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The evolution of IP in high-growth companies

Dr. Lamia Baker / February 26, 2021
The evolution of IP in high-growth companies

High-growth inventions based on IP are likely to come from expert inventors who operate within a structure for research and development, whether as a large company, as a small or medium-sized enterprise, or as a research specialist. Such companies or institutions can receive hundreds of invention submissions a year.

Typically, due to budget submissions, not all of them can be protected by a patent or a utility model. An internal IP office typically receives these invention submissions and, following analysis, decides which to protect and which to abandon.

A patent-based IP asset evolves through three phases: from invention to patent to commercialization. In this paper, the journey starts with the invention's inception and the choice of which submissions to protect. The drafting of a patent follows and hopefully ends with its grant. Commercialization is the final phase and includes the monetary exploitation of the patent.

It is worth noting that some patent owners, such as high-tech start-ups, embark on the commercialization journey before obtaining a granted patent, using patent applications in their business plan to gain external funding. High-growth IP continues to be an important topic within the IP ecosystem, fuelled by the continuous growth of the number of patents in high-tech industries worldwide.

This article is an abridged version of a book chapter published by the author in "Winning with IP: Managing high-growth intellectual property," Novaro Publishing, January 2021. 

Download the full version of the chapter

The invention journey

Most IP teams within companies follow a selection process to determine which inventions to protect. A typical process can include two types of analysis: IP and business, which are both uncorrelated and address a complementary element of the invention.

IP analysis

The IP analysis is there to establish if the invention is patentable. We would expect from such an analysis a binary outcome. The IP analysis primarily includes a prior art search. This search looks at identifying if the invention is novel, not obvious and commercially applicable, and hence fulfilling the key criteria for filing a patent application with a strong chance of reaching a grant status. Prior art searches have evolved from being paper based a few decades ago to using digital solutions. The digital solutions currently include Boolean searches using key patent databases. Although effective, these searches tend to require expert knowledge and are time consuming. We are now seeing on the market new types of digital solutions based on machine learning (often branded as AI). These rely on entirely different search principles but have the advantage of being revolutionarily faster.

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When deciding whether to patent an invention, certain companies may choose to consider a net IP budget. In all cases, some form of portfolio management is nearly always needed.

Whichever method is used to establish whether the invention is novel, it can be useful to attribute an IP Strength Index (IPSI) of high, medium or low for each invention. A high IPSI would refer to an invention with little, if any, prior art. Conversely, a low IPSI would imply a substantial number of prior arts affecting the novelty or the obviousness of the invention. Such an index can be useful when taken in conjunction with the business analysis, although it doesn't take into account the industrial applicability of the invention, which will vary by jurisdiction: software, as an example, can easily be patented in Australia, but not so easily in Europe.

It should be noted that if an invention has a high IPSI and is thus deemed patentable, it doesn't imply that the owner will indeed protect it. Further analysis, looking at the business case for the invention is then needed to align such a decision with the internal IP strategy.

Business analysis

In making a business case, an analyst first needs to understand what the hypothetical patent application covers. As an example, certain inventions are incremental, adding novel features to existing technologies; other inventions are entirely novel in their approach to fundamental aspects. Regardless of the breadth of the invention, a market analysis can help establish its business relevance.

In the case of an invention falling under existing products, the analyst may look at its impact on today's markets and estimate the potential for growth. In the case of an entirely new market, this exercise can be harder to complete, mainly due to the lack of market data. The analyst would then need to list a number of assumptions in order to establish an addressable market. In all cases, the invention should be attributed a Business Case Strength Index (BCSI), also ranking from high, medium to low.

Should I patent this invention?

After the completion of the IP and business analyses, the IP office is well placed to make a decision on whether or not to patent an invention.

Generally speaking, the business case overrules the IP case, as, after all, patents are there to fulfil a business opportunity. In addition to the IP and business analyses, companies will have other criteria that fall into the decision mix of whether to file an application or not. One prominent factor is the IP patent budget. If it is more or less fixed year on year, and the company is filing patent applications on an annual basis, the patent portfolio will then need to be managed and trimmed so as to fit within budget. In the fortunate event where the IP budget is growing with the IP portfolio, then such decisions become less critical. Read more in the full version of the chapter, which can be downloaded here