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IP Regime for Designer/Innovator in Knowledge Economy

Navneet Bhushan

(navneet.bhushan@crafitti.com)

Crafitti Consulting (www.crafitti.com)

New Delhi, March 13, 2010

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March 21, 2010 2© Crafitti Consulting Private Ltd.

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March 21, 2010 3© Crafitti Consulting Private Ltd.

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The Other Side - Non-Sensible

March 21, 2010 © Crafitti Consulting Private Ltd.

4

There are Many Patents Granted by Patent Offices that can only be called absurd

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March 21, 2010 5© Crafitti Consulting Private Ltd.

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March 21, 2010 6© Crafitti Consulting Private Ltd.

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March 21, 2010 7© Crafitti Consulting Private Ltd.

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March 21, 2010 8© Crafitti Consulting Private Ltd.

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March 21, 2010 9© Crafitti Consulting Private Ltd.

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Topics in the Theory of Design

March 21, 2010 10© Crafitti Consulting Private Ltd.

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March 21, 2010 11© Crafitti Consulting Private Ltd.

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Black Swan – The impact of the highly improbable

• “I cannot accept a pretense of science. I much prefer a sophisticated craft, focused on tricks, to a failed science looking for certainties” Nassim Nicholas Taleb

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Competitive Advantage- Over Ages

Time

Ex

tent of

Connec

tednes

s

How much of

Agricultural

land and

Natural

Resources

How much

can be

produced

How much

and Quickly

can be

Informed

How much

Actionable

Knowledge

How Fast

Innovate

How Fast

Co-Create

In the Connected Age –Co-Creators will thrive

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IDEAS…. The new world of Ideas

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Practice of Open Innovation (The P&G Case)

Source: Larry Huston & Nabil Sakkab, Connect And Develop – Inside Procter & Gamble’s New Model for Innovation, Harvard Business Review, March 2006

Connect and Develop

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P&G Connect and Develop

The Complete Picture

What to Search

How & Where to Search

Evaluate Ideas

Go To Market

$$

Source: Larry Huston & Nabil Sakkab, Connect And Develop –Inside Procter & Gamble’s New Model for Innovation, Harvard

Business Review, March 2006

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Open Innovation Processes • Uncertain

• Wasteful/Inefficient/Non-

flowing

• Unpredictable/Stochastic

• Is it possible to craft

an open innovation

process to be LEAN?

• Is it possible to craft

an open innovation

process to be

INNOVATIVE?

TRIZ Embedded

Lean Open

Innovation

Network

TRIZ

Lean

Six

Thinking

HatsAHP

DSM

Innovation

CraftingOpen

Innovation

Idea ProductivityIdea Hit Ratio

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March 21, 2010 18© Crafitti Consulting Private Ltd.

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March 21, 2010 19© Crafitti Consulting Private Ltd.

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March 21, 2010 20© Crafitti Consulting Private Ltd.

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Failures/Mistakes/Errors

Burning your hand is a small price to pay for a good idea.

PLEASE LET YOUR EMPLOYEES FAIL!

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© CRAFI

CONCEPTUAL SOLUTION: GLOBAL ENTERPRISE AS A SOCIAL

SYSTEM

The Tipping Point

that refers to the moment when something unusual becomes common. The book seeks to explain "social epidemics",

or sudden and often chaotic changes from one state to another. (Wikipedia)

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© CRAFITTI CONSULTING

Three types of people create Idea Tipping Points

Connectors are those with wide social circles.

Mavens are knowledgeable people.

Salesmen are charismatic people with powerful

negotiation skills. They exert "soft" influence rather

than forceful power.

The PROCESS of TIPPING POINTS

The Law of the Few: Find out Connectors, Mavens and Salesmen – a

few of these is what one idea needs to become an epidemic

Stickiness: Ideas or products found attractive or interesting by others

will grow exponentially for some time.

The Power of Context: Human behavior is strongly influenced by

external variables of context.

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TRIZ - Theory of

Inventive Problem Solving

HOW TO INVENT, UNDERSTAND and SOLVE PROBLEMS – How to Innovate

LIST – INVENTIVE THINKING

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TRIZ – Inventive Problem Solving by Altshuller

Teoriya Resheniya Izobreatatelskikh Zadatch• 1946 Patent Officer

in Russian Navy

• Discovered patterns in patents, published paper. Sent to Gulag

• 1954 released, analysed 2,500,000 patents

• Identified what makes a successful patent

• 1956-1985 TRIZ formulated

A Brief History of TRIZ

World’s best ideas

in this situation

(Access)

A situation like mine

(Abstraction)Access

World Knowledge

Base

Abstraction

My specific solutionMy specific situation

Specific

Me / my companyEvaluate

• Same Problems and Solutions appear again and again but in different industries

• There are a series of recognizable Technological Evolution paths for all industries

