Patently Unclear -

Capitalising on Intellectual Property and Know-How

Barrie Blake-Coleman

“Anything that won’t sell I don’t want to invent

- a sale

      is proof of utility and utility is success”.₁

       Thomas Alva Edison 1847-1931. 

Invention has as its basis original thought - one definition some might say of genius. However, as T.A.Edison is reported to have said, "genius is 1% inspiration and 99% perspiration".  What is often forgotten then, is that a single patent can often embody in un-emotive terms the toil and accumulated genius of many man-years.  A patent specification may eventually become the only accessible record and vestige of a project, distilling and encapsulating the results of a formidable endeavour. In this respect, the patent specification comes to represent the sum total of a huge commitment in time, facilities, money and intellectual effort.

Included in this category are patents emanating from corporate ‘resource hungry’ exercises  - only possible in such environments.  Such patents are usually those which are the outcome of dogged, but straight forward, problem solving  exercises, instigated by large corporate machines able to throw substantial amounts of capital and intellectual resource at a particular project.  In contrast to this is the patent based on a single flash of inspiration, an insightful thought, or a moments revelation,  on the part of a gifted individual. 

 

As Jewkes et al  pointed out, "It is customary to argue that there are no limits to the advantage of size in a working environment because  of the necessity of ‘team work’, the character of which is often misunderstood and the virtues of which are  exaggerated.  

Quantity cannot make up for quality and little purpose is served in lamenting the absence of what are in fact unattainable levels of intellectual coordination when there are too few minds of the highest calibre. 

 

Team work, we concede, is the only answer - but it carries with it a countervailing loss of power inevitable when several minds  are groping towards mutual understanding and assistance.

 

The loss becomes the greater the larger the team and the less voluntary its character.  Members of a team must always go the same way, and too often this is towards orthodoxy rather than innovation.

 

Working groups, even in large industries, are normally small.  The real moving spirits are few and the rest pedestrian. although, of course, useful contributing supporters.

 

A team is essentially a committee and thereby suffers from the habit, common to all committees (but especially  harmful where research and development is concerned) of brushing aside  hunches and intuition in favour of ideas that can be more systematically articulated or acquiesced by a majority - to say nothing about managers who stress ‘team players’ as a method of retaining control through an imposed echelon,  and confuse ‘team management’ with ‘team leadership’.

 

The reasons for the limitations of team work then are obvious.  Team work is always second best. There is no kind of organised, or even voluntary, coordination which approaches  in effectiveness the synthesising which goes on in one mind."

 

However, the inspirational pathway to invention can as likely originate in a corporate environment as invention ensuing from the persistence and perseverance on the part of an individual - hence the disputes that originate when corporate employees depart to form their own businesses, and their old corporate employer claims piracy of their R&D.

 

Nevertheless, whatever the source, the result can be a patent specification with the potential to be worth it’s weight in commercial gold.  Hence, a patent taken through  to grant can gain a substantial intrinsic value by virtue of what it cost to attain the  information contained  in it, which in some  way  expresses  why patents came  to  exist  in  the first place - they are defensive implements against intellectual and commercial piracy.

 

On the other hand, it is evident that often many patents materialize without being tested as to technical soundness or true commercial potential and without any  real intention of exploiting their merits. These come about for a number of reasons, not least that of corporate protagonists defending current, or future, trading positions.

 

The typical ‘gizmo’ is a device of impressive cleverness with ‘World  Patents’ stamped all over it. It fills a need few of us realized required addressing,  and most of us stand in admiration at the engineering and commercial perception that created it.  However, such things are merely the tip of the iceberg.  As much wealth, if not the greater wealth, is invested in the deep undercurrents of industrial  technology, and here the patenting game is far more  serious and calculated.  With vast sums  committed to research and development (R&D) the most important innovations are typically  those which reduce a manufacturer’s existing process or production costs (like a new chemical synthesis which turns pharmaceutical manufacture   from scarce and expensive micrograms into enormously profitable kilograms).  However, creative product or process   engineering enshrined in patents is seldom without risk and rarely unconditionally beneficial.   Acquiring patents has its down  side.   Where immense sums have been invested in R&D,  in industrial sectors where competition is fierce, it is foolish to provide competitors with a  route  to  competing technology, particularly if they haven’t paid for it.  It is even more foolish to patent [and thereby publish] a method which ensures that your competitor knows precisely which process, technology or product you have chosen to pursue.  This is particularly true if, simultaneously, your patent fails to conceal or protect what other schemes or procedures might do the same thing.  Seldom is the cat skinned just one way!  Thus is born the defensive patent, part of the  new policy of strategic patenting otherwise known as ‘the ring of thorns’ policy.

