R&D Game Types

When looking at the questions to be answered and elements to be included in a IP Strategy in the section above, it is somewhat overwhelming. To make creation of an IP Strategy somewhat easier, the way various industries utilize R&D and IP to create and sustain an advantaged business position can be leveraged to make IP Strategy formulation much simpler. This is accomplished by using a model of R&D Game Types that was developed by Dr. Roger Miller as part of an Industrial Research Institute’s Research on Research subcommittee on innovation. The eleven R&D Game Types related to industry sectors that compete in similar environments and typically focus their innovation methods on one class of innovation. The “R&D Game Types” figure is an adaptation of the original grid.

The key elements of this grid are in the segmentations along the two axes. The columns relate to the time it takes to create a working prototype of the new product or service from a technical standpoint. Where it takes a long time to develop a prototype, R&D is resourced, managed and leveraged for the scientific insight it is creating. This is often includes the use of a government laboratory or university partner. On the other end of this scale, where it takes a shorter time to create prototypes, because they exist in other industries or are straight-forward from a science and engineering standpoint to conceive, R&D is managed and leveraged more like typical technical service organizations.

For the rows of this matrix, the segmentation is based on the factors that affect time to market once a prototype has been created. These vary from long timeframes, because of government requirements for lengthy approval processes, to shorter times wherein it is just a matter of being sure the product prototype is refined to be something a customer quickly recognizes as desirable. Again, R&D is resourced, managed and leveraged differently depending on what timescale is needed. For industries that require government approval, R&D must contain individuals familiar with submitting the required documentation and test results. For industries that are driven by specification standards, R&D must have individuals capable of advocating their solution as the most appropriate. The R&D funding must be consistent with these various activities and timelines for bringing products to market.

Attributes of IP Landscapes Best Suited for Each R&D Game

What the Industrial Research Institute’s subcommittee on innovation found was that personnel backgrounds, training, aptitudes, and reward schemes varied by R&D game. Likewise the subcommittee also found that R&D strategic planning, project selection, project management, and metrics also varied consistent with the R&D Game Type. Such insight improved the guidance available to R&D managers. It was also found that best practices to create and manage IP vary by time to prototype and time to commercialize. Thus, a set of ideal IP strategies and environments for various industry sectors emerged when the best practices of IP management and licensing success was tabulated on the same segmentation axes as the “R&D Game Types” figure. Environments unique to the use and licensing of IP were related to the kind of business and innovation environment that existed in each industry. The resulting IP Strategy concepts are presented in the “Attributes of IP Landscapes Best Suited for Each R&D Game” Figure. This Figure highlights proposed attributes of an IP landscape best suited for each theoretical R&D game type.

The columns of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure contain the eleven R&D Game Types of the “R&D Game Types” figure. The rows of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure contain attributes a company would wish to find, or create for itself in the ideal or desired IP environment in order to obtain the most value from its investment in invention and innovation. There are fifteen such attributes that typically affect IP strategic planning, negotiation, and return on investment. Before explaining the elements of the table a few of these rows require some definition.

The first row is the overall patent density in a field. A patent “desert” is defined as a field in which there are tens of patent families present. A patent “forest” on the other hand is defined as a field in which many hundreds of patent families are present. Patent “jungles” are areas wherein lots of activity has produced tens of thousands of documents. Not all fields benefit from having the same IP density. Brand new areas of scientific inquiry are ideally devoid of previous IP, allowing the first movers to capture grandfather IP positions that can be later leveraged. This is an economic necessity in order to return the large amounts of money and risk required in such fields. This is typically an area for government, university, and high-risk venture funding of R&D initiatives that are then protected by small numbers of key patents. In contrast are mature areas such as consumer research and marketing. In these fields IP jungles are typically found and desirable. This situation occurs because both companies and individuals alike find it easy to create new technology in the field. However, when this happens competitors can typically design look-alike products quickly and without much cost or effort. Therefore the usual form of intellectual property protection is trademarked brands as opposed to patents.

