Archive for theft
“As we discussed on Tuesday, Andre Geim won this year’s Nobel prize in physics for graphene, but he never patented it. In an interview with Nature News, he explains why: ‘We considered patenting; we prepared a patent and it was nearly filed. Then I had an interaction with a big, multinational electronics company. I approached a guy at a conference and said, “We’ve got this patent coming up, would you be interested in sponsoring it over the years?” It’s quite expensive to keep a patent alive for 20 years. The guy told me, “We are looking at graphene, and it might have a future in the long term. If after ten years we find it’s really as good as it promises, we will put a hundred patent lawyers on it to write a hundred patents a day, and you will spend the rest of your life, and the gross domestic product of your little island, suing us.” That’s a direct quote.'”
While some people, including some in the anti-patent community, see this as a self-evident case for the problem with patents, it’s actually just the opposite, in my opinion. Tim’s a sharp thinker and great entrepreneur, but I have to disagree on this one.
Look at the story again. A genius on the verge of filing a foundational patent for a major breakthrough in technology approaches a large corporation who might benefit from the technology. The company learns that the inventor is about to file a patent. A valid patent would mean that the company would have to pay royalties for the invention, perhaps very expensive royalties. If no patent is filed, the company can use the technology for free and develop its own patents without having to cross-license or worry about what Andre Geim owns. Hmm, which would be better: paying a lot, or paying nothing? Having to work with an inventor or tech transfer office or new patent owner who may end up thinking an invention is worth billions, or having the whole thing pretty much gratis? Tough call, but I think the corporate leader was quick to recognize the advantages to nipping the patent threat in the bud. How could he talk the inventor out of a patent? What negotiating tactic to deploy? ah, how about the Hindenburg? That’s where you explain to the other party that their intended course of action would be a flaming disaster, with burning bodies falling out of the sky–oh, the humanity!–resulting in the adversary becoming toast themselves.The Hindenberg it is. The corporate leader then explains that IF Geim is so foolish, so greedy, so inhumane as to file a patent, disastrous suffering will follow and he’ll be burned. “100 patents a day!” Overwhelming force! You’ll go into debt suing us for nothing! You’ll be toast, baby. One big flaming Hindenburg crashing into the ground.
Baloney! All bluff and bluster. But the intimidation and scare tactics work. “OK, OK, I won’t file my patent. Sorry for even thinking about that. Now I see that patents don’t help the little guy, Mr. Big. Here, take what I’ve got for free. I’m just honored to watch you commercialize my work.”
Patents are the great equalizer. It’s what gives lone inventors a fighting chance against the big corporation that wants to take what they’ve got for free. It’s not easy and may not work, but with patents you’ve got a chance and corporations know it. Good ones respect that and will work with out. Others will try to take what you’ve got anyway, or better yet if they can, talk you out of pursuing a patent. Without one, you’ve already surrendered. You might as well throw the keys of your car to any passing stranger and hope they will pay you someday after they drive away.
The story isn’t about why patents don’t help the little guy. In fact, I think it’s about how much some big corporations despise and loathe patents in the hands of little guys. So much so that they would make outrageous statements to trick a brilliant scientists into NOT doing the one thing that could have helped him most: filing a patent. Instead, he handed them his inventions for free. Score one for the big guys.
It would be fun to go back in time and be with Dr. Geim when he was given the Hindenburg treatment. I’d like to ask a quick question of the corporate executive who made the threat:
Wow, 100 patents a day. That’s so amazing, you know, because the world’s most prolific patent filers like IBM and Canon average less than 20 filings a day, and I would be surprised if they ever hit 100 patents a day, and certainly not on one single project and certainly not over an extended period of time. So how many US patents did your company get last year? Wait, it’s right here at USPTO.gov – hey, based in your pathetic past filing rate, it looks like you could never ramp up to 100 a day. You’re trying to spook me. So just what are you afraid of? Oh, I see, my patent. Nice try, Mr. Big. I’m going to file, especially now that I see how much you care. Now go ahead and hire a hundred lawyers and create your own little fiscal Hindenburg, or we can talk about collaboration.
