rules:

1. Maximum length of a technology notable is one piece of paper, both sides.
2. Format: the notable will answer “THE FIVE QUESTIONS”
   1. What is it?
   2. How does it work?
   3. What are the benefits?
   4. What is the strategy?
   5. What are the objections?
3. Style: skull piercing enthusiasm.

At least, I *think* that skull piercing enthusiasm was required.  Notables just came out of the tips of my fingers that way, and somehow I got away with leaving the enthusiasm in.  Although, long-time HP marketers did speak about “bleaching” my words.

While writing the technology notable was considered a crap job by HP’s marketeers, for me, writing notables was a free day in Six Flags with no lines.  Because writing notables is about the most delicious challenge a high technology marketer can enjoy!

Enjoying a crap job?  How?  Why?  Because, … the purpose of a technology notable is to take one feature, and then translate that feature into  customer benefits.  And on top of the feature/benefit puzzle task, you have to write the notable in such a was so as to make the thinking required to learn and use the feature, worth the reader’s effort. So it is a fun tech marketing puzzle wrapped up in a writing challenge.

I don’t know the history of technology notables (Email me bill@basicip.com if you do!) before I jumped in to writing them for HP.  But, because technical products are forever adding features that customers never learn how to use, I would guess an engineer sat down to write up a feature in a simple format that even a marketer could understand.

Technical companies love to compete with one another by making lists of features longer and longer with each product revision.  The only problem with this kind of competition, is that it forgets the customer.  For example, I have no idea what sharepoint does besides share a folder.  I know it must be something more.  But I’m not a big Microsoft user, and I’ve never seen an explanation in plain English.  Notables attempt to bridge the feature-customer gap via the shortest possible plain English explanation.

Writing a technology notable is a test.  A test of whether you know who your customer is, and how they should benefit from the feature you are writing about.  A notable author is a paradigm pioneer.  A paradigm pioneer is someone who simulates the customer and new feature in their mind.  I’ve included the 1998 Moper 320 Usage Notable here so that you can get a feel for the format

HP, I’m pretty sure that this is OK to show to the outside world since we in Mopy/Copy handed notables out to any customer who was interested without a non-disclosure agreement.  The word file for the Usage notable is available here.

Figure 1 (Page 1)

Figure 2 (Page 2)

Now usage measurement seems at first blush to be a boring and dry subject.  But, in writing this notable, I learned valuable customer facts like:

• In a law firm using Equitrac page accounting, I learned that there was a systematic error in the pages counted by mechanical click meters.  The pages printed and faxed, the pages of paper put into the system, do not match.
• In doing the simple math of toner cost estimation, I learned that a 100% black page on a printer cost $0.18.  The paper is half a cent, and a 5% coverage of toner costs $0.009.  This little fact has a big economic implication.  The big implication is that toner = risk for companies selling pay for page programs.  A $0.05 per page program loses money at a coverage over 22%!
• Page counting can be done two ways: based on paper or based on pages written to the photo sensitive drum.  Of the two methods, because the leverage of toner cost per page is so much higher than the leverage of paper cost, measuring the pages written to the drum is economically superior.

So, in the process of trying to explain usage measurement, I began to build up a good understanding of customer page accounting economics.   The economic picture of HP’s usage measurement was that it was superior because it allowed customers (who for the Mopier 320 were copier dealers selling on a Pay Per Page basis) to measure and therefore, control their toner risk.

This was the point of clear superiority around which the usage notable wrapped off-the scale enthusiasm.  This technology notable received enthusiastic “Thank you!” voice mails from product managers, field sales people, customers, and twice, from sales people who had succeeded in killing a competitor by reading the notable before meeting with a customer.

Killing competitive sales is about the highest praise a notable can receive.  Almost as high as closing a sale.  Best of all worlds is to kill a competitor sale and close a sale for your own product, at the same time.  Turning a loss into a win is what technology notables are all about, and they accomplish this by picking the most important aspect of a feature’s superior value to a customer, and then wrapping that superiority in off-the scale enthusiasm.