 

More Means Safer?

 

Where an organization commits itself to a policy of aggressive competition, it may well see strategic patenting as a measure to maintain its product lead.  Technology which is optimized to profit [and product quality] tends to be supported by heavy R&D  expenditure.  To protect its market share, profitability and R&D investment, a company will take a strategic view and ensure  that money and resource is assigned to blanket patenting.  This entails patenting a primary technology or process which is   proven or preferred and then filing other patent applications describing alternative procedures which conceivably could do the  same thing.  There is no necessity to establish the validity of these parallel methods (see below), it is simply a case of  thinking  up all other possible variations, operations, processes or procedures which might eventually bypass the primary patent or  supersede it.   If  you do succeed, in obtaining grant of patents on all your applications, competitors are (supposedly) technically, and thus commercially, isolated.  This, then, is one aspect of strategic patenting which does not trust in the protection of a single broad patent, but defends a trading position by seeking to ensure that the monopoly itself has no loopholes or descriptive weaknesses (otherwise  known as a ‘ring of thorns’).

 

Of course, strategic patenting is perfectly legal (an individual inventor might see a similar tactic as one way in to stop industrial interests usurping his ideas ) and it has only one immediate drawback - cost.   Single nation patenting costs can be modest, but to be truly effective a patent must be filed universally and thus must be done virtually regardless of cost; one so called  ‘International’ patent (designated countries under the Patent Cooperation Treaty), assuming no hiccups, might require an outlay of between £20,000 and £45,000 for filing in designated countries with the attendant servicing (periodic renewal) costs which taken as a whole are likely to be  prohibitive.

 

This gives perspective, then, to the comparison of patents granted to the leading industrial nations.  The patenting  record of the Japanese as compared to the U.K, U.S, France and Germany is a reflection on the willingness to spend money on patents, rather than a direct measure of their technical and commercial value.  We should never presume that all patents are viable, nor should we assume that much of what emanates from ‘top league countries’ is not a  case of strategic patenting.  Published  statistics give only the  number of patents filed, but say nothing about commercial fitness, success, or the eventual utilization of the ideas embodied in them.  The true value of a patent lies in its ability to be effectively exploited.  Though strategic patenting  confers value to an idea embodied in another patent, any merit is arguably superficial and passive.  To see how countries have performed in the patent game we really need to know how many of their respective patents have become a working reality. There are no prizes for guessing who would come out on top,  but I would suggest that the U.K would do better than most  might think.   Arguably, quality is the thing (not quantity, whatever the strategic game) and the U.K has a fine record  in  inventions.   Indeed, our recent past industrial performance and the resultant economic climate has much to do with the  decline in the numbers of British patents and inventions. 

 

Some part of this can be attributed to poor R&D investment and the low status of science, engineering and technology in the U.K.   The one saving grace, if any, is that economic constraints - because they force us to be more selective and stringent - may reduce numbers but not necessarily the quality.  Indeed, the more rigorous the standard for electing to patent, the more likely is it that those that succeed must be worthy.  This reminds us, therefore, that intrinsic value is not a subjective or qualitative    matter, nor an index for a nations inventiveness - true value is only expressed in the tangible factors of intellectual  diversity,   utilization and exploitation.  In short, it is not the quantity of applications, or necessarily their perceived (subjective) cleverness which is at issue, but rather the number that actually make the grade commercially. 

 

Fewer British patents, in recent times, is a factor which has much less to say about the decline of British inventiveness and rather more about the decline of British industrial solvency.  In recent times, not only has government and industry neglected  to recognize the need to adequately resource R&D, to generate ideas worth  protecting, there has been a marked reluctance to finance exploitation - even when very good, lucrative ideas and methods are on offer.  Unless we use our inventive and creative talents properly to create wealth, as we did in the  past, the wherewithal to protect our ideas will dwindle.  As this goes so too will the incentive to patent at all.  However, having  said this, and as implied above, it is self evident that patents aren’t  always the source of new applications, processes or products.