• Innovative solutions used theories outside their own area/industry

• The most powerful solutions uncover and eliminate contradictions

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5 Levels of Inventions

March 21, 2010 © Crafitti Consulting Private Ltd.26

• Pioneering Invention – based on newly discovered phenomenon

• Pushing existing technology to a higher level

• RevolutionaryLevel 5 (<0.3%)

• New System Developed

• Interdisciplinary solutions

• Replacing old technology with NewLevel 4 (< 4%)

• Radical change or elimination of one principal system component

• One Engineering Discipline

• Resolution of a physical contradictionLevel 3 (19%)

• Slight Modification of the system

• Knowledge from different areas within the industry

• Resolution of a technical contradictionLevel 2 (45%)

• A simple improvement

• Knowledge within the trade

• No system conflicts are resolvedLevel 1 (32%)

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Patent Benchmarking Competitor’s Patents to TRIZ Lines of System Evolution

Case Study: Technological Alternatives Study on EP0922744

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PASSION ….. Is the new Skill for the New World …

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Define Global Trends and Scenarios

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Red Ocean Versus Blue Ocean Startegy

In the red ocean, differentiation costs because firms compete with the same best-practice principle. Here, the strategic choices for firms are to pursue either differentiation or low cost. In the reconstructionist world, however, the strategic aim is to create new best-practice rules by breaking the existing value-cost trade-off and thereby creating blue ocean.

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space. Create uncontested market space.

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of a firm’s

activities with its strategic choice

of differentiation or low cost.

Align the whole system of a firm’s

activities in pursuit of

differentiation and low cost.

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Future Directed Patent Strategy Elements

Link business Strategy with IP Strategy through Balanced Score Cards

Are we playing in the Red Ocean or are we creating Blue Oceans? How can you create Blue Oceans and Protect these as well.

Define Global Trends and Scenarios

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SETTING UP AN IP CELLHIGH LEVEL PROCESS MAPS

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An IP Cell Vision

Document

Training

Needs

IP Asset Management System Needs

Gap Analysis Report

GA

P A

nal

ysis

Su

rvey

Des

ign

Tra

inin

g M

ater

ial

and

sc

hed

ule

Buy COTS? Build? Integrate Disparate

systems?

Hig

h L

evel

org

aniz

atio

nal

str

uct

ure

of

IP

Cel

l/ P

roce

sses

/Sys

tem

s/ S

trat

egy

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IDEATIONHIGH LEVEL PROCESS MAPS

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Business Strategy

Competitor’s Patent

Portfolio

Pate

nt

Des

ign

Aro

un

d P

roce

ss

Direction Setting (Technology

Fields, Patent Portfolios, Target Geographies)

IDEASR&D

Processes

Patent Watch

Patent Strategy

Competitor’s Patent/

Products

Idea

Gen

erat

ion

Pro

cess

es

Pate

nt

Lan

dsc

apes

/ W

hit

e Sp

ace

An

alys

is

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FROM IDEA TO PATENT HIGH LEVEL PROCESS MAPS

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Invention Disclosure

Idea

Patent/Trade Secret/

Publication?

Prior Art Search?

Mak

ing

Inve

nti

on

Pa

ten

tab

le/

Stro

nge

r

Claims Drafting

Application

Received

Patentability

Assessment

Valuation?/ FTO?

Filin

g St

rate

gy

App Drafting

Patentability

Assessment

Office

Actions

Patent

Grant

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CommercializationHIGH LEVEL PROCESS MAPS

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Active Infringement Study

Patent/ Product with Patent protection

Negotiation Strategy/

Agreements

Cross Licensing

Patent Sale

Exclusive Licensing

Licensing Opportuniti

es Study

Licensing

Valuation Study

Re-Assignm

ent

Legal Actions

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CREATING WEALTH ……..

• The Ongoing Wealth Revolution

• Explosion of Prosuming – The unpaid work all of us do

• Wealth System – Money economy enmeshed with Prosumer economy

• The Ancient Wisdom – wealth beyond barest self-sufficiency is UN-NATURAL (Aristotle)

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March 21, 2010 42© Crafitti Consulting Private Ltd.

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March 21, 2010 43© Crafitti Consulting Private Ltd.

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Value of a patent

March 21, 2010 44© Crafitti Consulting Private Limited

How much is my patent worth?

It is a question that needs a multipronged approach

As an entrepreneur you want a patent that has a high value

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Crafitti Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent

March 21, 2010 © Crafitt

45

Current State of the Patent/

Patent Value Indicators

Citations

backward/

forward

Maintenance

levels/ Legal

Status

Technical

Description

Family

Size

Claims

Length/Breadth

Remaining

Life

Assessing the Patent Using Theory of Inventive Problem

Solving (TRIZ) – A Unique Proposition

TRIZ Level of Invention 77% of inventions are at Level 1 or 2, 19% at Level 3, 4% at Level 4 less than < 0.3% at Level 5, Higher Level means higher Valuation

TRIZ Laws of Evolution9 Laws have been identified. Based on the position of patent on each of these laws it is possible to ascertain the strength of the patent

