View From The Bridge

In Defense of the Trolls - Part 2

I suspect a few of you have either unsubscribed or are holding your fire... My efforts to put chum in the water with Part 1 have failed to evoke a single comment from the millions of subscribers to this blog. Stunning. Truly stunning. And a rebuke to the interactive future of all things blog...

But perhaps it's just that those who wanted to comment knew I was setting them up. So that's what I'll think -- you're too smart to be suckered in. Yep, Part 1 was a bit of a stage creation where all patents are created equal. Where all patents are GOOD patents. You've impressed me by not falling for my crass attempts and remaining silent.

In the silence, a point has been scored for the distinction between trolls and patents themselves. For this is the forest that is missed in the trees of frustration around the trolls' behavior. For I would posit that the troll that angers us is really a scapegoat for the property around which headlines have been made. Is the patent truly an invention? Is the patent an obvious (albeit enabling) tech for a complex computer/network/software system architecture and part of hundreds (thousands?) of aggregated improvements or is it a single, standalone god-like advance? Is it Internet software that moves at the speed of light or is it life saving or tremendously value enhancing novel insight that no one had done before and creates the foundation of dramatic societal/technological/economic advance?

It is this question that I fear is lost in today's discussion about trolls. Witness the latest CNNMoney article on Myhrvold's venture. The HP guy comes across as an absolute idiot - so you should only license patents that relate to operating businesses you participate in? C'mon! Get a life. You license a patent because someone else can create value where you can't -- that's the whole point dufus. Taken to its logical conclusion, the HP guy is saying that patent licensing has no role -- either practice the invention (and block others) or go home. That's just inane and I hope (and pray) the writer just took him out of context.

But back to the point here, patent litigation is frequently about where someone appropriated all that value creation for themselves. Believe me, I know -- patent lawsuits suck. But all lawsuits suck, so let's not point fingers and say patent lawsuits are really all that different from others. The bigger problem is in how the patents get awarded and the timeframes around them. I'm delighted to see the Supremes taking up the question of obviousness, for I think THIS is a key part of the answer to our current mess. I'm also generally delighted to see the expansion of the definition of prior art given the reality of today's search technology -- again, this is a big step forward (albeit painful in some specific cases near-term as we advance the search ball).

Here's the punchline for the hook I set earlier: the trolls aren't the problem, the way patents are evaluated and issued is the area that needs improvement. I'll come back to that later in the series...

In Defense of the Trolls - Part 1

This is going to be a multi-part post over the next week or two. And I'm taking a bit of a provocative stand for a reason: I'm getting tired of the debate over patent trolls and I think people are missing the forest for the trees... Just last week, our friends in the House had an oversight hearing on "Patent Trolls: Fact or Fiction" and the topic has gotten plenty of press. Let me begin by stating a hypothesis I'm naming "The Game Theory of Patents". My thesis is thus: patents, standing alone as property, can be only two things: threats or insurance. Insurance, in the absence of a risk, is worthless. Therefore, from a value perspective, patents, standing alone as a property right, can only be threats.

The above is a bold assertion, but I believe as you peel the onion you'll see the self-evidence of it (successful contingency lawsuits by patent holding firms, patents pursued solely for the purpose of counterpunching (or nuclear bombs as some think of them, etc.)). I won't belabor this post with a long discourse on the logic thread, as I want to get to my main points.

Point #1: Assuming the above is a truth, as a (pending) patent owner, if you can't make a credible threat, align your patent rights with someone who can.

Point #2: threats can be either business attacks or legal attacks.

Let's first dispose of the case of when products that are covered by the claims in a patent are already in the market. This almost always means a legal attack (or threat thereof). In the absence of a legal attack, business norms and behaviors are not aligned to promote re-apportioning of value streams as the patent is essentially ignored. To re-state, the invention disclosed in the patent is already in the marketplace and the know-how described therein is already known and combined with the means of production to put it on the shelf. Since nothing more is needed from the business perspective, the legal attack is the only road open.

Therefore, in a world where the established market dominant player enters the market, if a small firm/inventor doesn't have resources, a patent troll is the only option. Let's not niggle about the semantics of those who never intend to enter the market anyway (as some have tried to do to distinguish "evil" trolls from the merely impoverished inventors who use contingency law firms to pursue "good" ends). We can debate that argument offline as I think anyone who is consistently good enough to put themselves in the center of future successful products should indeed be handsomely rewarded and furthers the very ends that patents are designed for -- promoting the disclosure and advance of new technologies. And recall my prior comments about Google enabling one to find almost anything now -- the world of new products moves faster because it can move faster... Patents are published and searchable within 18 months of filing...