 

Protection vs. Pace ? 

 

Industrial development depends as much on technological leads and know-how, arrived at by experience and specialization, as  it does on methods strictly derived from an inventors specification.   As noted above, this results from the attitude that frequently a published patent specification detailing a novel process or technology is as (commercially) dangerous as ignoring the commercial realities.  It is naïve to believe that competitors are sufficiently ethical as not to poach on an originators ‘natural’ right to monopolize an invention.  Patents are designed to protect a concept, but notifying the competition that you are stealing a march on them only invites competition at a time one could best do without  it!   The lesson, then, is that notwithstanding  strategic games, if you can’t afford to do it right  (a full inviolate patent portfolio) there is a case for saying don’t do it  at  all!  

 

This means that there are as many, or more, technical breakthroughs and inventions left unpatented as there are locked up in  the patent office.   Indeed, one can starkly contrast the policy of strategic patenting with that of simply ‘catch me if  you  can’.   Of course, the latter calls for a lot of soul searching and confidence in your ability to run faster and more successfully than the opposition.  It is worth observing that an application that fails to be granted, or is abandoned,  still constitutes a publication and as such can not only impede other (competitor’s) chances of acquiring a later, similar, patent, but may mean a collision at some  later date with any subsequent patents filed by ones self.  Nevertheless, like  accident  insurance, owning the right patent means you are unlucky if you have to rely on it.  Uppermost in our minds should be the guiding rule that if the idea makes commercial sense (i.e. has a  realistic potential to generate income or save money) then the wise decision is to proceed.  But if the application is for less sound reasons (vanity etc) the maxim remains - ultimately, (expert opinion aside) a patent is only as strong  as the litigation that tests it!

 

The inventor, therefore, should always be aware that a  patent grant says only that the examiner is prepared to allow  it, not  that the examiner is infallible and guarantees the legal invulnerability of the patent.  Furthermore, the rights conferred on an inventor tend to be to do with preventing others from profiting from the  method embodied in the patent.  Indeed, in some instances national regulations abrogate patentee's rights to exploit the invention.

 

Who Peddles the Patent?

 

This last revelation should not deter us, and seldom does.  Applications for patents will continue as routine because there are many circumstances where it is right to seek protection.  There are a lot of nasty people out there and, as mentioned above, a patent, weak though it might be, is an effective deterrent.  However, once the  idea is  in the patent machine, what then?  Sometimes the individual might be persuaded that the patent agent, who so sympathetically leads him through the minefield  of patent application formalities, is the very man  to take the idea to some commercial conclusion.  Doubtless, this approach  has some value.  However, without in any way  wishing to understate the role and value of patent agents, they are [as a body]  less well placed than one might think to assess  the  commercial or industrial potential of an invention!

 

This is because patent agents are more concerned with the protocol of taking a patent  specification through to grant.  Provided the technical details of the  invention are logically consistent, and not obviously in conflict with any fundamental physical  laws,  technical veracity is assumed and priority is  given  to  the  processing of the application rather than its eventual exploitation. In  short, the agent takes much on trust and does not formally verify the idea; nor, indeed, does the patent examiner[s].  If he or  she is a professional your idea will be carefully examined for its ability to be technically convincing.  However, excepting applications for devices purporting to demonstrate the impossible (e.g. perpetual motion) or discoveries of nature (i.e. trying to monopolize ‘handiwork’s of nature’ ) there is usually no  obligation on the part of  an inventor to demonstrate the device or process for which a patent is being  applied for.  (Though this principle is under challenge from the recent successful attempts   to patent ‘natural’ genetic and biotechnological components).   Generally though, without any liability on the part of the  inventor to offer substantive or convincing evidence to verify his invention,  the whole business of patenting becomes that  of  obtaining exclusive  rights to, or a monopoly on, a concept.  The concept or idea need not be complete or indeed demonstrable - if it displays utility and an inventive step, is novel [in terms of not being obvious or predated in any other accessible publication] and does not appear to be ‘taught’ [by obviously combining  ideas from other sources that would draw the same conclusion by a numberof equally skilled individuals   -  otherwise known as 20/20 hindsight -  it stands a good chance of  obtaining a patent.  The commercial potential of a patent may well be of more than passing interest to a patent agent but, generally,  it is of low priority since commercial viability is not a factor in securing a good patent.  In the last analysis, priority is given to acquiring as broad and as effective a patent as possible - thereafter the agent’s duty is  usually done.