Oh, one more thing. You need to work on that Hindenburg act. The flames shooting out of your ears were a bit freaky.
The Summer 2010 issue of American Educator (a publication of the American Federation of Teachers) ably illustrates one of the lessons we teach in Conquering Innovation Fatigue: metrics to drive performance can have unintended consequences that may actually hurt rather than help. Indeed, unintended consequences are a major theme of our book, as we explore the problems arising from metrics, corporate and government policies, corporate innovation initiatives, laws, taxation policies, and other factors, all of which can contribute to innovation fatigue.
In terms of education and the danger of improper metrics, Linda Perlstein’s article, “Unintended Consequences; High Stakes Can Result in Low Standards,” examines a highly celebrated school in Annapolis, Maryland that received media attention and praise for seemingly miraculous success in education. The new principal arrived in 2000 to find Tyler Heights Elementary School in a dismal state with only 17% of its students getting satisfactory scores on the state test. She began redirecting efforts in the school to address this problem. Eventually her laser-focus efforts paid off, delivering the stunning success of 90% of third-graders performing well on the Maryland State Assessment, when only 35% of third-graders did so two years before. Several newspapers recognized the amazing turn-around and people at the school celebrated the success. But was it real success?
To achieve good performance on the Maryland State Assessment, education for the children was largely focused on how to do well on the test. Students learned how to write BCR’s (“Brief Constructed Response”) to deal with expected questions about poems and plays, and practiced writing these short answers for many hours, without actually studying poems or plays. “What gets tested is what gets taught,” the principal told the teachers, even if that meant leaving behind the material that was supposed to be taught according to state standards. Bins of equipment for studying science were largely unused.
Tyler Heights’ third-graders got only the most cursory introduction to economics and Native Americans, and much of the curriculum was skipped altogether. The students were geographically ignorant. . . . The third-graders had heard Africa mentioned a lot but were not sure if it was a city, country, or state. (They never suggested “continent.”) At the end of the year, the children in Johnson’s class were asked to name all the states they could. Cyrus knew the most: three. He couldn’t name any countries, though, and when asked about cities, he thrust his finger in the air triumphantly. “Howard County!”
The state standards required a broad curriculum, but the metrics for assessing that were based on one particular test and all the incentives were for helping students pass that test. In spite of the praise for the miracle at Tyler Heights, had the children really been helped?
The problem with unintended consequences from metrics such as tests is hardly unique to Tyler Heights. Daniel Koretz, also writing in the same issue of American Educator (see page 3 of the PDF file on unintended consequences), explains that in education and other fields, score inflation is a common and well known but widely overlooked problem. In the social sciences, a phenomenon that leads to score inflation is known as Campbell’s Law. While widely applied to education, it was developed while looking at business. Donald Campbell, a prominent social scientist, examined the role of corporate incentives on the performance of employees. His research led to this general formulation: “The more any quantitative social indicator is used for social decision making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.” (Donald T. Campbell, “Assessing the Impact of Planned Social Change,” in Social Research and Public Policies: The Dartmouth/OECD Conference, ed. Gene M. Lyons, Hanover, NH: Public Affairs Center, Dartmouth College, 1975, p. 35. See also Can New York Clean Up the Testing Mess? by Sol Stern.)
Campbell’s Law is at work when schools game tests to get better scores, at the expense of education. It is at work when cardiologists choose not to operate on patients who might need surgery rather than risk hurting their own published statistics on mortality rates among their patients (Koretz refers to a 2005 story from the New York Times reporting the shocking results of a survey of cardiologists). It is at work when a company tries to boost innovation with metrics or incentives that result in game playing, while leaving the real problems from culture, systems, and vision unaddressed.