Technology Notables: 4 Lessons

1. There is nothing a marketer can do that is more powerful than marrying a genuine point of technical superiority, to off-the scale enthusiasm.
2. Even people who don’t like you, will be glad to accept your work, if you close sales.
3. Technology notables are great tools for product evangelism.
4. Don’t write notables about every feature.  Write them about features that are high-value and low-understanding.

What is an Intellectual Property Strategy?

by:
Bill Meade, Ph.D.
President
Basic Intellectual Property Management, Inc.
twitter @billmeade
bill@basicip.com
+1-208-585-1044

Introduction:

Intellectual property (IP) is as complicated as a gothic cathedral … and can be more expensive.  The complexity of IP is such that if you do not manage your IP, it will manage itself.  Now, autopilot can be a fine way to manage IP if your industry is stagnant, competitors are few, and your company is lucky.  But if you work in an industry with growing competition, changing rules, threats from new technologies, and increasing pressure on margins, autopilot is effectively, no pilot.

The purpose of this article is to reduce the Gothic cathedral of IP strategy, to the answers to 6 questions that package IP strategy, and put a handle on it so that standard strengths-weakness-opportunities-threats strategic management can be applied to IP management.

Question #1: “Who is our IP reference group?”

For example, think about the display industry.  If you were an IP manager in one of the companies competing in the US display market, how would you decide how many patents you need to generate?  How many do you need to license from?  License to?

Wow!   Hard questions.  Easy to make wrong decisions.  Particularly if you’ve just been hired as an display industry IP manager.  Everybody knows “Samsung is big” but what exactly does being “big” have to do with developing a viable long term IP strategy in the display industry?

Figure 1 – Estimated Display Patents by Year Source: www.delphion.com

Defining the reference group answers a lot of these questions.  Figure 1 displays the past 20 years of patent history of large display companies.

Samsung, Sharp, and Sony display patents were raked out of the total patents for those companies by searing for only patents that included “lcd, screen, display, and plasma” somewhere in the patent.  Display patents for Samsung and Sharp are indicated by the name with an asterisk at the end: Samsung*, Sharp*, and Sony*.  Patents for Chi Mei, Innolux, and Toppoly have been added together and titled “Chi MEI+I+T”.

Picking the correct IP reference group of companies, will set you on a course to preempt litigation, set management expectations for investment, and set the IP manager up with a long-term goals to execute against.  The more you know about the deep competences and aspiration of your company, the more wisely you can range in a profitable and practical IP plan once your reference group is defined.

Question #2: “What is our role in our reference group?”

Once you know your reference group, you do what we call “simple math” analysis and portfolio management answers start falling out.   For example, the display industry patenting, because the industry has become so concentrated, is what we call a “king, prince, serf” distribution.  Samsung and Sony are kings.  Sharp is the prince.  And the serfs are LG Display, AU Optronics, and Chi MEI+I+T.  The first law of IP management is “don’t piss off the kings.”

Of the 422 patent litigations that Samsung is currently involved in (Source: www.innography.com), there are 32 cases where Samsung is suing, the rest Samsung is being sued. Wait, what?  32/422 = 7.6% of the cases Samsung is involved in, it is asserting. Of the 710 cases that Sony is involved in, 20/710=2.8% are cases Sony is initiating.  First rule of display IP management is to stay out of Samsung’s 7.6% and Sony’s 2.8%.  With a display portfolio of  nearly 13,000 patents (Figure 2), and a total patent portfolio of approximately 33,500 US patents, Samsung is one company that can grind you to dust, and Sony has even more patents.  The statistics though say, that unless you do something horribly wrong, kings are unlikely to come after you (only 1 in 13 of Samsung’s litigation cases are assertions, 1 in 35 for Sony!).

Sharp, as a prince, has enough patents (Sharp is approximately at steady state portfolio of 6000 patents.  About the same number of Sharp patents expire every year, as are captured.) that it can’t be forced from the display market because of “nuclear IP” logic.

Figure 2 – Annual Estimated Display Portfolios Source: www.delphion.com

Nuclear logic is that even though Samsung has 13,500 and Sharp has 6,000 patents.  Each company has a big enough pile of patents that if both companies got into an all out patent litigation war, each company has enough IP to blow up both companies.  Just 1 patent and 1 injunction on shipping your best selling product, and you are in a world of hurt.  Somewhere in a 6,000 patent portfolio is a patent that will kill Samsung’s best seller.  Both Sharp and Samsung know this and manage their relations to avoid an all out patent war.