 

Learning The Hard Way

 

The person least likely to arrive at a realistic assessment of the business difficulties encountered in promoting an invention is  the inventor. 

 

Some, of course, are street wise and become highly  skilled at identifying a market niche, negotiating industrial support, and providing a successful product for it.  Yet, the majority of the inventor population will find it difficult to sell their idea.  It takes a lot of time, experience and negotiating skills.  If an inventor gags at the thought of hawking his patent about he will often look for a professional to help him.  Reputable brokers for IP (Intellectual Property) tend to operate on their best estimation of the merits and the likely returns on the venture.   With some it is - ' a small fee now and a large piece of  the action when (or if) I make you rich’,  others will waive the initial fee and simply settle for a percentage if/when the idea generates income.   Yet others won’t charge you if you can’t afford their initial fee but will use the shotgun approach -  I won’t make a formal,  systematic  search,  but  if I happen to pass a  target that needs your invention I’ll shoot the idea at them!   All these  approaches are reasonable methods of sharing the load and in most cases have the merit of giving the broker or agent an incentive to make a real effort.   As a rule, he/she will use market analysis (and experience) to tell an individual inventor the hard truth about the  value of his patent  - sometimes it is better to be disappointed at the outset rather than limping on for years and being constantly disappointed .  After all, the broker is faced with a none too difficult task in finding outlets for the manifestly marketable ideas let alone those categorised as a solution looking for a problem.   Implicit in all this is that getting someone reputable to pick up the IP and run with it  (beware of cowboy ‘Patent Shops' and never sign over your rights to an agent), requires the obvious precondition that the idea must appeal to the recipient and makes immediate, or at least foreseeable,  commercial (and financial) sense. 

 

However, this hides a multitude of motives and the professional involved with IPR (Intellectual Property Rights) can cite a massive array of negative,  as well as positive, reasons for any given business or industrial sector to refuse, or license/acquire,  patents.   Seldom is it obvious why a company declines interest in a technical acquisition or a patent license of apparent value  to it.  Even some of the positive reasons tend to be defensive and elusive.  Indeed, unraveling the actual reasoning behind  acceptance/rejection often leads one into massively convoluted thinking.  On the less obvious side,  a patent, or a license,   might be acquired by a company to ensure it doesn’t impede a parallel 'in  house' development by the company itself (though one of the ideas might be more advanced or refined than the other!), or the prospective recipient wants to ensure a competitor doesn’t procure the  patent and  apply commercial pressure, or it feels that it wants to be certain that no other factor enters  into its predictions for the commercial life expectancy of its products.   A few of the more subtle reasons behind a (recipients)   refusal to negotiate include:-  

*   failure to admit an understanding of the principles or implications of a technical development

*   viewing an existing product range as sufficient without inviting undue competition 

*   lack of appropriate pre-production development/design facilities 

*   new idea departs from core  business

*   the idea isn’t viewed as technically feasible or production orientated (i.e. requires too many ex-house skills) 

or 

*   the client has technical confidence but is unfamiliar with, or lacks marketing skills, to make new proposal successful.

 

Finally there is the problem of internal politics.  This is by far the most dangerous area for new  ideas.  It must be remembered  that jobs go with products.  A new idea may mean an internal polarisation of internal responsibilities and skills, it may mean future security for some, but not necessarily for those linked to an old product.  If the existing product is usurped in importance some might see this as a threat to their future in the company.  In short, they feel threatened by the possible rise to prominence of an incoming idea.  Furthermore,  there is risk in adopting a new product, those responsible for deciding an acquisition will, for their own careers, want  it to succeed.  Ensuring this might mean bleeding resource from other areas or  depleting an already overstretched budget.

  

It is for these and similar reasons that many new ventures never see the light of day and the inventor receives yet another  refusal.  All this is included in the well known 'not invented here syndrome', primarily the result of the in-house R&D people  viewing incoming ideas as infra-dig. or a threat to theirsecurity and professional standing.

 

Right Decision, Right Reasons?

