3 Ps (People, Products & Patents) of IP Strategy

OK, so you have done your research and see a corner of the market that your company or business unit or project is looking to dominate. In an Intellectual Property (IP)-dominated businesses, how to chart a course to protect IP might seem like a daunting task.

Over the years, I have developed a simple framework for IP Strategy—this framework should apply to any part of any business, but particularly relevant to the “hard science/engineering” domains:

People + Products + Patents (3Ps)

If building organically, one can execute each of the Ps in order and having even one P is good, having two is being quite competitive and having all 3 makes the entity very dominating in the market and valuable as an entity.

People. You want to strive to be very methodical and intentional in who you hire. Do enough diligence to make sure the skills are solid, but new hires are also compatible with the rest of the team (“chemistry”). Lean towards folks who see value in their work, in addition to fair remuneration—this assures a durable team. In hot areas like tech/biotech, grass can always appear greener on the other side for employees, but a team that turns over too much is disruptive to the company and team cohesion, and can disrupt the execution of your IP strategy.

Products. In general, you want to build the core products in your offerings, rather than buying that key piece of the puzzle, if the “white space” is available (i.e. others have not already staked their claim to the kind of IP that you want to offer in your own products). Sometimes, to go-to-market quickly, there might be a build-vs-buy calculus even for core products, but over time, you want to build the core products within your entity and use tools and 3rd party IP for non-core offerings. For instance, in a software business you want to write your own code (or have it be written for you as “work-for-hire”) and make use of tools and frameworks where licensing terms are friendly (e.g. MIT, BSD license terms), being mindful not to embed any outside 3rd party IP, that was not intended (e.g. Gnu Public License, GPL, which will require you to make your IP publicly available).

Patents. Depending on the industry patents can have a tremendous inherent value to the company (e.g. biotech) or might be easily circumvented (e.g. software)–but those are very general observations–and the devil is in the detail and could vary quite widely from the norm, depending on the domain of the IP art, novelty in the marketplace and adoption momentum, among others. Patents can also be used as marketing tools and defensive, and sometimes, offensive measures. In a very litigious IP landscape like the US, not having your own IP portfolio is a very vulnerable position to be in. Although patenting process is costly in both time and money, it would be prudent to start filing both seminal/foundational work as well as related, peripheral patents, to increase both the count and coverage of the domain you want to dominate. Not everything can be patented, however—they have to be 1) novel and 2) patentable. There are other mechanisms of protection such as building brand equity in your company or your products.

This is a simple framework for an IP Strategy that is easy to remember and easy to communicate to your company and team. It is as simple as 3Ps: People + Products + Patents.

3 Rs of a Startup Business

When you are running a startup, which customer opportunities to pursue can be a difficult task. Even though, one may want to take on all opportunities, it would be very unwise to pursue them all, since startup resources are limited and a structured qualification process that is easy to understand by all, yet quick to execute goes a long way.

Over the years, I’ve developed what I call the “3 Rs” and I share it with others in my company as well as others in the entrepreneurship community.

Here’s what they stand for, and the blended output is subjective, yet very helpful in the qualification of a prospect.

Revenue: Cash is king, especially in a B2B business, so a customer bringing in revenue matters.

Reference: Depending on the stage of the business, the quality of the customer reference is very advantageous.

Resourced: The product the prospect wants is already built, which means incremental cost is zero or very low. Or do you need to go out and build it?

The ideal of course is a very good quality customer wants to give you lots of cash for something you have already built. That’s an easy case.

The harder cases are:

  1. What if a high quality prospect (good Reference for future business) wants to give you little or nothing in cash (low Revenue). This is where, if the reference is really good and you already have it sitting on the shelf, you may want to do the deal.
  2. What if a high quality prospect will give you a lot of Revenue, but you have yet to build it (not yet Resourced)? This is where you need to decide if the product to be built can be resold many times (e.g. licensed software) or is it a “work-for-hire” custom product just meant for the larger entity (i.e. one-time revenue potential)

In a software business, in a B2B environment, if the use-case or application is right down the middle of the Resourced product, the other two will help you decide whether to take on the opportunity or not.

Not all comers are your future customers, choosing wisely can be the difference between a thriving and dying business.