State of Innovation

Patents and Innovation Economics

Robert’s Rules of Innovation: Book Review

This book is a well laid out, logical book on how to ensure that your company continues to innovate.  This is not a touchy feely book or a feel good cheerleader book like so many business books.  If you want practical advice from a person who has been there then this is the book for you.  As the book subtitle states this book is “A 10-Step Program for Corporate Survival.”

Robert F. Brands, the author, headed the highly successful company Airspray.  Airspray makes consumer products, particularly the highly successful instant foam dispensers.  These dispensers foam soap products without an aerosol and are found almost everywhere today.

The book has a number of metrics to determine if your company is truly innovating or only giving inventing lip service.  He suggests that companies should track new product sales.  New products are generally defined as those introduced in the last five years, however this depends on your industry.  If new product sales are less than 15% of total sales then your company is at risk of becoming extinct.  Note line extensions are not new products.  In Chapter 3 the book describes a complete innovation audit to determine if your company is truly committed being a technology leader.  He points out that most companies make the fatal mistake of cutting R&D and new product development budgets when time are tough.  If you want your company to survive, this should be the last budget item cut.

Creating successful new products is not enough to survive in the marketplace.  Your company must protect its new products with strong IP particularly patents to have sustainable advantage.  In addition, you company must understand the patent landscape of your marketplace.  “It is proven that those companies with a strong patent portfolio creates much more value to their stakeholders than companies without. Airspray, the case study focused on in the book (the company that brought instant foaming dispensers like hand soap to market) was sold at 15 times EBIT, which proves the point.”  This 15 EBIT was twice the going EBIT for similar companies and the main reason for this high valuation was Airspray’s patent portfolio protecting its innovative products.

Robert’s Rules of Innovation is a must read for anyone who wants practical, real world advice on how to ensure that their company does not go the way of the dinosaurs.

April 23, 2010 Posted by | Business Models | , , , , , , , | 2 Comments

Robert's Rules of Innovation: Book Review

This book is a well laid out, logical book on how to ensure that your company continues to innovate.  This is not a touchy feely book or a feel good cheerleader book like so many business books.  If you want practical advice from a person who has been there then this is the book for you.  As the book subtitle states this book is “A 10-Step Program for Corporate Survival.”

Robert F. Brands, the author, headed the highly successful company Airspray.  Airspray makes consumer products, particularly the highly successful instant foam dispensers.  These dispensers foam soap products without an aerosol and are found almost everywhere today.

The book has a number of metrics to determine if your company is truly innovating or only giving inventing lip service.  He suggests that companies should track new product sales.  New products are generally defined as those introduced in the last five years, however this depends on your industry.  If new product sales are less than 15% of total sales then your company is at risk of becoming extinct.  Note line extensions are not new products.  In Chapter 3 the book describes a complete innovation audit to determine if your company is truly committed being a technology leader.  He points out that most companies make the fatal mistake of cutting R&D and new product development budgets when time are tough.  If you want your company to survive, this should be the last budget item cut.

Creating successful new products is not enough to survive in the marketplace.  Your company must protect its new products with strong IP particularly patents to have sustainable advantage.  In addition, you company must understand the patent landscape of your marketplace.  “It is proven that those companies with a strong patent portfolio creates much more value to their stakeholders than companies without. Airspray, the case study focused on in the book (the company that brought instant foaming dispensers like hand soap to market) was sold at 15 times EBIT, which proves the point.”  This 15 EBIT was twice the going EBIT for similar companies and the main reason for this high valuation was Airspray’s patent portfolio protecting its innovative products.

Robert’s Rules of Innovation is a must read for anyone who wants practical, real world advice on how to ensure that their company does not go the way of the dinosaurs.

April 23, 2010 Posted by | Business Models | , , , , , , , | 2 Comments

Patent and Antitrust Law

Historically there has been a conflict between antitrust law and patent law.  Periods of aggressive antitrust enforcement have coincided with the courts’ disfavor of patents.  Is there any economic justification for using antitrust law to limit the strength of patents?

The goal of antitrust law is to ensure competition in the production and sale of goods.  The reason why we want to have competition is to reduce the cost of goods to consumers.  If there is just one company selling a good, then they can charge almost any price they want.  If there are just a few companies selling a good, then they will not compete for customers as vigorously on price to attract consumers as when there are many companies selling a good.  The ideal for antitrust is to have “perfect competition” for all goods.  Perfect competition is the situation where no buyer or seller can effect the price of a good.  A company’s return on a product in a perfectly competitive market will approach zero.