LG Display is a serf that is becoming a prince by aggressively growing its patent portfolio.  But serfs in any industry patent structure are essentially free riders.  We call the serfs “raiders” because their IP management is all about just staying in the game and running production full blast to tear off big blocks of sales from the king’s market.   An example in the TV industry might be VIZIO which, when sued by Sony in 2009 (after passing Sony in US sales) bought a patent from Motorola and counter asserted the patent to win a cross license with Sony.  All in less than 6 months!

Look again at Figure 1, for IP strategy role changes.  Industry insiders who know the internal pressures and crises of each of these companies, will be able to tell a story from the variations in the patent data.  But my point for this article is that even as an industry outsider, you can see stories and make conclusions about what roles each auto company has chosen to play and when those roles change.    What happened with Samsung* in 2005?  Something changed there.  Samsung went from being a king, to being a king with a nearly unlimited arms development program.

I think what was going on was that Samsung around 2004 realized that if it was going to get out of being the world’s largest payer of patent licenses, it would need to pass IBM in patenting.  The display group seems to have led that as display patents spiked upwards in 2005, and total Samsung total patents took off in 2006 (Figure 3).  Sony in the same time period is on a gradual rate of increase.

Figure 3 – Total US Patents By Year Source: www.delphion.com

An IP manager needs to know a tremendous amount about their company in order to isolate the IP strategy role most appropriate for that company.  Much as Steve Fox, the brilliant long-time associate general counsel for IP at HP, set HP’s IP strategy based on long experience, knowing Bill Hewlett and David Packard personally, and having deep experience with HP as it grew.  This IP strategy changed when Carly Fiorina became HP’s CEO and then it changed again when Mark Hurd took over the top job.

IP managers need to study senior management, then predict what the right strategy will be for the future, then concept-test the IP strategy on senior management early and often.  Then, concept-test the strategy on the board of directors, and anyone else who will listen inside the company.  Everyone in a company has an opinion about IP.  They may not even know what IP is, but still, opinions come for free and in large volume.  When defining the role played in the past, the role needed in the future, the IP manager will have no trouble having management interested if plain English is used.

Question #3: What is the core IP business model?

What is an IP business model? Simple, how IP pays for itself. There are at least 8 ways that companies justify the investment in IP (Figure 4). Each company has to pick 1 or at most 2 business models as the main way(s) it will generate returns from IP. The reason is that IP is so underfunded in most companies, that even 1 just 1 business model, most companies are unable to drive their IP strategy through monetization.  If your IP team does not have the required infrastructure to implement an IP business model, then that model is not for you (see Question #5 below).  Business models and means to them, must match to have a viable IP strategy.

The exception to the 1 company, 1 (or at most 2) business model rule is IBM.  IBM is renowned for capturing revenue from outbound patent licenses.  But this is far from the only way IBM funds its IP management program.  Because IBM has the largest number of issued patents over the past 2 decades IBM also benefits from reducing patent litigation.

Figure 4 – 8 Basic Ways IP Pays for Itself

How do patents reduce litigation?  Why would anyone practicing in any business sue IBM when there are 50,000 degrees of freedom (see Figure 5 2009 for IBM) in IBM’s ability to make your life miserable?  IBM could sue you in the US, in China, in Japan.  Their patent portfolio sends a potent message to companies contemplating suing it for patent infringement: “Bring it on.”   In addition to inbound license revenue, and reduced litigation, IBM benefits from having design freedom.

Design freedom is a fruit of core companies in an oligopoly, cross licensing one another.  Numerical example: Imagine 5 companies in an industry, each having 20 patents.  Further, imagine all 5 companies have cross-licensed one another to all 100 patents.  So for the 20 patent investment, each company has the ability to avoid 100 patents worth of protected ideas.  That is, each of the 5 companies can practice its own inventions, and the inventions of all 4 of its peer companies without fear of patent litigation.