 

Of the many positive reasons for acquiring a patent, the simplest and most compelling concerns the wish to exploit its  potential to its fullest, using it as a major source for income generation or saving money. The ideal vehicle for a new idea is one which has the technical and financial resource to quickly extract the full measure and value of the patent.  However, the  willingness to do so depends on whether the  patent is properly understood and perceived in  terms of a marketing and manufacturing  strategy.   A good agent, acting as advocate for an inventor, will establish a pyramid of prospective takers for the invention.   At the top will be those with an industrial or technical interest which aligns itself with the invention.  Second may  be  those organisations or interests which are evidently diverse in their manufacturing or business strategy and will be open to persuasion as to the business merits of taking on the idea.  Thirdly, there will be the option of an entirely fresh business venture which would require a complete startup from scratch.  This clearly would be indicated where finance could be acquired to begin a new manufacturing operation.

 

In many cases, an existing technical expertise in an identical or parallel area, on the part of the recipient, bodes well for a new idea - it makes it far more credible and easier to evaluate in terms of the potential commercial worth.  If an agent is getting it right, he will steer his way to the appropriate people in an organization (the decision makers) and put up a convincing argument in favour of acceptance.  He will show that the new idea is technically sound, it aligns itself with the business interests  of  the  recipient,  that the return on investment  justifies pre-production,  production and marketing costs, that the product or process  familiarity will not divert resource from existing profitable operations and that the terms of acquisition are not unacceptable.  In  short, the sale of the IP is done with a full and sympathetic understanding of those factors which need to be satisfied in the  recipient’s business and manufacturing environment

 

A Deal Is A Deal?

 

Usually, inventors become frustrated with the tedious business of IPR transfer.  They become irritated and sour by the apparent lack of any willingness on the part of prospective takers to see the true value of the breathtaking revelations detailed in the patent specification.  The more experienced, street wise, inventor knows that any recipient of his idea is placing a heavy commitment on itself and that it is not to be done lightly.  He also knows that the vocabulary underlying the selling of an idea includes  words like tenacity, persistence and determination.   Many factors have to be satisfied particularly if rights and   licensing agreements are coupled to set times for production to begin.  Typically, a patent is acquired by a recipient either:

 

(a) as a Primary Risk venture where the recipient agrees direct purchase of ownership (in which case the inventor relinquishes all rights and control for a lump sum)

 

(b)  as a substantial royalty (or moderate lump sum + royalty) on a ‘shared risk’ basis  -  which gives a license to the recipient and does place a duty on him to actually go into production

 

or 

(c)  a  ‘Split Risk’ venture where a substantial lump sum is paid ‘up-front’ for a license (or ownership) and the inventor takes his  chances on when/if use, manufacture and any royalty on sales commences.  

 

Whatever happens, royalties will be at a much reduced percentage.  Licenses, as in (b), are generally exclusive (fixed territorially or restricted use) or sole (no other licensees ) or pre-defined in terms of the industrial and marketing  area covered.  Sometimes, where the invention may spawn other novel products, or where the recipient wants absolute market control, the  licensing arrangement may include sub-licensing conditions.    In the case of  a non-product orientated deal (process or cost  saving  ideas) the  inventor receives a part of the cost saving (as long as the savings exceed the cost of any technology used in implementing them!).   The advantage to the recipient in buying out the inventor is obvious, in accepting a once only payment, the inventor surrenders control and interest in the patent.   As such, the organization acquiring the invention is in no way obliged to use it.   Similarly, ‘option’ deals pay the inventor a  retainer  for exclusive use by the recipient at some future, indeterminate, date. 

 

To get a good deal, the inventor needs to realise that he is an integral part of the acquisition.  This, as his advisors should not  be slow in telling him, can be central to his case.  Peddling IPR is as much a PR (Public Relations) exercise as a conveyancing of  technical information.  Few are likely to want to acquire an unfamiliar technical process without direct access to the originator of the process.  The patent is seldom all there is to it.   It is not uncommon for inventors to be  overly defensive about their ideas, not even trusting the safety of a patent.   As a result, by dint of deliberate omission or oversight, many patent specifications are deficient in essential technical features, thereby making it very difficult or impossible to repeat or recreate the work.    Given the clearly perceived deficiencies of  a technical specification, the prospective purchaser will sensibly want some  commitment from the source of the specification.  The recipient is viewing  the  acquisition as an exercise in acquiring a  monopoly, the technical description is never likely to be comprehensive enough to do all that is required of it.   Granted, in certain circumstances  the mere exposure to an idea is enough for a technically competent individual to succeed in producing the same end product.  Likewise, the merit of a patent may be in its ability to identify a new application for a well established  procedure.  But, whatever the situation, usually the inventor is seen as important to the success of the undertaking.   As such, he must consider any acquisition as an exchange, he gets the chance to see his idea utilised with  some possible financial   benefit.  In exchange, he provides his expert knowledge and his patent as factors in optimising the technical and business side of the venture.

