A technology company must have its patent strategy, to paraphrase H. L. Mencken, as a dog must have his fleas. (Mencken was speaking of professors and their theories, but any theorist worth his fleas will doubtless sport a few patents as well.) The truth, however, is that few companies develop IP strategies that are business driven and responsive to changing circumstances; most, instead, indulge in guesswork and fall victim to inertia.

The consequences of pursuing IP without a strategy are predictable enough. Patents make expensive wallpaper. A portfolio that grows haphazardly will ultimately diverge from what is important to business success, covering the past rather than the future and inflicting no pain on competitors. What appears formidable in terms of numbers of patents or their cost may be no more than strategically useless decoration.

How to achieve this unhappy state of affairs? One excellent way is to view IP procurement as a scientific enterprise rather than a business function. Top managers may be tempted to cede full responsibility for IP to the chief technology officer or, worse, to fragmented groups of engineers, each operating with its own budget and discretion. The approach seems superficially sensible, since those others know about patents and technology, and lord knows the managers already have their hands full. But scientists often pursue the intriguing rather than what is important – that latest technological twist may engender appreciative oohs and ahs but no business benefits realizable through IP.

Conducting an IP due diligence means investigating and evaluating a company's IP assets, practices, and risks. How strong are the patents? Will they help the company succeed? Do outsiders – an inventor's former employer or university, competitors bristling with their own patents – have any potential claims? Most commonly, IP due diligence precedes a transaction such as a round of venture funding, a merger, or an acquisition. Not only do professional investors hate to watch their money fund lawsuits, but also must measure the worth of IP assets in order to place a realistic value on prospective investments. A company's market projections may ultimately rest on its ability to secure a strong IP position, and, moreover, that position can itself prove a valuable asset even if the company fails.

Too bad, then, that IP due diligence can often seem a ritual ticking off of checklist entries rather than an effective search for meaningful issues. The grand menu of items that might be considered is enormous – if you do not believe it, feast on the banquet that ends this chapter. But performing an IP due diligence should not feel like being lost in an endless, expensive buffet, and, if it does, it's time to find a different restaurant. Context and common sense dictate the proper tasks. If a company's patents do not figure strongly into its business strategy (or an investor's estimation of what that strategy should be), why spend time reviewing them?

The last chapter outlined the various options for protecting innovation, their advantages and disadvantages. If managers could consult these criteria to identify the best strategic options for a given situation as easily as choosing the right fence to surround a yard, IP planning might be a simple matter of comparing price, availability, and preference. Would that it were so easy. Not only is the exercise of comparison more subtle, but, in fact, we have so far considered only half the story. The criteria discussed in chapter 1 set the basic legal parameters – the boundaries of your property. The ability to enforce IP rights, however, means the power to eject squatters. The fanciest estate quickly becomes uninhabitable if anyone can pull in and stay for free. As Odysseus learned when he returned from Troy to a houseful of gluttonous freeloaders with designs on his wife, having a legal property right isn't the same as vindicating it.

Not that anyone should be too eager to resort to litigation. The best lawyers would rather persuade the squatters to leave than smite them as did Odysseus. But it is essential to assess the practical availability of a legal remedy along with the suitability of the property right, since only rights you can enforce – in terms of money, time, and reliability – are worth procuring.

Poor Derek. Commercial reality being what it is, at some point Mouthscape will receive a letter accusing it of patent infringement or find itself sending such a letter. It is the price of playing in the marketplace. Although only about 1% of United States patents ever make their way into court, the sheer number in force at any given time and their importance to their owners make it likely that commercial technology players will, eventually, become embroiled in a patent dispute. Mouthscape's initial reaction, either to a threat or to the opportunity to threaten, may well dictate the course of the ensuing dispute by abandoning or preserving options – perhaps even pre-ordaining the outcome.