Figure 5 – Total US Patent Portfolios Source: www.delphion.com

In actual cross licensing practice, it is not uncommon for heavily cross-licensed companies to multipliers of 15 and 20 to 1.  That is, for every patent in one company’s portfolio, that company has access to 15 to 20 patents in other company patent portfolios.

So IBM has at least 3 business models: outbound licensing, litigation reduction, and design freedom. Your IP business model is a simple as an income statement.  The sales is the quantified benefit your company receives from the sum of royalty payments, reduction in litigation costs due to strong portfolio, cross licenses, being obscure enough financially to avoid attention, and to save costs by terminating patent litigation.

Question #4: “What IP portfolio hygiene process do we need?”

IP portfolio hygiene is all about keeping the IP in a company, matched to the requirements for IP.   Matching IP to needs requires a closed loop feedback process that operates much faster than the pace of technical change.  Lead times for patents are so long, if you have a patent-based IP business model, you have to be looking 2, 3, and even 4 years into the future before patent protection can be brought on line.

IP matched to what requirements?  Matched to the reference company patent rates, and the role your company has chosen, the future looking technologies your company needs to own the right to use, as well as competitively preemptive IP.

Portfolio hygiene is much more complex on the inside than it seems from the outside.  For example, most companies don’t have an employee that is fully up to speed on their patent portfolio.  Just reading the portfolio and knowing what technical and business buckets that the patents fall into, is time consuming and difficult.  For example, if you started as Apple’s IP manager, you now have 2,726 patents that you need to understand and mobilize.  HP has 23,500 patents in force in the US and Dell has 1,900.  How do you manage the IP of a company with 10% of the patents in the largest competitor’s portfolio.  Simple really, start reading!!!   Ideally, the IP manager would either have read, or have a staff that has read the own-company patent portfolio.  Then, there should be a process for specifying and updating the IP requirements.  And then, an annual process to match requirements to IP inventory and plan.

The traditional approach to IP management is to get a patent, proof read it and then put in for any typo fixes, then drop it into the portfolio and forget it.  Forget it until the next batch of maintenance fees are due by the patent office.  Maintenance fees?  To keep a utility patent in force fees are due at 3½ years ($930), 7½ years ($2,360) and 11½ years ($3,910) after issuance.

So, in a conventional IP program running on autopilot, the patents with maintenance fees due, are reviewed together in a bundle, and a decision is made whether to pay or drop the patents.  In companies that have not specified the IP that is needed, these are high-risk, no-high-veracity-data decisions.  That is uncomfortable decisions.

Any effort to close the open loop between patent value before deciding on maintenance fees is a huge advance.  For example, simply knowing which patents are used in which products, so that you could get a list of patents not being used to sell them or stop maintaining them.

The one area of patent portfolio hygiene that is fun and relatively easy to manage, is finding impending technologies.  Another name for impending technologies is future looking or competitively preemptive inventions.  IP managers usually know what they want next to bring into the portfolio.  The question is “how” to bring future looking technology into the portfolio.

The 3 basic approaches to bringing new technology in a patent portfolio are: (1) Farming, (2) Crisis management, and (3) IP arbitrage.

1. Farming.

Building up a patent portfolio for example, can be done by farming inventors.  While managing IP for HP’s LaserJet group I learned that the analogy between farming and inventing goes pretty far.  You can generate as much IP as you need at a lot better quality if you:

• target the inventing you want (i.e., buy and plant seed of the species you want to harvest),
• if you train (fertilize),
• have an objective rating process and provide quantitative feedback from idea ratings (remove weeds to prevent competition with good plants),
• if you transfuse massive quantities of enthusiasm to inventors (same as watering, hint if you water the alfalfa, you can get multiple crops per summer!),
• have infrastructure for closed loop feedback between IP team and inventors (equipment and people needed for the land, plants, and weather).

Pushing the farming analogy we were able to light an inventing fire (By the way, thank you Carly for putting “invent” under HP’s logo!) that took HP from 18^th in patenting after the Agilent spin-out, to #6 in US patenting in 2006.

