A short case history that demonstrates the catastrophe that can result when technically and commercially superior innovations are ignored because of the desire to remain within the boundaries of a company patent.

We are all familiar with the reason for a patent – the competitive edge that comes with a monopoly. Why, then, is it often a disadvantage to be first? Of course the early entrants are committed to their technology but could the patent itself be a hindrance?

The sad but true story below provides an example:

The senior management of the company involved believed that it was impossible to make a high quality product. The technicians, who had been recruited from their leading competitor, blamed the eccentric process control. Because of a long-running feud, their opinion was ignored.

The company took pride in a history of innovation and decided to develop a more “reliable” technology to manufacture the product. This would be based on a patent in the company’s portfolio. They forecast that a consistent material would quickly attain about 30% market share in Europe.

At an early stage of the project they did identify a WOW! advantage for the finished product. They failed, however, to address fundamental issues before a very public market launch. These were not resolved until several years and $5m+ later when the opportunity had passed. Widespread adoption of CAD/CAM and progress by competitors had meanwhile eliminated all their cost and technical advantages.

The irony was that several low-cost and technically acceptable solutions, complete with WOW factor had been known from the earliest days of the project. One of them had been prototyped within two hours of asking the question: “How would I get around this patent?” The young technologist had not been allowed to pursue the ideas because they were “outside the patent” and would “cause embarrassment” if competitors found out.

The project eventually folded; the subsequent careers of the team members and their management had little correlation with their individual guilt.

So what can we learn from this history?

  • Make sure you really understand the customer, the technical requirements and the standards that are expected.
  • Customers buy solutions, not patents. Can you solve the problem quickly with an extension of reliable technology?
  • New products require professionalism throughout the company. They are not a substitute for it.
  • Anticipate problems with new products. Deal with them while it can be done cheaply. Don’t launch before you are ready.
  • Look for ways araound your own patents. If you can find them – so can competitors
  • Recognize that projects involve politics. Go/no go conditions must be clear.
  • Review and challenge market forecasts. The telephone number predictions made the project unstoppable.
  • Be aware of developments outside your immediate industry. The project was culled after a visit to an unrelated trade show showed that costings and assumptions were no longer valid.