The second row of the table relates to innovation and patent growth rates. “Low” growth rates are from zero to 10% change per year. “Moderate” growth rates are usually steady growth at between 20% and 80% per year. “High” growth rates are characterized by exponential growth increasing multiple times per year.

The third row in the table is characterized by the typical number of intellectual property holders. This can range from one entity as in the case of some very unique gadgets, to a large number of entities running in the tens to even a few hundred. In between this range “few” intellectual property holders is usually on the order of three to 10, “modest” numbers of holders run between 10 to 50.

The next row deals with the minimum position usually required for commercial participation in a field. This can range meeting to be the sole holder in a very competitive pharmaceutical area to merely having percentage of the total portfolio which enables cross licensing positions or participation in standards bodies.

Patent fences are use to describe the citation relationships that exist between a parent patent and the follow-on patents cited by an applicant or the Examiner. This term shows up in the row called self-citation position.

In following row called competitor citation position the characterization as an IP “predator” is used to describe an entity that has over 10% of the citing art. “Sharks” in this context are used to describe entities that have over 30% of the citing art.

In the row entitled portfolio management posture the term “building” is used to describe portfolios that are typically increasing in over 10% per year. In contrast “holding” a portfolio characterizes one in which the portfolio size is essentially flat, or going up / down less than 10% each year. “Pruning” a portfolio describes the action of reducing the portfolio size by abandoning, selling or donating the portfolio at a rate over 10% per year.

Halfway down the list of rows is the row entitled claim quality. “High” quality claims are typified by having over an 80% chance of being held up as valid and enforceable in a litigation proceeding. “Low” quality claims in contrast are those which have less than a 10% chance of being found valid and enforceable in a court of law. “Moderate” claim quality covers the ground in between these two extremes. This rating is important because in some innovation areas litigation is likely and claims are extensively challenged. In other areas the more common practice is to value IP on the basis of the quantity of claims, relying on the extensive number of patents and claims for protection, versus the eloquence of any one claim in particular.

The following row relates to the claims scope for technology and uses. In new evolving technologies and applications were the full breadth and scope of art covered by a patent is not yet known, “broad” coverage refers to claims that easily cover over half dozen different technology and uses. “Narrow” claims by contrast usually cover a single, or at most two, technologies and uses.

The following element, geographic coverage ranges from “broad” where over a hundred different countries may be covered. “Specific” geographic coverage on the other hand is oftentimes limited to a Big 8 or Big 12 countries of interest.

The third of the last row characterizes IP holders’ posture versus infringers. The term “aggressive” in this context refers to a company’s proactive search for other entities that have a possibility of offering products or services that infringe the claims of their IP. “Don’t look” on the other hand refers to a very passive approach on the intellectual property owners’ part wherein the time and expense required to look for infringers does not have a business chance of success in generating an ROI that meets the company’s hurdle rate or target internal rate of return.

The last row refers to non-practicing entities (NPE), patent assertion entities (PAE), or intellectual property aggregators, collectively sometimes called “trolls”. Because of the ROI required for this business model to succeed there has been only one R&D game type which so far has proven to be most attractive to trolls. This is in the area of “Battles for Architecture” found in the center of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure.

Having defined the jargon used in the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure, key elements in each of the 11 R&D game types from a patent standpoint will now be discussed. It is understood that for each of these R&D game types the attributes of the patent landscape are generalizations. They simplify the patent landscape found in these areas for quick, high-quality strategy decisions, though by no means is each and every industry segment represented by exactly these descriptions. It should also be noted that these landscapes are for patents; trademark and copyright landscapes will differ.