But as farmers know, you don’t have to grow just one crop or farm just one way.  Once you realize that you can farm inventions, you can go for massive quantities of inventions from a few inventors.  You can go for highest quality inventions (but watch out if you do) in future looking areas.  You can have a Bonsai invention farm, an organic invention farm, a genetically engineered invention farm, or any other kind of invention farm you require to meet your company’s IP needs.  Invention farming is not about quantity.  Nor is invention farming about quality.  Invention farming is about matching inventions needed to the company’s IP requirements.

To mobilize your organization’s inventing to meet its needs, it helps to have invention farmers.  Specialists in targeting, refining, and capturing inventions, can bring closed-loop control under the hand of CTOs and IP departments.  While farming inventors at HP we were capturing 2.5 invention disclosures per inventor per workshop.  Now, 10 years later we’re capturing between 6 and 11 invention disclosures per workshop.  While farming isn’t about just numbers, this increase in numbers over time illustrate the gains from specialization.  Invention farming, like real farming is all about profit.  If you have knowledgeable invention farmers, you can maximize your IP profit by matching outputs to requirements.

2. Crisis management.

Often companies find the need for additional IP not by managing their IP portfolio, but instead by an IP crisis engulfing them.  For example being sued.  Once an IP crisis happens, the company will start climbing the IP management learning curve, with management, with lawyers, with outside consultants, all hands bailing wildly.  The good thing about an IP crisis is that the needs for additional IP to manage the situation become crystal clear.  Once the crisis points out the need for IP, the company can like VIZIO mentioned previously, find a killer patent owned by a pedigreed patent holder and then counter assert.  For many companies this will cost tens of millions of dollars, and would pay for an IP farming program and patent program many times over.

I think the most important ‘crack’ between business and legal is a feeling on the business side that legal is running the litigation show and they {the business people} only need to be tangentially involved. This is because the business people know nothing about litigation, are busy running the business and assume that since attorneys are trained in litigating that they would naturally be good at managing a litigation project.

On the other hand, it seems to me that attorneys are trained or think of themselves mostly as advisors.  Therefore they often don’t seem to have the background or training or maybe even inclination to really manage a litigation project.  For that reason they really want the business side to be very closely involved and making all the key decisions.

- Jim Hall LaserJet R&D manager

The biggest problem with managing IP by crisis, is that very little long term learning happens from crises.  Crises bring with them big disconnects between legal and business.  This is the point of Jim Hall’s quote above.

After the crisis, litigators declare victory and move on to the next crisis.  Business managers are just happy to have the situation closed.  Corporate counsel are left burned out and un-thanked.  IP portfolio managers having survived litigation often leave their position, and often, the company.  Matching your IP portfolio to your needs via crises is like treating type 2 diabetes with emergency room visits and no change in diet.  The misfit of this approach is so great, that there always has to be a better way to manage IP than by waiting for crises.  Having survived 3 corporate IP crises, I may be biased.

3. IP arbitrage.

The final opportunity for matching your IP portfolio to your IP requirement is to use a new class of IP arbitrage broker that is emerging.  IP brokers range from order-taking companies, who list everything from A to Z, to “arbitrage sellers” such as Quinn Pacific that specialize in building “sell high” markets for patents.

QP can set up “sell high” transactions (and theoretically, engineer buy-low transactions as well) because they’ve been focused on the display, and touch asset markets for 20 years.  QP knows and is trusted by senior management, so they are able to give patents the best possible exposure to a company’s IP business model managers.  In effect, QP builds a market from scratch for each patent portfolio it sells.  As an arbitrage broker, QP lives from commission, so they have a strong incentive to find as many buyers as possible to get the best price for a seller.  Golden rolodex + 20 years of trust = sell high patent brokering.

Summary:

How are you going to match your IP requirements to your IP inventory?  This is the key question of IP portfolio hygiene.  You need to specify the IP needed.  You need to know the IP you have.  You need to specify the mismatch between IP needed and IP on hand.  The 3 main ways to fill an IP gap are invention farming, crisis management, and patent arbitrage.

Question #5: “What is your IP infrastructure scaling model?”