 

Do We Or Don’t We? 

 

One might suppose that having got a half decent offer one should think twice before refusing it.  This is particularly true if the  offer is long in coming and is the result of years of traipsing around the country, attending numerous frustrating meetings and getting constant refusals.   Companies usually move cautiously and a decision not to proceed further toward acquisition or  licensing, after months of negotiation, can take the  fight out of even the most vigorous and enthusiastic of  inventors.   Selling  the rights to a patent can be expensive in many ways.  Yet, the bird in the hand (otherwise known as ‘grab it while you can’) syndrome, though not good policy, is all too common.  The burden of personal involvement and sundry costs (including transport of demo equipment and possible professional and legal costs) can quickly exhaust the patentee, but instead of  despair the exercise should be reconsidered in terms of whether the objectives are, or were, ever sound.  The open minded applicant will learn from the comments, questions and observations made at various meetings.  It can become clear, after a while, that opinion agrees that the idea embodied in the patent is heavily flawed, either technically or commercially.   For the inventor, the facts can be hard to swallow but the more quickly they are, the less painful it will  be.  Even if the consensus is that the idea appears sound, it is perhaps the  application or approach that is in error.   It might be that the industrial or commercial  sector targeted is actually inappropriate.  The process is usually iterative, in that the positive side of getting lots of  'no’s'  is  that it can teach you how to go about getting a yes!

 

The situation where the individual inventor finds himself inundated with offers and courted by organisations, talking money in six figures, is  the  stuff that drives many to dream of becoming an Edison, Dyson or a Westinghouse.  Unfortunately, the  axiom  that  building a better mousetrap will get people beating a path to your door is  of  doubtful value.  Edison (1093 patents) knew the game very well -  “It is easy enough to invent things and set the newspapers talking, but the trouble comes when you try to perfect your inventions so as to give them a commercial  value”.   The individual inventor will need to cultivate the doctrine of pragmatism and good business sense to profit by his efforts.  Some ideas simply lack refinement (but demonstrate a new, emerging technical capability, with breathtaking potential - thus emerging technology) or are technically immature (hence  commercially targeted, technically advanced concepts are termed near market). 

 

If, and when, the mousetrap materialises, the inventor will need to make it known and ensure that he doesn’t say yes to the first knock on the door.  In short, vendors of IPR need to be able to say no too!  If it is valuable, then it shouldn’t be given away. Again, professional help is advisable - if only to suggest where to invest the money!

 

On What Terms?

 

These days corporate R&D generate the greater proportion of patents.  The  day of the amateur inventor is past its zenith.  Nevertheless, patents  are still bartered, exchanged and sold and in this context it  is  as well  to  consider  on  what  basis  terms  are  agreed   and   what constrains the typical negotiation.

 

We  noted above that there are a number of primary factors that  need to  be in place in order to optimise the chances of a deal  being  made.  To  put this into context, it is little realized just how much resource  is  needed   when  investing  in  a  new  idea,  particularly  if   that   idea represents a new product. It is easy to overstate the importance of  the intellectual contribution to a new idea and understate the mechanics of turning the concept into a reality. As continually stressed, the risk can be large and costly for the recipient and this cost ranges from the staff needed  to consider and process the idea and carry out product  design to  the setting up of cost and manufacturing procedures. There is also the time spent by personnel  in  establishing  the   production   and marketing operations. Negotiating a license for IPR, or the transfer of rights,  has  as  its essential query the question about  how  much  how soon? 

What  this  means  is that if the  vendors  are  satisfied  by  the willingness  on  the  part  of  the recipients  to  make  a  good  job  of exploiting  the  technology  or  idea, it is in  the  vendors  interests  to  agree terms which are favourable to the recipient in the first  instance.  The  recipients should not have their chances of success  marginalised because  of an over-demanding  ‘money   now’   agreement.   This epitomises the reasons for the shared risk approach outlined above.  It is better  to  await patiently for long term rewards  than  risk  short  term failure  as  can happen with some small firms taking  on  new  patents requiring substantial investment in time and equipment. It is a salutary lesson that most of the familiar patented processes took a long time to make  it.