In the upper left-hand quadrant of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure, the first R&D game to be discussed is that of “Technology Races”. Recent examples of business areas participating in this R&D game type are biotech, fuel cells, artificial intelligence and nanotechnologies. From a patent standpoint, patents a company wishes to acquire or negotiate for in this area will be patents that fill out their portfolio of IP consistent with the ideal environment described. This ideal portfolio is governed by the fact that it takes a very long time to create a technical prototype because the underlying science for its development is still poorly understood. In fact sometimes the science takes so long to develop that the patents covering the underlying innovations expire before they are applied to products and services of commercial utility. It also reflects the fact that even once the technology or service is brought into existence it takes a very long time and much further work to commercialize the product or service and start earning revenues or profits from it.

For Technology Races, at the time when the companies are first understanding the science underpinning a new field, the patent density that will benefit all parties will be a desert. The field is wide open for grandfather patents to be established and dominate the few other patents in an early landscape that will act as prior art for the work that follows. The patent growth rate should be very high reflecting the incremental and next-generation work that is building on the breakthrough work of this grandfather art. The reason it’s desirable to have a large number of IP holders is that it represents large-scale investment by many universities and government funding agencies, with no one entity holding large positions. Such diversity of noncommercial entities in an early phase speaks well for the potential commercial value that will accrue to the first commercial entities in years to come.

The minimum strategic IP position that a “Technology Races” company would wish to build is: First, having the largest portfolio in the embryonic market. It’s important to build multi-generation patent fences to protect derivative and follow on next-generation or incremental work on associated new applications and uses. Parties to the negotiation must plan to fund and file patents on this derivative and follow-on work in their agreements with one another. There may be potential competitors to the company working in the field so it will be important that no other company have more than a 10% position at the time of the initial Open Innovation negotiations between the parties. The new patent velocity of the licensee should have historically been faster than average when compared to the first non-self citation times of other entities. In other words the licensee has been building the portfolio at a rate faster than others in the field. For this R&D game type patent claim quality must be very high as ultimately, when the field becomes more crowded, the original grandfather art is very likely to be subject to scrutiny and potentially litigation. The claims scope and geographic coverage should be broad because the initial use of the technology may not be well understood at the beginning of the technology and business cycles, so broad claims that allow for derivative work to fall under the grandfather art is important. Also during the Open Innovation negotiations is important that the understanding between the parties be that they will proactively file and defend the patents. They must be vigilant in looking for infringers and when they appear challenge them aggressively.

The next game type is that of “Safety Journeys”. Industries and companies utilizing this R&D game methodology typically include pharmaceutical drugs, medical equipment and aerospace. Although the technical challenges to create prototype products are still formidable these challenges are moderated as the underlying science has become more broadly available. Once a product prototype has been made in the laboratory it still takes a long time for commercialization however. As with Technology Races, government approvals and regulations are often hurdles that slow the commercialization process. The typical IP environment that companies working in this area usually find is a light forest. This is because in addition to academic entities, commercial ventures around the world have often done their first exploration of this new field. Mostly because of the increased amount of activity and the more programmatic approaches that exist, patent growth rates tend to be moderate.

There are still many participants creating IP in the field, so the advantaged IP position the “safety journey” company would like to obtain is: First, to be the sole holder of the “chokepoint” or grandfather patent that holds the low-cost high-performance position versus other technical and manufacturing approaches that may exist. This chokepoint patent should be protected by multi-generation patent fences. As before both competitors and non-competitors that are citing the key chokepoint art should have positions well under 10% of the total citations present. If an entity has a large position, for example that of a “shark” with over 30% of the follow-on citations, there is a good chance that entity has blocked some of the high value commercial routes that a licensee might have wished to have available. Because of the more modest rate of patent velocity present, the activity level by the licensee can be the average of the first non-self citation times present. Since it’s going to be key chokepoint art, the patent claim quality is very important so as to defend against potential litigation. For this type of R&D game the geographic claim coverage can now become more specific as target applications and target countries are typically known by the company, reducing patent portfolio costs. It still remains important that both the licensee and licensor in Open Innovation negotiations in this area understand that aggressive proactive defense against challenging infringers be provided for. Their relative roles and funding contributions for these activities have to be carefully defined in the Open Innovation agreements.