The first time an IP manager cranks through these IP strategy questions, they inevitably find a mismatch between the IP needed, the IP available, and the budget available to bring needed IP into inventory. Because IP departments are usually cost centers, they rarely have activity-based budgets.

This is a small fact that has huge implications for IP management.  For example, if an IP farming effort doubles the IP flowing into an IP department, the IP budget will not increase to fund the increased work.  IP departments can crank out more work for a year or two, but if management does not bring in the infrastructure to fund work at competitive levels, the department will disappear as migration to more reasonable work loads takes place.  A general counsel friend when challenged about the need for an activity-based IP budget said: “We have no financial problems, we just added a paralegal!”  Denial ain’t just a river in Egypt!

IBM’s IP management again provides an example of how the pros match activity to workload.  IBM reportedly built a patent factory in India to augment the patent drafting capacity of its legal department once management had decided to become #1 in patenting in the US and world.  When you have a dynamic IP generation need, you need to meet the need with economic engineering.  To meet this need the legal department and the management teams need to agree on an infrastructure scaling model.

The idea of infrastructure scaling model is to, over some long run, bring IP requirements together with IP capabilities and inventory.  The default infrastructure scaling model used in industry is what I call “Last Year + 4%”.  Over 30 years, this is a powerful model.  But, in the short run of 3 or 5 years, Last Year +4% can’t move the needle enough to fill IP gaps.  If your IP strategy requires you to take dynamic action, you need to stop and figure out how to fund dynamic change before you initiate the change.

Think of Tesla.  They are entering the auto industry and are tens of thousands of patents behind companies already in the industry.  To buy membership in the main industry it should consider an IP strategy to get to 600 patents (average auto industry patenting in 3 years) per year as soon as possible.  Table 1 shows just the variable costs of scaling up a company’s patenting to 600 patents per year over 4 years (Tesla Motors has 8 patents as of 2/22/2010).

Given how difficult it is to raise money, is it likely that Tesla will have this much capital to invest this quickly?  Only insiders to Tesla have an idea.  If sales takes off, this may be easy.

Table 1 – Example Patent Program Ramping Costs.

But then, if sales take off, Tesla is likely to be seeing demands for cross licensing.  It is hard to get ahead of IP hygiene needs.  Hard to have an IP plan in place to prevent litigation, and then to continue to implement the plan after litigation has engulfed an IP department.

IP strategies are just air and email without an IP infrastructure scaling model.  Infrastructure scaling models are how IP strategies are implemented over meaningful time horizons.  If you need to make a right angle turn at mach 2 without blacking out (as Tesla likely needs) you will need the infrastructure investment to match owned-IP to IP-needed.

Question #6: “Who is our nemesis?”

The last question in defining an IP strategy is who the company’s nemesis is.  Because governments grant and implement patent defenses, having patents gives you business partners whether you want them or not. Business partners like inventors with small improvements on your patents, or patent trolls that game the court system.  Every IP strategy has a nemesis.  For example, IBM’s nemesis is patent trolls.  It is surprising how little IP managers talk about their nemeses given how much we complain about nemeses.  There are no conferences on managing patent trolls, for example.  To complete your initial IP strategy, stop and think about who you have no IP defense against.  Make a list.  Over time you need to manage this list to become shorter and smaller.  But, it will start with too many nemeses.

How does one manage a nemesis?  In court would be one (poor) way.  Breaking bread with them might be another way.  Working jointly on projects with a nemesis might be another way.  Conventional practice is to ignore nemeses and hope they will go away rather than getting creative about how to engage and manage the nemesis.

Article Summary:

To have an IP strategy you need to figure out answers to these 6 questions:

Question #1: “Who is our IP reference group?”

Question #2: “What is our role in our reference group?”

Question #3: What is the core IP business model?

Question #4: “What IP portfolio hygiene process do we need?”

Question #5: “What is your IP infrastructure scaling model?”

Question #6: “Who is our nemesis?”

Table 2 displays my guesstimates as to the 6 IP strategy parameters of 6 companies.  I have no inside knowledge of these companies.  These are my quick thoughts.