The receiving end of a threat

A corporation may be a legal artifice but it is run by people and, when menaced, will react in human terms – often passing through the stages psychologists associate with grief or trauma: fear, denial, anger, guilt, bargaining, depression, and acceptance. No self-respecting company would admit to such emotional, unbusinesslike behavior, of course, and therein lies perhaps the greatest danger. In the throes of a deeply human response it is unwilling to admit to, Mouthscape, having been threatened by a large competitor at a critical business juncture (is there ever an opportune time to be accused of infringement?), may react in numerous self-defeating ways. And, once taken, a rash action cannot be revoked. Here is a hit parade of the most hazardous missteps.

Licensing is the vehicle by which the IP rubber meets the commercial road, with someone else doing the driving. The idea of allowing others, even competitors, access to hard-won proprietary rights may have seemed absurd a generation ago, but today it is commonplace and a huge source of IP-driven revenue. To be sure, licensing is by no means the only way to realize value from IP; many patents thrive locked away in a safe, securing the realm against marauding technology thieves and increasing (sometimes largely constituting) a firm's asset value. But, as soon as a company or institution finds it attractive to look beyond its own capacity to monetize technology, licensing becomes inevitable.

A license is essentially a promise not to sue. You are given permission to infringe someone's IP without fear of legal repercussion. A ticket to a concert is also a license – permission to enter and listen without being thrown out unless you make too much of a pest of yourself (that is, violate the terms of the license). Unlike a concert ticket, however, an IP license is personal. Concert promoters do not care if you give your ticket to someone else. An IP owner, by contrast, does not want valuable rights falling into the wrong hands – those of her competitor, for example, or hands simply less capable of effectively exploiting the IP (for the ultimate benefit of its owner).

It wasn't so long ago that intellectual property (IP) didn't much matter to company managers and investors. Copyright was for writers and artists, trade secrets were difficult to protect, and, as for patents, they seemed at best a necessary expense for large technology companies. Not that IP was exactly ignored; epic patent battles followed the introduction of photography, the telegraph, and television, to name just a few disruptive technologies, while the music and broadcast industries struggled over copyright royalties for most of the twentieth century. But few companies viewed IP as a strategic asset. Particularly in the United States, courts historically detected the foul odor of monopoly when asked to enforce IP rights, and the universe of protectible subject matter was limited – software, for example, lay firmly outside the patent system, while the prospects for biotechnology remained uncertain. Lawsuits involving patents were (and still are) enormously expensive, yet few companies licensed their IP routinely and voluntarily. These circumstances left IP uncertain in scope, difficult to enforce, and unlikely to yield an economic return, absent exhausting and potentially ruinous litigation.

As a result, managers spent little time fretting over IP. Often disinclined to dive too deeply into the details of their companies' technology in any case, many simply delegated, trusting that responsibility would reach the sober hands of engineers, scientists, and lawyers padding about their offices in mismatched socks. And why not? Business success seemed to depend no more on IP than the locks on the doors.

IP? What's IP?

What's in your head is intellect – the mind, emotions, imagination and creativity, problem-solving ability. “Intellectual property” (IP) establishes rights in intellect made real – writing, art, music, invention. IP rights are bastions of ownership created by law and granted automatically or by government agency or decree. Though intangible, IP is no less real than a bank account or citizenship. But IP rights are creatures of the laws that underpin them. Only those expressions of intellect falling within a favored category receive protection, allowing the owner to prevent unauthorized use. Everything else is unprotectible; it belongs to the public.

Most creative efforts will be eligible for protection within some IP regime. The traditional categories, and the ones with which we will be most concerned, are:

• patents: protect most technologies – useful articles and machines, processes, and compositions of matter, as well as ornamental designs and plants;

• trademarks: protect words, names, symbols, sounds, or colors that distinguish goods and services;

• copyrights: protect works of authorship, such as writings, music, and artworks that have been tangibly expressed, as well as computer software;

• trade secrets: information, such as formulas and manufacturing techniques, that companies keep secret to give them an advantage over their competitors.