The third intellectual property environment shown in the top row of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure is that associated with “Asset-Based Problem-Solving”. Industries utilizing this R&D game type are typically utility power, gas, petrochemicals, mining, and regulated telecom industries. Distinct from the two previous games that have been discussed, this R&D game requires the shortest time to build a technical prototype. This is because not only is the underlying science is understood but also the underlying engineering principles by which new products or services are created. These particular industries are usually subject to government regulation because of the environmental health and societal interests that are associated with these fields, thus this game is still placed at the top of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure with the other R&D Games requiring the longest time to commercialization once the prototype is ready. Because these fields and the technologies supporting them have been developed over decades, it is not surprising that a forest environment is one that is typically found. Also because of the low R&D investment rates of these industries their innovation and patent growth rates are low. They’re usually typically many patent holders because research institutes and government agencies have all funded multiple incremental improvements to the base technology.

For the “Asset-Based Problem Solving” companies innovation plays a lesser role so the IP position to sustain an advantaged position is: First, a patent position that is about average in terms of its size is usually sufficient. Likewise because most work is incremental it is unusual to find, or need, patent fences. Building them rarely generates a commercial return on the investment. With the lower level of innovation present in the field is not surprising that predators and sharks are few. Many companies find themselves with a patent portfolio larger than they need and thus pruning the portfolio is often the activity associated with intellectual-property management in this area. The probability of litigating art in this area is low and therefore the claim quality and the claims scope is usually set at a low level. Likewise it’s unusual for patent holders to get a return from enforcing or litigating their art so little effort is put into looking for infringers and if infringers are found it is usually the case for participants in this R&D Game to settle out of court or cross license as a way to avoid commercial problems. Open Innovation agreements are difficult to reach in this area mostly because the companies’ intellectual property teams have little experience in negotiating or valuing patents.

This completes the three R&D or innovation game types in industries that have long times to commercialization once prototypes have been developed. We now move to the second set of innovation games are shown in the middle of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure. These R&D games have a medium time to commercialization once prototypes have been created. The rate limiting step for commercialization is usually the adoption of industry standards. These can be formal industry standards that are required by a government, or more typically required by consumer preferences. Underwriter Laboratories (UL) ratings are examples of such standardization. Internet standards such as MPEG3 and others are also examples. Once a prototype product has been made a company must test it to make sure that it meets the applicable industry standards because such compliance is required by the consumer as a condition of purchase of the product or service.

The first “RD&E Tools and Services” game type of this section has the longest time to prototype. Typical industries using this innovation game are drug research and discovery tools, specialty cosmetic research tools, and engineering test equipment. The long time to prototype comes from needing to discover basic scientific principles as a prelude to development of products and services. RD&E tools and services are in the same column as Technology Races because of their time to prototype, but they are in the lower row because they can be commercialized at a much faster rate and do not often have the problem of patents expiring before they become useful. In this field when looking for strategic opportunities it is best to find specific areas in which the intellectual-property density is that of a forest. This is because there are academic and government entities funding breakthrough research in these areas. For any specific commercial opportunity however the typical number of patent holders in the field is few. This is because in many areas the development cycle times require significant investments on the part of the entity bringing it to commercial fruition.

The minimum position in this area for a “RD&E Tools and Services” type company would be to: First, have at least the largest or within 20% of the largest portfolio with knockout or chokepoint patent present in that portfolio. At a minimum single-generation patent fences are desired from the licensor. Potential competitors may be present but there should be no company with over 10% of the citations of key art in the field. It would be desirable to have the licensee filing for patents at a faster than average first non-self citation times. The company should be building, or planning to build, a portfolio with high claim quality and broad geographic coverage. This is important because the geographic reach of the industries using this game model has become worldwide. To protect the significant return on investment in innovation that’s being made it’s important that both the company be aggressive in its enforcement of its patents. They need to proactively defend challenges and ensure that there are no aggregators present in the field.