The goal of patent law is to promote invention.  Patent laws were created as part of a country’s industrial policy.  Countries used patents to gain access to inventions in other countries and to encourage the development of inventions.  Modern patent law is only used to promote the development of inventions.  The ideal of patent law is to have everyone developing new technologies that lead to new products and services.

What incentives do these laws provide in the marketplace?  Lets look at how these laws would operate in the case of Ford’s Model T car.  Under an aggressive antitrust policy the goal would be to create competition for the Model T.  The ultimate result of antitrust law would be to have so many competitors that the Model T is free.  However, this would kill any incentive to innovate since any innovation would be hit with an antitrust policy to force competition on the innovator until there was no profit in making the innovation.  So while we would have relatively cheap cars, we would be stuck with a Model T.  Patent law on the other hand would prevent competitors, for a limited period of time, from copying any of the innovations associated with the Model T.  As a result, the potential competitors of the Model T would be forced to innovate.  When they saw that Ford was making strong profits because of his innovations, they would be motivated to invent.  This would lead to a virtuous cycle of inventors creating enclosed cars, cars with starters, cars with four wheel drive, airplanes, jets, etc.  The long term advantage is in encouraging invention instead of encouraging competition.  Antitrust encourages commoditization which not only discourages innovation it discourages production.  Whenever there is a conflict between patent law and antitrust, patent law must rule.

February 3, 2010 Posted by | -Economics, Innovation | , , , , | 1 Comment

Innovation Expert Ignores Inventors & Patents

There is a great post in IPBiz, “Mentioning Innovation with Mentioning Patents“, how CBS Sunday Morning had a whole show about the lack of innovation but never discussed patents or inventors.

One of my colleagues is always pointing out the people who use the word innovation discuss it in a disembodied way.  They never discuss inventors or patents.  Specifically, he states:

Say yes to inventors. Say no to “ignore-&-evasion”.

The full-truth word is “invention”, not inno-evasion.

He makes excellent points – at least on how the word innovation has been perverted.

January 11, 2010 Posted by | Patents | , , , , | Leave a comment

The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation

 This post is the Introduction to my book, which should be available on Amazon.com in December of 2009.

This book started as a project based on my observations.  I deal with technology start-up entrepreneurs everyday as a patent attorney.  I noticed a difference between the sort of projects my clients were undertaking since the technology downturn of 2000-2001 and the 90s.  Clients, in the 90s, would come into my office with plans to build businesses that were disruptive or revolutionary.  The technologies underlying these companies held the potential to completely redefine a market.  Some of these of these ideas would increase the available bandwidth by 10x for minimal costs or allow data searches that were 10-100x faster than existing technologies.  It was extremely exciting talking with these entrepreneurs.  Their energy was infectious and the potential implications of their work was mesmerizing.  The technology downturn of 2000-2001 forced a reevaluation of these aggressive business plans.  I expected that after a couple years of the technology market taking a breath, I would again be working with companies trying to change the world.  Continue reading

September 24, 2009 Posted by | -Economics, Innovation, Patents, Uncategorized | , , , , , , , , , , , , , , , , , | Leave a comment

Innovation and the Obama Administration

The Obama administration has released a white paper outlining a strategy to encourage innovation and thereby stimulate the economy, entitled “A Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs. ”  According to President Obama, “The United States led the world’s economies in the 20th century because we led the world in innovation.”  The first step in solving a problem is identifying the cause and the Obama administration has nailed it on the head. Continue reading

September 23, 2009 Posted by | -Economics, Innovation, Patents, Uncategorized | , , , , , | Leave a comment

Innovation – Wake-Up Call

There are number of indications that the U.S. is losing its technological edge.  In the second quarter of 2008, there were no public offerings of Silicon Valley venture capital-backed companies, a phenomenon not seen since 1978.  U.S. venture capital firms are investing more of their funds overseas.  Many U.S. trained, foreign national, scientists and engineers are leaving the U.S. and returning to their home countries.  In 2001 (the most recent year for which data are available), US industry spent more on tort litigation than on research.[1] Continue reading

August 19, 2009 Posted by | Uncategorized | , , , , , , , , , , | 2 Comments

A Short History of Innovation in the United States

            The U.S. has been the most innovative country in the history of world.  “Virtually every major development in technology in the twentieth century – which was far and away the most important century in the history of technology – originated in the United States or was principally industrialized and turned into consumer products here.”[1]  The economic success of the U.S. is due to its technological innovation.  The first colony was only possible because of two new technologies – the full-rigged sailing ship and the joint-stock company.  This inventive spirit has continued to the present with the Information Age, which was founded in the U.S. and based on the internet (ARPANET) invented in 1969.  Continue reading

August 9, 2009 Posted by | -Economics, -History, Innovation | , , , , , , , | Leave a comment

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