It is important to distinguish IP from obligations created by contract, custom, or other law; for example, anything an employee creates in the course of his work may belong to his employer.

The analysis of thousands of inventions by Altshuller resulted in the formulation of typical system conflicts, such as productivity vs. accuracy, reliability vs. complexity, shape vs. speed, etc. It was discovered that, despite the immense diversity of technological systems and the even greater diversity of inventive challenges, there are only about 1250 typical system conflicts.

Typical conflicts can be overcome by a relatively small number of inventive principles. There are 40 inventive principles for overcoming system conflicts, and each of them may contain a few sub-principles, totaling up to 100. The inventive principles and typical system conflicts are combined in a system conflict matrix (or the Matrix, for short). The Matrix contains attributes that are the most common for all technological systems (e.g., weight, strength, length, surface area, power, ease of usage, etc.). These attributes are arranged in rows and columns.

Suppose there is a need to improve some attribute of the system. If this improvement causes the worsening of another attribute (i.e., a system conflict develops), the intersection of the row and column corresponding to the conflicting attributes will show the potentially useful inventive principles (Fig. A2.1). The application of one of these inventive principles, or their combination, has a high probability of solving the problem.

The inventive principles are formulated in a general way. If, for example, the Matrix recommends the inventive principle flexibility, it means that the solution to the problem relates somehow to changing the degree of flexibility or adaptability of the technological system being modified.

The tools of TRIZ, as described in Chapters 2 and 3, are very helpful when searching for new conceptual solutions. Their direct application to complex situations, however, can at times be rather perplexing: it may not be clear what system conflict should be resolved, or which component of the system should be modified, or what sufield model describes the problem most adequately. To assist the problem solver in making these and other important decisions, Altshuller developed the Algorithm for Inventive Problem Solving or ARIZ (AlgoritmResheniaIzobretatelskihZadach – in its Russian abbreviation).

Goals of ARIZ

ARIZ pursues three major objectives: problem formulation, breaking psychological inertia, and combining powers of various tools of TRIZ.

Problem formulation

A conventional approach to problem solving is to jump to potential solutions once a problem has been presented. Solving a difficult problem may require numerous leaps. From a TRIZ standpoint, if a problem cannot be easily solved, it usually means that it is poorly formulated. A properly formulated problem can be easily solved automatically, or it becomes clear that there is no necessary scientific knowledge or technology available to find a solution. In many cases, the proper problem formulation includes the selection of a system's component to be modified, and the formulation of a physical contradiction for this component.

For this reason, ARIZ contains a set of steps that lead the problem solver from the initial vaguely, or wrongly, defined problem to a lucid formulation of a system conflict and a physical contradiction.

Technology is as old as mankind. Myriad small and large innovations have shaped the world, and are molding the future of civilization. The prevailing majority of these innovations have been developed haphazardly; their creators have not used any organized approach to finding new ideas. Despite the great past achievements of a random approach to innovation (the wheel, the automobile, the radio, the airplane, the computer, antibiotics, to name just a few), that approach has become increasingly inefficient in today's fiercely competitive marketplace. This chapter shows the principal shortcomings of random innovation, and the need to replace it with a method of systematic innovation.

Product development process

Every new product – whether the “product” is a technology, a device or a production process – originates from a new concept. To become a product, a concept must be generated, then evaluated and, finally, developed. This flow of activities constitutes the product development process (PDP) (Fig. 1.1).

The process begins with the recognition of a need. Then, the designer must transform this need into a clearly defined problem, or a set of problems. The output of this stage is a problem(s) statement accompanied by a list of various constraints (e.g., performance specifications, manufacturing limitations, economic conditions, statutory restrictions, etc.).

In the next phase, various conceptual solutions to the problem(s) are generated. Here, the most important decisions are made which bring together engineering, production, and commercial aspects of the problem.