The next R&D or innovation game in this sequence is called “Battles for Architectures”. Industries utilizing this game theory are typically mass software, computers, Internet and telecom services, networking equipment, and semiconductors. Characteristics of this particular R&D game type are a moderate time to prototype and a moderate time-to-market. This unique blend of characteristics generates high commercial returns on technology investments. The science needed for innovation has already been done so relatively speaking it is simply a matter of applying engineering principles to create rapid prototype products and services. Likewise once prototypes are available it is relatively quick to make sure that they meet evolving industry standards to meet customer expectations as opposed to the longer timeframes typical of government standards. Because of these time frames and lucrative markets many companies invest in innovation. They thoughtfully cover their inventions and innovations with intellectual-property and in particular patents. This creates a jungle environment in many of the industries that utilize this R&D Game type. Patent growth rates are very high, growing exponentially in the newer areas. Entities around the world actively research market trends that are then reported and analyzed in market research reports. This information provokes participation by large numbers of competitors, each with high innovation intensity.

The desirable minimum patent portfolio position for a “Battles for Architectures” company is: First, have within 20% of the average portfolio size in the field. This metric is driven from the need to participate in, if not control standards activities. Patent fences are again imperative to prevent being blocked from introducing incremental products based on original concepts. Because of the product life cycles in these areas usually only a first-generation fence is needed. Competitors are present and often times in fields utilizing the “Battles for Architectures” R&D Game Type it is found that there are trolls, predators and sharks present. Thus in creating strategies it is important to detect the presence of such threats. The desirable company position is that it has brought out new patent applications faster than the average of the first non-competitive citation times. It is likewise important for both the company be committed to building a portfolio in order to protect an advantaged competitive position from often hostile parties. Because of the high returns in this field litigation is many times required to settle differences. This, along with increasing scrutiny by standards bodies, means that claim quality and broad claim scope is usually desired from for the key patents in the large portfolio. As most of these industries are worldwide in nature the geographic coverage should also be broad. Lastly with respect to infringing art, patent holders need to be aggressive and proactively defend against challenges to their position. As trolls are sometimes present it’s also important for IP holders to consider belonging to patent pools to help ward off some of these threats. The “Battles for Architectures” game type has been the one in which cross-licensing has been most prevalent. Also, Open Sourcing, were the derivative work is also shared freely amongst participants, has its genesis in this particular R&D game. This environment has most richly rewarded companies sharing of information and cross-licensing of patents.

The third innovation game in this row “Innovating in Packs”, includes chemical products and polymers, industrial gas products, packaging materials, building materials, and pharmaceutical carriers industries. The time required to create a technical prototype in these fields is lower than the previous two. With the underpinning science and engineering known, most work in this area has been reduced to next-generation and incremental innovation. On the commercialization side, industry standards still govern the introduction of products providing a moderate time-to-market. Companies exploring opportunities in this area will typically find a forest environment. Patent portfolios are growing at a moderate rate and because of the specialty of the individual industries involved there are usually very few patent holders in any one of them. There are usually a Big Three or Big Ten worldwide that have invested continuously in next-generation innovation.

An “Innovating in Packs” company should look for a IP strategy that contains: First, having a portfolio within a standard deviation of the average size. The specialized products and services of this area attract competition and the technology underpinnings for these areas make patents a good vehicle for sustaining an advantaged position. Patent fences of a least one generation are desirable. Competitors are often present but not of concern unless one of them has a position of over 10% of the follow-on citations of the key art. Most companies innovating in this area have systematic new products and technology roadmaps and pipelines. Because these tools are used, steady innovation and new patent applications filed by the company should be at a rate at least as great as the average of the first movers’ self-citation times. Opportunities in this area sometimes exist where patents have been pruned from larger portfolios. This is because often multiple products and services enter the market in similar time frames and only the one with the most advantaged position is worthy of the continued protection from investing in maintaining patents. In areas with incremental technology innovation such as this one, the claim quality can be low and the geographic coverage specific, targeted just in the areas where competitors will manufacture or sell products. Because basic chemical and packaging products in this area are often found at the early steps of a Value Chain, the claim scope should be broad, especially with respect to diverse uses and potential consumer needs. For the few key chokepoint patents the patent holder’s position against infringers should be aggressive assertion and proactive defense of challenges. For most of the portfolios however a moderate level of competitive assessment and follow-up is appropriate. Because most patents are covering incremental innovations that create a small price premium for a few companies, this has not been an R&D Game area where IP aggregators or trolls have found value. From an Open Innovation standpoint this is been a particularly good area for exploring opportunities because the base technologies developed in these fields have such broad applicability.

