Patent Sharks

R&D companies are increasingly falling prey to patent sharks: firms with hidden intellectual property that surface, threatening to sue, when their rights are inadvertently infringed. The attacks usually come out of the blue, and companies' traditional lines of defense, designed for fighting off visible competitors, are essentially useless in this type of guerrilla warfare. Munich University of Technology's Henkel and London Business School's Reitzig offer five principles to help companies avoid attack. Move away from amassing huge patent portfolios for cross-licensing with competitors. Creating technological interdependence can work among competitors interested in exchanging technology. Patent sharks, however, want only monetary gains. Simplify standards and create more-modular designs. Companies become vulnerable when a shark's technology is built into a standard and they can neither stop using the technology nor switch to a feasible alternative. The solution is to simplify standards to minimize the number of irreplaceable core components and to create more-modular designs, so an infringing module can be swapped out for a legitimate one. Cooperate with competitors early in the R&D process. Disclosing unprotected ideas to competitors can seem counterintuitive, but sharing information early on may help companies avoid developing products that are susceptible to attacks. Foster interdepartmental and intercompany cooperation. Assigning patent lawyers to projects from the start reduces the costs of protecting high-quality technologies down the line. Stop flooding patent offices with insignificant inventions. The deluge has actually made it easier for sharks to secure protection for trivial innovations, thus increasing the chances that a company will unknowingly infringe on a patent.

• R&D
• Patents
• Web and mobile applications
• Litigation and lawsuits