TRIZ Function and Resources AnalysisHow does various parts of the invention combine to perform the function and how much resources have been utilized help in understanding the strength of Invention

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Relative Centrality of the Patent in its Ego-Centric Citation Network

March 21, 2010 © Crafitt

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19971996198719851984 2000 2002 2003 2006 2007 2008 2009

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Relative Centrality of the Patent in its Ego-Centric Citation Network

March 21, 2010 © Crafitt

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19971996198719851984 2000 2002 2003 2006 2007 2008 2009

Building the Ego-Centric Citation Network of the Patent

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Relative Importance Index quantifies (using crafitti’s methodology) the centrality of the Patent in its Ego-Centric Citation Network

March 21, 2010 © Crafitt

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19971996198719851984 2000 2002 2003 2006 2007 2008 2009

Relative Importance Index gives a view

of vitality of the patent. If its value is

more than the rest of the patents in its

ego-centric citation network, valuation

should be more

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Relative Centrality of Patent in its “Social” Citation Network – taking a cue from social network analysis

March 21, 2010 © Crafitt

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Relative Social Importance Index gives a view of vitality of the patent in its social network of patents which is formed by connecting all forward and backward citations of patents in its ego

centric citation network. This involves forming the “social” citation network of the Patent, which may large number of patents

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Using the AHP for relative importance of each parameters from multiple experts

March 21, 2010 © Crafitt

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Parameter Relative Importance

Level of Invention 15.0%

Position as per Laws of Evolution 15.0%

Function/ Resource Analysis 15.0%

Citation Network Analysis 15.0%

Maintenance levels/Legal Status 5.0%

Technical Description 10.0%

Claims Length/ Breadth 12.5%

Family Size 12.5%

Total 100%

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Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent

March 21, 2010 © Crafitti Consulting Private Limited

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Current State of the Patent

Future State of the Patent

Historical Factors related to the

invention/Patent

Current State of sub-systems,

components and parts that make-up

the patent

Future State of sub-systems,

components and parts that make-up

the patent

Historical Factors related to

components and sub-systems

PAST PRESENT FUTURE

Current State of Technology, Market

and Competition

Future Scenarios in Technology,

Market and Competition

History of Technology, Market

and Competition

Sub

Sys

tem

Syst

emSu

per

Sys

tem

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Valuation Methods Used (in Practice)

• The Capitalization Approach

March 21, 2010 © Crafitt

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• The Income Approach

• The Cost Approach

• The Market Approach

Valuation using multiple perspectives and multiple

Scenarios works best

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MDMP Valuation

• In each of scenarios (i) that emerge during the valuation study what are thepotential benefits that can accrue from the patent (bi) and the risks (ri)

– Incorporating the Invention in the existing products

– Potential Market Share enhancement

– Using the invention to Invent more adjacent areas

– Does it denies a space to competitor

– Does it enhances the portfolio of the inventor – the synergistic effect

– How easy it is to design around the patent?

– How easy it is to verify the infringement?

• In each of scenarios Value (vi) of Patent will vary within a range based on benefits and risks of the patent loosing its relevance (bi) and (ri)

• Each Scenario also comes with an estimation of likelihood or a probability estimation (pi)

• Overall value V = ∑ pi x vi = ∑ pi x f(bi , ri)

March 21, 2010 © Crafitt

53

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Patent Valuation Methodology

• Is Multi-Dimensional and takes into account multiple perspectives to produce a robust valuation considering multiple futures, current state and past trends

• We combine multiple science based methodologies to come up with the valuation framework

– TRIZ Based Patent Analysis

– Value Network Analysis

– Analytic Hierarchy Process

– Scenario Writing

– Standard Patent Landscaping and Analysis

– Systems Analysis

Multi-Dimensional Multi-Perspective (MDMPTM) Valuation does not produce a single $ number. The methodology gives a sum total of past, current and potential future value that the asset may create in a range of possibilities.

March 21, 2010 © Crafitt

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It is not enuf to be an innovator in the knowledge economy ….

March 21, 2010 55© Crafitti Consulting Private Ltd.

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© CRAFITTI CONSULTING

FINAL POINTS

• Complexity is Increasing, Scale is the New Frontier• Deep Knowledge, Expertise may lead to Inertia and restricted viewpoint • New ways of looking at reality are needed• Artful Making, Lean Thinking, TRIZ, Social Computing, Open Innovation, Scenario

Planning needs to be integrated as a framework• We need to design organization as a Learning Enterprise

• Integrated IP Response combining Patents, Design Rights, Trademarks and Copyrights is the need in the new world!

• To Generate Wealth – You have to PROTECT…

• YOU HAVE NO OTHER OPTION BUT to P (NO PUN

INTENDED)

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Crafitti helps craft innovation in multiple contexts.

Your Innovation Think Tank

March 21, 2010© Crafitti Consulting Private Limited 57

Crafitti Consulting

Crafting innovation together . . .

www.crafitti.com

Navneet Bhushan (navneet.bhushan@crafitti.com)