The last innovation game in this row is “Consumer Research and Marketing”. This is one of the easiest to understand. Example markets and industries are automobile and mass consumer products. It however is one of the most difficult to characterize for intellectual property environments. This is because in the environments described above the characterizations fell mostly into the descriptions provided. However this particular R&D game is bimodal. There are a few key newsworthy chokepoint patents that dominate the industry/press and provide the holder a much advantaged position for short periods of time. These patents fall outside the characterization provided below. Examples of such chokepoint patents are the intermittent windshield wiper for automobiles and the Dell business and manufacturing method patents that protected their start-up company with an initial and sustained advantaged position. Examples such as these are however not the rule. More typical in this area is to find a patent jungle because a large number of inventors worldwide have the expertise and capability to come up with consumer product ideas and implement them. This results in a ripe area for Open Innovation activity, but from an IP standpoint more often than not it will be the know-how and trade secrets that are the subject of Open Innovation discussions as opposed to patents.

The IP strategy for “Consumer Research and Marketing” typically takes into account: Patent filing rates in this area tend to be low and the larger portfolios usually fall into the hands of a few key top competitors. Patent fences are rare as derivative work is protected by trade secret and know how. A key success factor in this market is to intercept or create consumer and market trends versus technical prowess protected by patents. A result is that portfolios are usually pruned quickly. Claim quality is often low, the claims narrow, and the countries covered just the world’s largest markets. With the exception of the newsworthy patents described above it is often found not worth a patent holder’s time and effort to put in place careful screens for infringing art. When art does come up the issue it is often settled with a modest license agreement or cross licensed with the other company. Brand Strategy via Copyrights and Trademarks is often more critical to a sustained advantaged position than patents.

This completes the four R&D or innovation game types for industries that have moderate times to commercialization once prototypes have been developed. The last row of the “Attributes of IP Landscapes Best Suited for Each R&D Game” figure contains four R&D games that have the shortest time to commercialization once a prototype is developed. These games are distinct from those of the previous two rows in that there is no formal review process required for a company to bring a product to market. There are no government regulations per se and no industry standards. The only requirement is that the product hopefully matches the customer’s expectations.

The first R&D game on the left-hand side of in the bottom row relates to “Unique Gadgets”. These can be specialty consumer products like the Gillette Mach 5® razor, Procter & Gamble SpinBrush® toothbrush, or the Fisher-Price Talking Elmo® doll. What is unique about these products is the high scientific content embedded in them. Often times they incorporate technologies that come straight from the science laboratory and are put into high value consumer products where there is very little risk of failure. Examples are new battery technologies, new manufacturing methodologies, or a new computer chip applied to a toy. The patent landscape associated with this game is usually a forest. The growth rate of investment and patent filing is usually a high burst (extremely rapid even compared to exponential growth) to protect the new product application, followed by a lull and very little follow-on and activity as other competitors choose not to enter the market.

Therefore the desired patent position for a “Unique Gadgets” company is: First, that of a sole patent holder dominating the landscape with only a very few, if any, focused patent fences. Because of the rapid movement in this industry there is typically no patent predator or shark present. Once the initial burst of patent activity has taken place the episodic activity dies off and as the product matures pruning the portfolio for lowered costs becomes the norm for portfolio management. Patents are used to discourage competition so claim quality is often low, the claim scope is broad, and geographic coverage specific to the countries in which the application will generate the highest returns. If an infringer does appear, the parties to the negotiations must plan for a very aggressive follow-up. Companies then usually quickly settle or cross license.

