High-Impact Entrepreneurship

Endeavor network member David Frazee on IP strategy in emerging markets

Recently, Endeavor Global Network Member David Frazee gave a presentation to Endeavor Global staff on common startup mistakes and IP strategy. This blog post is adapted from his presentation.

Endeavor Entrepreneurs often tell us they have no need for IP strategy; in their countries, IP enforcement is seen as comedy and filing for a patent is tantamount to handing your blueprints over to competition. David Frazee, a partner in the Palo Alto office of K&L Gates LLP, disagrees with this sentiment and argues that IP strategy is important regardless of your company’s location and size.

What is good IP strategy?

In thinking about intellectual property, many people conjure images of engineers hunched over esoteric designs corresponding with engineers at the U.S. Patent Office and doing the secret engineer handshake. David advocates an alternative vision of intellectual property, one that goes far beyond a company’s engineering team.

In David’s view, the legal question—What is patentable?—comes last when formulating an IP strategy. The first and more important question to ask is, What is really worth patenting? Implicit in the question is a business strategy perspective rather than a legal or even a technical perspective.

To determine what is really worth patenting, David suggests a process of competitive mapping in which members from diverse groups within a company get together for a brainstorming session. By asking three questions—What are we doing today? What are we not doing today? Could our invention apply in other fields?—a company can map out how its technology fits into the competitive landscape. Soliciting answers from everybody, from engineers to marketing personnel, guarantees that every innovation is viewed from multiple vantage points, and the cross-examination helps wring out maximum utility from each innovation. It’s a great team-building exercise and one that drives further innovation.

This is the real magic of the process: innovation changes from being technically delightful to being the platform for future growth. As for patents? They are the byproduct of this strategic process, and when the legal question finally arises—What is patentable?—cost-benefit analysis should be applied.

Pragmatic paranoia is advised

At Endeavor, we often hear from our entrepreneurs that the proper legal counsel required for pursuing sound IP strategy is prohibitively expensive. David’s Silicon Valley experiences tell a different story. Relative to the cost of making IP mistakes, legal counsel is cheap and the most cost-effective IP strategy is to start off on legally sound footing.

Early stage IP mistakes are surprisingly easy to make. In most non-U.S. countries, patent rights are forfeited from the first moment of public disclosure. Entrepreneurs should be aware of their country-specific regulations, but regardless of legal domicile, it is clear that IP mistakes made early in a company’s history can have dramatic repercussions.

Of course, not everything that can be patented should be patented. There are expensive patents and there are cheap patents. The expensive ones are those obtained for vanity’s sake, and the cheap ones are those that have withstood the strategic process mentioned above as well as rigorous cost-benefit analysis. The costs of filing for a patent are the same regardless of company size; this uniformity of cost bodes well for nimble startups, which can stake their ground and gain the attention of bigger players by filing strategically.

The bottom line? IP strategy is as relevant to an emerging market startup as basic business strategy—in fact, the two are inseparable. The beauty for emerging market entrepreneurs is that patents, along with their sometimes shoddy legal enforcement, are not integral to the process.

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