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How Patent Reform Will Force Changes to R&D Management

Patent Reform Will Force Changes to R&D and New Product Development (NPD) Management

The America Invents Act of 2011, commonly known as Patent Reform, is going to force a fundamental change to the way that US based CEOs make decisions about new products and innovation.  Planning for patent reform is an increasingly important topic for corporate CTOs and CEOs.  The Patent Reform law will go into full effect on March 16, 2013.  This change will demand a massive shift in activities impacting innovation, research & development (R&D) and new product development (NPD) processes that most US based companies and inventors are unprepared for. 

First To File:
The component of the law that is going to cause the most disruption is its ‘first inventor to file’ provision.  When the law goes into effect the US will change the definition of who has the right to be granted a patent for an invention.  The new, first to file, system grants the right of a patent for a given invention to the first person or organization to file a patent application for protection of that invention, regardless of the date of the actual invention.

Prior User Rights:
Another provision of The America Invents Act, called “Prior User Rights”, affects the rights companies have to undisclosed inventions.  The prior user rights provision gives inventors the right to ongoing use of undisclosed inventions (if prior use was greater than a year), even if another entity is grated a patent for the invention (due to first to file).  However, this right is limited to the inventions prior usage, its use cannot be expanded.

 An example may be a modification to a piece of manufacturing equipment that is used at a single plant.  If another inventor independently develops the same invention and is granted a patent for it, they would not be able to sue for infringement if the manufacturing plant can prove it has been using the invention for more than a year.  However, the manufacturing plant’s use of the invention is limited, it cannot expand the use of the invention without infringing on the patent granted to the later inventor.  (Note: If the invention was filed by a university or technology transfer office, the manufacturing plant is not granted the protection of prior use and can be sued for patent infringement by the patent holder.)

The Impact of Patent Reform on Corporate Innovation:
The changes embodied in Patent Reform will force R&D and new product development to do the following:

  • Decide what to file with USPTO as early as possible
  • Integrate patenting strategy with new product development processes
  • Modify, cancel outright, or reduce the expectations of open innovation initiatives
  • Identify and publically disclose ideas and inventions previously kept secret

Companies who are proactively preparing for patent reform are changing they way CTOs, CEOs and senior leadership makes decisions about their R&D strategy, investment and reporting.

  • Patent reform will change innovation, R&D and NPD strategy
  • Patent reform will change the time available for innovation
  • Patent reform will change how much budget is available for innovation
  • Patent reform will change which innovations can be protected
  • Patent reform will change how inventors respond to open innovation initiatives

Planning For Patent Reform:
In order to counter the negative effects patent reform will have on R&D and innovation companies can implement four R&D and new product development (NPD) strategic management tools:

These tools will not only counter the negative effects patent reform will have on innovation, they will improve a company’s overall R&D and new product development (NPD) performance.  These tools contribute to improving outcomes, reducing time to market, reducing costs and increasing the predictability of innovation programs.  These four tools achieve these goals by providing the following:

  • Clearer vision of long-term trends in market/customers, competitors & technology
  • Better process to select the most promising innovation opportunities
  • Clearer & better process to plan and allocate development capacity
  • Better focus in product portfolio strategy priorities
  • Better focus in technology & manufacturing strategy priorities
  • Clearer & better process to optimize product & portfolio plans
  • Better process to determine which resources to build where
  • Better focus in product planning and faster product development

 Next Steps Needed to Address Patent Reform:
Leading innovators utilize four key tools to achieve their leadership performance.  These four tools;  1) R&D Portfolio Management, 2) Technology Strategy, 3) Technology Platforms, and 4) Innovation Inventory Management, will not only counter the negative effects patent reform will have on open innovation, the tools will improve the performance of R&D, innovation and new product development organizations as a whole.

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  1. […] 3) Open Innovation cannot be targeted at a company’s most pressing opportunities and 4) Patent reform is going to have a significant effect on Open Innovation initiatives (link, link, […]

  2. […]  Additional background on the effects of Patent Reform on R&D and innovation can be found here and […]

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