“System Design and Consulting” is the name of the next innovation game played in this row of patent environments. It is characterized by a moderate time to prototype as the needed engineering principles must still be developed. It requires only a short time to take the product to market once the prototype has been completed. Industries in this area are typically MIS (management information systems), specialized telecom systems, and enterprise solutions. It is important to distinguish between the time it takes to get the prototype ready to take to market and first sales. The industries that we see here have short times to introduce products to market, but often a long time to first revenue. This is because often times specialized telecom systems and enterprise solutions have a long sales cycle. The prototype is ready for customers but they must fully understand the solution before they are willing to purchase the product. Patent density in these industries is often a patent forest. The innovation and patent growth rates are low but have high bursts of activity that is many times associated with business method patents. The landscape itself usually has many patent holders, each with their own approach to what will bring value to customers.

For “System Design and Consulting” companies the IP advantaged position is: First, the size of portfolios under discussion be within one standard deviation of the average size. Because patents often relate to components versus system-level art, there are few fences found in these fields. Enterprise solution companies tend not to follow one another’s exact designs so there’s typically no predator or shark present after the dominant design has taken hold in the market. Most laggard companies in the industry prune their portfolios to save costs, as price is the only sales point available to these second and third tier parties. For the leaders it’s necessary to have moderate claim quality with the claim scope narrow so that if there is infringement the asserting counsel will be able to easily describe why there is a violation to the judge and jury unfamiliar with patents. Enforcement against infringers early in the market development cycle is a mistake as the most important thing during this portion of the business cycle is to build the market by everyone. Therefore a “don’t look” attitude is often taken until after the chasm described by Geoffrey Moore has been crossed. After, and only after, that point should companies then proactively defend against challenges.

The third R&D game in this row is “High Technology Craft”. Industries using this innovation game methodology include specialty food, ingredients, specialty chemicals, electronic equipment, and industrial controls. In this and the last innovation game, the technical effort needed to create a prototype is low. These are fields where from a technical standpoint it is easy to construct the prototype and quick to bring it to the market. It is also an area where there has traditionally been good collaboration between suppliers and customers. Value chain partnerships have for decades been present in these industries. In any one industry there is usually a Big 3 or Big 10 competitors present, each with their own network of suppliers. This small and tight network of companies creates a forest environment of patents. When one customer / supplier pair hits upon a solution there is usually a high burst of patent activity. Then the burst quickly dies away to nothing as most innovation is in the incremental category with follow-on work rarely needed. Again because of the value chain partnerships, the typical number of patent holders is low. When one company spots a weakness in a competitors approach they oftentimes put together R&D teams capable of encircling their competition with patent fences. Hence the presence of predators and some sharks occurs here. Non-competitors however rarely engage in this behavior.

For “High Technology Craft” companies it’s important for companies to: First, quickly build a portfolio with good claim quality that is going to keep away and discourage their closest competition. The patents must be filed broadly enough to keep competitors from doing a geographic end run. When infringement does occur its aggressively pursued and the parties will often go to court to defend their positions versus settle them out of court.

For completeness the final innovation game is mentioned. Technical innovation in this area is often quite low. It affects the “News, Clothing, and Commodity Food” areas. Companies working in this area do not use patents as a primary means of creating a sustained advantage position. Instead the intellectual property of choice is often copyrights and trademarks. These two forms of intellectual property afford good projection at a much reduced cost than patents. Where patents exist they are often design versus utility patents. As such the patent environment as that of a light forest, the innovation patent growth rates low and the number of patent holders few. It is rare to see a patent fence in these fields and even more so to find a predator or shark. For portfolio management, the eye is to continuously prune the portfolio as advantaged positions become protected by trademarks. It is not surprising that not much time or money is invested in high-quality claims or broad coverage. Companies in this area do not typically invest in the competitive intelligence needed to determine whether or not infringement is taking place.