Table 2 – Hypothesized IP Strategies

As a homework assignment, take a moment to copy the 6 questions to a new email message.  Then, quickly fill in the guesses at your company’s IP strategy parameters for each of the 6 questions.  Don’t overthink this.  Just take 2 minutes to answer all 6 questions in as few words possible.  Once you have written down a set of answers, try sending the hypothesized strategy email, asking for feedback.

As Francis Bacon said, “Truth will sooner come out from error than from confusion.” So do not worry about being wrong.  My experience with articulating IP strategies is that you will be provided with a lot of help (whether you want it or not) but will not be criticized for articulating IP strategies.

Getting an IP strategy down on paper is a big relief.  Any written IP strategy is better than any unarticulated IP strategy.  Once (even critical) people (lawyers) see the IP management ball moving forward, they will come along side and help.  I think this is because when an organization has an IP strategy on autopilot, it is stressful dealing with IP.  Stressful because when “everybody knows what our IP strategy is” in fact, nobody knows.

Who is BasicIP?

Basic Intellectual Property Management, Inc., or BasicIP is an intellectual property management consulting firm based in Boise Idaho.  We endeavor to be the world’s best at invention capture, trade secret protection, and restarting IP programs.  We do this by being the most experienced, most enthusiastic, most analytical, and best at IP basics.

Bill Meade, Ph.D. President of BasicIP, is the former Patent Portfolio Manager for HP’s LaserJet group where he lit the inventing fire that took HP from 18^th in patenting after Agilent’s spin out, to 6^th in patenting in 2006.  Bill managed the business side of patent litigation for HP in the HP v Xerox lawsuits during the Thoman regime at Xerox.  Bill worked for Jim Hall, father of the LaserJet increasing the quality, quantity, and strategic alignment of inventing with HP’s businesses, and was promoted upon Jim’s retirement, into the legal department where he extended HP’s fantastic IP strategy into day to day use by developing IP business processes.  Bill ran over 200 invention workshops for HP in Boise, around the US, and in Australia, Singapore, India, Germany, France, and the UK.    Bill is not a lawyer, but when you put Bill between a lawyer and your inventors you will hear your lawyer say “Bill, I could never say what you say, but when you say it, the inventors do what I’ve always wanted.”  Bill has 6 issued patents.

Second in command at BasicIP is Bob Sesek.  Bob has a BS and MS in control systems engineering (University of Illinois), experience managing test for space vehicles at Hughes Aircraft, and extensive test experience where Bob as a master test architect when he left HP in 2005.   As a super inventor at HP, Bob generated over 600 completed invention disclosures in his last 4 years (of 10) at HP.  Bob has 38 issued patents (7 solo inventor and 31 co-invented with over 30 people).

But more importantly, Bob is the world’s greatest mentor to inventors.  Bob’s 3 core competences are:

• world-class ability to invent, then take specific inventions understand across applications and then generalize from the specific idea into a patentable architectural control point,
• absolute intellectual fearlessness grounded in a marriage of systems theory with microeconomics, with just a dash of user interface DNA thrown in for good measure,
• an X-ray vision that cuts right through organizational baggage to detect inventing animals even when they hide behind self-doubt or hide under ignorance of their inventing capabilities.

Our business is based on helping inventors and companies create, manage, and leverage useful IP.  If you have any questions we would be delighted to talk to you, just call us on +1-208-412-8080, email us at bob@basicip.com, or check us out at http://www.basicip.com

iphone beta testers needed

Hello beta testers!

The information below is divided into three parts: Welcome, 6 steps to sign up and frequently asked questions.

Welcome
BasicIP Management, Inc. is developing an iPhone application (iCapture! which is short for Invention Capture) for capturing invention ideas. The application will implement a very simple invention disclosure (click here or Invention Disclosure pdf). It is an open question whether people will be able to use this to do full disclosures, or just to start disclosures and then email the disclosure back to their laptop for completion. We’d like you to try the application and let us know what you think.

If you would like to participate in the beta testing of iCapture! all you need to do is to email your iPhone’s device ID which you can copy from iTunes (step by step instructions below). After I have your device ID I’ll email you a file to drag from email and drop on to iTunes. Then all you have to do is to sync iTunes and the iCapture! app will be installed on your iPhone.