In our experience, metrics and incentives can play a valuable role in driving innovation, but only when the corporation has a culture that genuinely encourages innovation, when there is a shared vision of innovation and success, and when sound systems are in place to advance innovation. Without those, you can not only waste a lot of resources in attempting to drive innovation with metrics and incentives, you can actually make a weak culture become pathological and lethal, sometimes exacerbating fatigue factors like the Not Invented Here syndrome, theft of credit for innovation, and breaking the will to share. Adding incentives linked to metrics without the right culture and systems can be sort of like throwing raw meat into a school of sharks or piranhas. You can generate a lot of activity, a lot of exciting thrashing and splashing, but in the end there will just be a lot of blood in the water and fewer thinkers and producers in your school.
As always, innovation success requires that you carefully monitor for harmful unintended consequences from the policies, programs, and incentives you have in place. Innovation metrics, incentives of all kinds, and employee performance evaluation systems and other tools associated with metrics can backfire. Unless you are tuned to the voice of the innovator and understand the impact of unintended consequences, you can be like the company we treat in Chapter 8 of our book that felt like it was a rock star of innovation while they were actually squelching it. Don’t let the unintended consequences of well-intended policies and metrics crush your innovation success.
One of the nine major innovation fatigue factors that we treat in Conquering Innovation Fatigue is theft of the invention, of the IP, or other assets. One of the most painful and most common sources of theft of an invention is from partners such as vendors or customers. One apparent example is the dispute between Woodstream Corp. and Agrizap, Inc., a case that went to district court and then on appeal to the Federal Circuit Court. Again, there are always two sides to these stories, and we encourage people not to judge losers of legal battles too harshly, for truth and justice are not always the product of courts. But the apparent facts of the case, as reported in public documents, illustrate the kind of problems that many inventors face and need to be protected against.
Agrizap, Inc. had developed a rat killer based on electrocution. It was patented in US Pat. No. 5,949,636. Woodstream, the maker of the Victor® brand pest control products, approached and developed a partnership with Agrizap. During negotiations under a non-disclosure agreement, Woodstream sent samples of the Agrizap product to Chinese manufacturers. Agrizap learned of this and challenged their motives, but a vice president of Woodstream assured Woodstream that the action was simply to obtain a price quote for use in negotiation with Agrizap and was permitted under a particular section of the non-disclosure agreement. However, it appears that they were looking for help in making their own product. Woodstream soon licensed the patent from Agrizap to allow Woodstream to sell the product to a limited group of companies such as Home Depot and Lowe’s. Agrizap agreed not to compete in those markets. They provided Woodstream with products, not knowing that Woodstream was working on developing their own version of the same. Within three years of the partnership, they were competing directly with Agrizap with their own version of the product.
Agrizap sued for patent infringement. Unfortunately, during appeal, the Federal Circuit used the recent KSR decision on obviousness to argue that the patent was simply a combination of known elements to achieve a predictable result, and thus invalidated the patent. But Agrizap also sued over fraudulent misrepresentation and won a $1.2 million award in spite of losing their patent. The existence of good documentation about their agreements, including oral aspects of the agreement, proved to be more valuable in the end than the patent itself. (Resource: “. . . Eliminates Pesky Patents Too! Agrizap, Inc. v. Woodstream Corp.,” Advanced Patent Trial Strategies (APaTS®) series, Robins, Kaplan, Miller and Ciresi, LLP, Minneapolis, Minnesota, April 14, 2008.)
In this case, unfortunately, the activities of Woodstream forced Agrizap to sue and thereby put their patent at risk. Had Woodstream been more forthcoming, Agrizap might have been able to license the patent more broadly or continue using it to generate revenue. One can argue that eliminating an invalid patent is a public service, and that may be the case, but the invalidity is painful when it comes from rules that change midstream, adding new uncertainties for patent owners. And in any case, the apparent misrepresentation by Woodstream resulted in substantial loss for Agrizap. It gave Woodstream several years of market penetration before they launched their own product, when it would have been much better for Agrizap–had they known of Woodstream’s intent–to simply enter the market directly and build momentum before Agrizap had time to reverse engineer their product. No one wants to form a partnership with someone who secretly plans to turn around and compete directly against you.
Choose your partners and friends carefully. The ones with poor ethics will usually lead to regret and loss. Make sure you have solid documentation of your agreements and understandings, in addition to strong patents, in order to protect your interests in spite of the uncertainties of law.