 

Patience is the thing

 

Typically, the period for a concept to materialize as a product is seven years.  Pilkington's Float glass occupied seven years in perfecting the process, major advances in petroleum cracking required a total of twelve years, nylon was only  perfected  after  six  years and, even with an effective recovery process, large scale production of penicillin took twelve years. The transistor only became a reality five years after the first crude demonstration of the effect, and the production of crease resistant fibres required another five years of work following the first patent disclosure of the method.

 

Even on a larger scale, the philosophy remains the same: for the invention to succeed it is necessary to make it possible for the recipient or user to succeed. It should be emphasised, however, that this does not mean concluding a bad deal, unfavourable to the inventor.  Rather, a pot of honey tomorrow is better than a spoonful now.  Naturally, some agreements will involve terms which are immediately and immensely beneficial to the patent vendor, but this will generally be true where the rights transfer instantly confers some financial advantage to the recipient.  Being able to freely market a product who’s launch would infringe  your nice new patent is just one example.  Here a further, proportionately smaller investment to acquire a license, frees the company to continue profitable trading and eliminates the need to write off the original manufacturing investment. Unencumbered exchange of licenses, where two competitors have both invested in nearly identical products, precludes costly  litigation or mutually destructive price wars. 

 

Typically, product placement and sales expansion follows an organic growth.  As we have noted, the delay before a product  based on a patent makes its mark commercially can be protracted.  The individual inventor has, on past records at least, tended to produce ideas  ‘before their time’ and it is often the case that he faces an uphill struggle in convincing others of his far seeing ability.  Often, too, inventors see economic advantages as secondary to the pleasure of conceiving and demonstrating a novel concept.  The inventor often has the utilitarian mind and the artists heart.  There is nothing to indicate that the inventor, or his task in converting his ideas into an industrial reality, is any more difficult now than it was in the inventive heyday of the 19th  century.  Essentially, the problems remain the same,  as do the rewards  if  successful.

 

The Black and Decker 'Workmate' made its inventor, Ron Hickman, very wealthy but when he first approached B&D they  declined to pursue the idea because they thought that too few would be sold to warrant volume manufacture.  He set up his own manufacturing operation and when sales clearly started to pick up he offered the idea to B&D again.  A redesign, for cost  effective mass manufacture, resulted in massive sales.  In this case, Hickman needed to prove his idea commercially, beyond its technical merits.  In the end, the popularity of his product proved that his marketing perception was better than that of the professionals. 

 

It is possible to win and lose at the same time.  At the end of the 19th century Westinghouse - desperate to break the hold that his arch rival, Edison, had in D.C. electrical generation - offered a straight million dollars for Tesla’s patents on A.C electricity supply - they shook hands  on the offer just minutes after their first meeting started.   As it turned out, the patents were actually to be worth much more than the fabulous sum agreed.   Though Tesla was  delighted, Westinghouse later confided that had Tesla demurred, he would have been prepared to go as high as three million dollars. However, Westinghouse was unsure how  his board of directors would react. They, on the other hand, were unclear of Westinghouse’s intentions and on hearing about  the million offered to Tesla thought Westinghouse had taken leave of  his senses.   Tesla believed he had done extraordinarily   well but, ultimately, nearly exhausted all his money on a fine lifestyle and virtually sterile experimentation. 

 

Curious, then, that in retrospect Tesla was content with far less than he could have got, Westinghouse achieved more than he  expected, while the Westinghouse board thought the whole arrangement was foolhardy as it stood, without realising how bad it could have been.  In the end Westinghouse was vindicated but might not have been had he committed the full three million,   making it difficult for the company to develop Tesla’s technology.  A lesson for us all?

 

 

                                                                             

 

References:

1) Brooklyn Citizen November 4th 1884.

2) Edison’s version of Charles Batchelor’s motto

‘Perseverentia  Omnia  Vincit (Perseverance  Conquers All)

3) New York Herald. Article in ‘Phonograph’, 1929.

4) Personal communication - B&D Swindon. U.K.

5) O’Neil J.J. The Life of Nicola Tesla. Neville Spearman 1968.

 

 

© 2014 B.C.Blake-Coleman.