Management Strategies

05:15 PM
Mick Simonelli
Mick Simonelli
Commentary
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To Patent or Not to Patent

As more and more IT organizations look to drive innovation, they inevitably need to consider whether they should patent those innovations.

The protection of intellectual property can be a difficult decision for many companies entering the innovation space. Intellectual property includes patents, trademarks, and copyrights; however, patents are the big issue that most financial services companies tend to wrestle with.

According to the US Patent Office, the number of patent submissions has nearly doubled from 315,000 in 2000 to 609,000 in 2013. Correspondingly, those companies with burgeoning innovation programs must analyze the circumstances and consider whether patenting is beneficial and profitable, or risky and uneconomical. Companies frequently get torn between the decision to protect their ideas or to simply let their ideas incubate without any patent protection.

[For more from Mick Simonelli, the former head of innovtion at USAA, check out: Customer Benefits Versus Revenue Growth in Innovation.]

The following are some of the major benefits and risks of patenting ideas.

Benefits:

  • Protection. Protect the invention from competitors and patent trolls.
  • Monetary. Monetary benefits can be gained through commercialization. If a product is successful, it can be sold to other markets or even competitors.
  • Promotion. Patents can promote the company’s innovative standings, improving the image and brand with customers and partners. I remember the positive impression that IBM made on me when I was leading innovation for USAA. We visited IBM headquarters and its supercomputer Watson, and were met with 60,000+ patent plaques on the walls. Every member of the leadership team left that meeting wanting to work with IBM.
  • Innovative spirit. Patents can bolster employee morale as well as the internal culture of innovation. Patents are widely accepted symbols of inventiveness. There is something special about having your name on a patent grant from the US Patent Office.

Risks:

  • Mimicking. Even after patenting, sometimes a very minor modification can result in a similar invention so that the original patent is useless. Many software applications and technology inventions fall victim to this ploy.
  • Cost. Patent submission and maintenance can be costly, especially if a company pursues an aggressive patent program. Each patent must be written properly, tracked, and maintained. Ultimately, it can become a business of its own, requiring a team of IP lawyers to manage.
  • Defense. If a patent is violated by another entity, the patent may have to be defended. This can cost millions of dollars and waste critical resources. This can be problematic if the patent isn’t worth the millions of dollars to defend or the company doesn’t have the will to defend it.

In this hyper-innovation environment, many argue that we are at an inflection point in human history where our inventiveness and creativity is drastically changing the way we do business. The above benefits and risks can aid an organization to make the right decisions about what to do with inventions. For most financial services companies, to patent or not to patent is a big question.

[Do you aspire to the C-suite, or some other spot in upper IT management? Then bulk up your credentials around today's most pressing IT movement, digital business, at the Information IT Leadership Summit.]

Mick is an independent consultant and thought leader on innovation in financial services. Previously, Mick served as the senior innovation executive for USAA, where he built and led the innovation program to world class status. During his tenure, USAA received numerous awards ... View Full Bio

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