If you don’t have time, no problem. Hit delete now. If you do have time, the instructions below will tell you how to copy your device ID and email it to me. If you know of anyone who might be interested in having a voice into an iCapture! application, please feel free to forward this email to them. If you have questions about iCapture!, please give me a call, I’m delighted to tell you about my grandchildren … um … no … talk about what iCapture! is, what iCapture! does, and what iCapture! might be able to do to make the inventing playing field a level, smooth-running, meritocracy.

6 simple steps to sending your device ID!
Thank you for considering helping BasicIP on this project. Here are the 6 simple steps to send your iPhone or iPod Touch device ID:

To send your device ID to a Bill Meade (bill@basicip.com) for testing iCapture!:

1. Launch iTunes.
2. Connect your device to your computer.
3. Select the device in the Devices list.
4. In the Summary pane, click the Serial Number label. It changes to Identifier.
5. Choose Edit > Copy.
6. Email your device identifier to bill@basicip.com

Please include your device name in the email (ex., my iPhone is named BillPhone if you have an iPod Touch the name of that device will be different from your iPhone). After you’ve sent me your device ID, I’ll build up a batch of IDs and email you back the program for you iPhone is about a week. That email will give you the 3 step instructions on how to get iCapture! on your iPhone so you can play with it.

FAQ

Q#1 Why do this?

Profile of Key Personnel

Bill Meade, Ph.D.,President.

Profile

Bill produces results by mobilizing technical and business creativity. Started career as new products manager for materials handling robots at Litton Industries. Conducted primary research with customers to define market requirements. Worked with engineers pecifying software requirements, EE requirements, chemical requirements, industrial engineering and mechanical requirements for mobile robots. Entered grad school for an MBA, recruited by marketing faculty into marketing Ph.D. program. Ph.D. minors in econometrics, statistics, electrical engineering, and evolutionary ecology. Assistant professor, University of Missouri – St. Louis 6 years, taught high-tech marketing, and rest of marketing curriculum.

Discovered the Internet in 1992, Guy Kawasaki in 1994, and Geoffrey Moore in 1996. Moderated Internet discussion lists for every class taught, for Guy Kawasaki on high tech marketing and for Geoffrey Moore on high-tech investing. Beamed through Internet to product manager job at HP’s LaserJet operation in Boise. Moved from new product development into intellectual property management providing business support for 6 gigantic patent lawsuits between HP and Xerox.

Mobilized marketeers, enginerds, scientists, expert witnesses, public relation people, and managed these to support litigators. Played catalyst role in bringing HP/Xerox litigation to a close with a flanking tactic. Pushed the envelope in HP of quantifying IP for cross-license negotiations. Lit the fire of inventing that took HP from #18 in US patenting to #3. Conducted 200+ invention workshops for HP in the US and in 6 other countries.

Developed business processes to embrace and extend legal policies for inventing, paying incentives to inventors, and reporting invention to HP management. Left HP and started successful intellectual property consulting firm.

Experience

2001-present President, Basic Intellectual Property Management, Inc., Eagle, ID

1998-2001 Intellectual Property Portfolio Manager, Hewlett-Packard, Boise ID

1997-1998 Product Manager, Hewlett-Packard, Boise ID

1991-1997 Assistant Professor of Marketing, University of Missouri, St. Louis, MO

1986-1991 Graduate Student, Michigan State University, East Lansing, MI

1982-1985 New Product Manager, Litton Unit Handling Systems, Zeeland, MI

Education

• Ph.D. Marketing (1992) minors in econometrics, statistics, electrical engineering, evolutionary ecology. Thesis on “cola payola” measuring competition among soft drink brands and bottlers.
• MBA Marketing 1986.
• BA Finance 1981

Skills

• Defining business processes to embrace and extend legal policies
• Modifying legal policies to embrace and extend business strategies
• Defining and executing strategies to out-flank legal competitors
• Pushing “just enough” in a corporate culture to embed inventing as a character trait
• Project managing litigators, business people, IP attorneys, and technical experts
• Number crunching measure development, statistics, econometrics, technical graphics
• Telling the truth regardless of personal cost

Patents

4 issued US patents, 11 pending US patents.