Even Reality TV Values IP Strategy

March 10th, 2010

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I was recently hooked on a reality television show called “Shark Tank.” I know, I know! Before you go judging me, just hear me out. And yes, this somehow relates to intellectual property (IP) matters.

For those of you that do not know, the show, which is a remake, offers a fascinating look into investment negotiations between hopeful entrepreneurs and potential angel investors. The show is obviously over-dramatized and keenly edited to show some sort of tension. Entrepreneurs pitch to a panel of five veteran investors, to artificially create an environment of out-bidding and competition between the sharks. Needless to say, most of the fun with the show stems from watching crazy ideas fall flat on their face and, on the upside, cheering on novice businesses as they make a dream deal.

Since we have been fine-tuning and analyzing what IP strategy best fits Border Stylo, the show actually has an added level of personal interest to me. A few celebrity-type investors make up the board of sharks. Although I really like Robert Herjavec’s personality and style, it is Kevin O’Leary’s that always ends up making a bigger impact, mainly due to relevance of his comments.

Kevin, who very smartly made his billions, always speaks truth, and he never sugarcoats it. As such, most of the time he comes off as a cold-blooded jerk, and it is obvious the producers jump on this and take advantage. But one of Kevin’s truisms is always emphasizing the importance and value of Intellectual Property (IP).

Pitching Element Bars – “There is nothing proprietary about the process or what you’re doing,” points out Kevin at minute 5:35. Watch the entire sequence to catch the context and some of Kevin’s jabs.

Kevin O’Leary has a very good point, and one that we have been learning our way through here at Border Stylo. The biggest lesson we’ve learned, that keeps coming up over and over again, is that developing an IP strategy is a very sensitive but truly important facet of any small business, whether in tech or not. Ultimately it is one of the things which investors care about first and foremost. Whether you are manufacturing a good or just offering a service, the more IP value you can add to your business portfolio, the stronger position you are in to raise funds and/or leverage this for revenue and monetization.

An IP strategy is not something you sit down and decide on after x number of hours. You can try to philosophize your way through it, as we most certainly tried, but it’s more of a dance than anything. We’ve been learning the old-fashioned way that an IP strategy evolves and adapts as circumstances (both opportunities and questions) arise.

It is worth highlighting that a strategy does not need to be solely for offensive measures. In fact, IP rights can be used for protective and defensive measures also. This is a large motivator behind a part of Border Stylo’s IP strategy. Preemptively filing an application for a patent, whether you intend to enforce it or not, can be a long-term, strategic move to make. (Jumping the gun, for those of you with an already sophisticated understanding of IP matters, prior art is not necessarily automatically granted by just publishing a paper.) Investors, no matter how altruistic, appreciate forward-thinking efforts that protect their investment. In fact, if you plan to file solely for retaining IP rights and cannot think of other complementary reasons to file your work with the USPTO, you probably have not thought through all the complexities and costs of proper use for your IP. This was the first thing we realized a bit over a year ago.

Now, setting up the correct approach for your business has a very delicate cost-benefit analysis that takes into consideration many variables. These vary from industry to industry, and from company to company. Making the right analysis definitely can be a costly endeavor—IP lawyers can charge as much as $500-800 an hour, with a minimum retainer paid upfront. . Our most difficult challenge was finding the right attorney who understood our needs and our limits as a start-up. But ultimately, the investment in developing an IP portfolio and strategy, guided by the right experienced IP lawyer, we hope will generate a long-term valuable return

While deciding on the right IP strategy, however, we aim to remember the spirit and intent behind our chosen routes so as to not deviate in the midst of the process. The legal world and business realities often crash. As an entrepreneur, your risk assessment of any given situation is confronted by the clash of these two worlds on a daily basis. For example, do you decide to pursue a patent on a technology, or do you evaluate how realistic (ie costly, manageable, scalable, etc) it is to enforce it as a startup? Maybe your invention’s application is best kept as a trade secret, from a business perspective. Regardless, remembering our macro-level strategy is what we deem to be most important. After all, brand is actually the most valuable asset to any venture.

As a software company, the issues of IP are further complicated for us with the entire open-source and copyleft movements that are more pervasive in our neck of the woods. Border Stylo holds the utmost respect for these movements and we are leading off, or at least think we are, on the right foot as a tech company keeping these in mind, as our strategy for IP continues to evolve.

This is where Kevin O’Leary may be wrong—not every part of your technology needs to be proprietary for it to be of value to your business goals. We do not see copyleft and copyright ideologies as competing philosophies. We think they can both be embraced and work hand-in-hand, complementing each other.

Although we do consider filing patent applications a defensive measure, we also are committed to maintaining a positive relationship with the seemingly opposite school of thought of open-source software. Therein lies one of our realizations: not all software is the same, not any more than all inventions are the same. Without going into the many assets and differences of open source software vis-à-vis proprietary, one thing we have learned is that there are some inventions which could have only been created in an open-source model and others which only could have been invented in the proprietary model, especially when part of the invention is its “mass adoption” or becoming a “standard.” As such, part of our technology is going through the USPTO, and another part of our technology is being offered and contributing to copyleft licenses. The difficult part is maintaining a clean record of the different limitations behind all these licenses.

My hope is to continue elaborating on this subject of IP value as we continue to learn from and evolve our own strategy. If sharing these experiences has a spillover benefit for you as a reader, then that makes it all that much more bearable. If nothing else, hopefully I can give you more clips from other favorite shows of mine, too. So please stay tuned!

Tagged with: intellectual property, open source software, copyleft, copyright, entrepreneur

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