In sum, I think the world requires some semblance of patent trolls. I think it was right that RIM had to pay a small fortune to NTP to make that case go away. They tried to stomp over a small inventor, could have settled for a small amount and gambled. As much as I don't always like the result, the reality of the market dynamic requires a counterbalance to thievery and trespass, intentional or otherwise...

Google, Tails, Patents, and Trolls

For both of you subscribing to this blog, I'm going to demonstrate that I can transition between almost any two points in the universe in four paragraphs or less (separate post someday on why four paragraphs is my general rule on blog posts). You'll see where I'm going in my next post, but this is the transition post. Mark.

Much has been written about the Long Tail. A year ago (after a glass of wine to keep me honest), I would have said I thought the Long Tail was an interesting theory, but not particularly relevant to new product development in a broad market context where retail distribution and market awareness for offline buyers of physical products was difficult to influence. Silly, shallow me. In fact, I might go so far now as to say that the theory of the Long Tail is a critical component of EIP's philosophy -- we're enabling ideas in the tail (that previously got ignored) to get evaluated. We're breaking down the barriers between concept and execution by greasing the skids of product assessment, validation and transformation.

10 years ago, when Not-Invented-Here (NIH) reigned supreme and product managers were the gods of what made it onto the shelf, the internal R&D/New Product team owned the new product queue, and ideas from outside were in the long tail. They got ignored for all sorts of rationalized good reasons. Now, we're in the 500 channel world of new product development. If you're the CMO at Bigco XYZ, you can look beyond what your internal team is doing, and look into the long tail of new product concepts. You can pull from all sorts of new product development resources -- IDEO, Universities, small companies, competitors, EIP, individual inventors, you name it. And, ultimately, the long tail is going to dwarf the internal ideas in terms of aggregate, qualified idea flow. BOTH will be important, but the long tail is thereby embraced. Yes, this is a different Long Tail than normally thought of, but it's still the same if you think of product concepts as "products to be bought by companies"...

Google accelerates your ability to assess an idea (see prior post). It enables you to search for alternative solutions to an inspired problem/solution set; it enables an informed decision about "how dramatically different is product concept X from what's out there today?" And, fundamentally, it gives one a chance to understand property rights around product concept X -- has it been patented? Has someone solved parts (or the whole) of the implementation of X before? If so, Google enables an accelerated market launch through partnering, licensing or acquiring something that you weren't looking for yesterday but discovered you wanted today.

In some cases, a BigCo is later to the party with product concept X than others were. And by being late, they get all the benefits of being a "fast follower" and learning from the pioneer's mistakes. Sometimes, the pioneer has solved things that become "general knowledge" and sometimes they have solved things that become patented. And, candidly, most times the pioneer is underfunded, poorly managed, and may not be operational; although the heavy thinking has been done and disclosed. And that, dear reader, sets us up nicely for the next post coming soon... Mark. :)

Google me this, Batman

One of the most valuable things in our business is Google. Whether we're searching for competitive information on a new product concept, looking for resources to help us work on a product, or searching patents, Google is ushering in an era of speed and knowledge in new product development that is stunning.

One of the first things we ask inventors who have a product concept they're submitting to us is: Have you Googled it yet? If not, DO SO NOW. Don't waste your time and our time, only to discover that your "greatest thing since sliced bread" has been on the market for 5 years and you can have one shipped to your door by half a dozen e-commerce sites.

One of the next things we ask ourselves is "where does this product fit into the grand scheme of things?" And Google is our resource there too. Whether it's Google finance to explore licensees and their senior management, Googling for technology providers (materials, possible collaboration partners, contract manufacturers, etc.), or most often, Googling to better understand the problem set and what consumers or other researchers have said about the core problem. We even use Google to research the background of the inventor (in one case we had a convicted felon propose an invention!).

Being smart about new product development is easier than ever. But being smart about it can make it harder than ever, for being blissfully ignorant is no longer a luxury afforded by a highly competitive marketplace. Sometimes seeing how high a mountain is with perfect clarity can be daunting. But sometimes, every so often, perfect clarity can show a mountain pass that is quite scalable, gorgeous, and may even contain a huge vein of gold.

As a free market fan, with a corresponding belief that perfect information makes for efficient markets, the role of the GOOG in changing the speed and quality of new product introduction is incredibly exciting...