Problem solving is the core of concept development. Solving problems usually starts with attempts to find solutions by using conventional means. Frequently, however, such an approach does not work. Suppose, for example, that we want to enhance the comfort of a car. One of the simplest known ways to achieve this goal is to enlarge the passenger compartment. This will result in increased weight and size (drag resistance), and consequently in increased fuel consumption. Thus, gaining advantage in one part of the car will be negated by disadvantages in other parts.

An engineering design problem becomes difficult when attempts to meet one constraint make another constraint, or constraints, unattainable. Designers are usually taught that it is impossible to have the “best of both worlds,” so they take for granted that trade-offs are unavoidable.

There is not a universal approach to distinguish the best trade-off from a variety of potential options. Much effort is spent on trade-off studies, but rarely can the engineer claim that the selected trade-off is the best one possible, and that the entire design space was examined. As a rule, many products and processes are designed with less than optimal performance.

Another, more fundamental, concern is the very nature of trade-offs, which is an incomplete fulfillment of opposing requirements. In other words, trade-offs are inherently suboptimal designs.

This chapter describes concepts and tools of TRIZ that make developing trade-off-free – i.e., breakthrough – designs possible.

The concept of predictable evolution of technological systems, proposed by Genrikh Altshuller, implies that various contributing factors such as the efforts of individuals producing breakthrough inventions, market forces, political conditions, cultural traditions, etc. may greatly affect the pace of this evolution (speed it up or slow it down), but they cannot significantly alter its direction. The steam engine, electric motor, automobile, airplane, radio, ball pen, laser, transistor, integrated circuit, and all other major innovations would have been invented sooner or later even if their actual creators were not born.

This chapter describes the laws of technological system evolution that are the conceptual foundation of TRIZ. A judicious use of these laws may greatly contribute to success in business and engineering practices, since technology leaders and designers are able to identify the most promising innovations among numerous candidates. These laws can also be used to efficiently develop novel technologies and products, to objectively assess those systems' business potential, and to predict what competitors may come up with.

Laws of technological system evolution

Technological systems are not frozen entities. They are in a state of continuous change in order to satisfy the changing needs of society and to survive in a very competitive global market. The evolution of any technological system can be presented as a set of stages, with the system at each stage being distinct from the system at the previous stage.

Algorithm for inventive problem solving, ARIZ

The central analytical tool of TRIZ (ARIZ is a Russian abbreviation). Its basis is a sequence of logical procedures to analyze a vague or ill-defined initial problem/situation and transform it into a distinct system conflict. Consideration of the system conflict leads to the formulation of a physical contradiction whose elimination is provided with the help of the separation principles, and by the maximal utilization of the resources of the subject system. ARIZ is a system of the most fundamental concepts and methods of TRIZ, such as ideal technological system (ideal system), system conflict, physical contradiction, the sufield analysis, the Standards, and the laws of technological system evolution.

Altshuller's metrics

See Technology assessment curves.

Auxiliary function

A function supporting the system's primary function.

Auxiliary tool

A tool supporting the performance of the main tool(s). Particularly, auxiliary tools perform the function of measurement and/or detection in a system whose primary function is not measurement or detection.

Bi-system

A system consisting of two mono-systems.

Chain sufield

A sufield in which S2 is controlled by another substance, S3 (see Chapter 3, Table 3.3).

Coefficient of convolution, Cc

A measure of the system's degree of ideality; the ratio of the number of sufields to the number of elements these sufields contain (or the ratio of the number of functions to the number of sufield elements involved in the performance of these functions). For an elementary sufield, Cc = 1/3; for a chain sufield, Cc = 2∕5; for a double sufield, Cc = 1∕2.

Completely convoluted bi- or poly-system

A completely integrated bi- or poly-system performing two or more functions. In such systems, sub-systems responsible for individual functions are often merged into one substance; their separation is impossible without disintegrating the whole system (e.g., in photochromic reading glasses, two functions – eyesight enhancement and shielding sun light – are performed by one substance – the lens material).