How Online

Transparency and collaboration in intellectual property:
An interview with John and Nancy Cronin of ipCapital Group

John and Nancy Cronin are principals with ipCapital Group, a consultancy that helps companies organize and capitalize on their intellectual property. HOW Online talked to them about the ways in which collaboration has changed the ways companies invent.

HOW Online: You’ve worked in the world of patents and intellectual property for many years. That world has changed a lot since you began, hasn’t it? It’s become a more collaborative enterprise.

John Cronin: It has. I began my career at IBM. While I was there, I made a study of inventors and their processes of inventing. I found that some inventors were very private, and that these inventors seemed to have a much harder time getting their ideas through the system. They were always emphasizing that the invention was their idea – they were reluctant to work with co-inventors who could have improved their work and hastened its acceptance.

I worked with one inventor at IBM, though, who was a master at getting his ideas patented and embodied in products. Whenever he was working on a major innovation, he would invite others to collaborate with him, and the group would start patenting things together. They’d all become “co-inventors.”

By sharing his ideas with others and letting them build on the ideas, everybody on the team got value out of the process. In doing so, he also spread the risk of inventing, allowing a lot more people to take pride and ownership in the idea. Not only did he have eight, ten, twelve people working on patents with him, he had all these people defending the ideas, too.

HOW Online: So by approaching invention from a collaborative point of view, individual inventors increased their chances of success.

John Cronin: Seeing this process in action, I wanted to institutionalize it, somehow, and so I started a program in 1991 at IBM called the Patent Factory. Our team comprised about 15 other people used to “extract inventions” and get them documented. Our group filed literally hundred of inventions a year and got lots and lots of patents out of it.

Because of this work, IBM jumped to the top patent holder list and became the top patent holder company in the U.S. Patent Office. At the time, the top ten list was dominated by Japanese companies. And IBM has stayed number one since.

HOW Online: So the patent process has become more collaborative. It also seems to me that it has become more transparent. Information management has changed a great deal over the last decade or so. I would imagine that the online environment, along with changes in database technology, have had a big impact on patents and intellectual property.

Nancy Cronin: Yes, patent literature is now available online to almost everybody through the U.S. Patent Office. There are also a number of more sophisticated databases like the ones that we use at ipCapital.

Years before I started work here I had a great idea that I wanted to patent. At the time, I lived near Philadelphia and you couldn’t get any of that information online. I would have to go downtown to a library and work with this terrible system of microfiche. Nowadays there are very powerful tools that can do much more sophisticated analyses. But go back a decade and the world looked very different.

John Cronin: And over the last decade, more companies have gotten involved in licensing. A lot of companies are saying, ‘Let’s make some money from our patents. If IBM can do it, why can’t we?”

Nancy Cronin: Yes, the sophistication level has increased. We used to have to work very hard to educate our prospective clients on the power of intellectual property. Now companies regularly ask us about their intangible value. They want to know how to capture and utilize it.

HOW Online: And there are plenty of tools that make the process more transparent.

John Cronin: You – and anyone else, for that matter – can do searches to determine which companies are likely to license your patents. Or how many times your patents have been cited, which says something about how valuable they are.

The bottom line is this: The United States doesn’t really manufacture much anymore. With that sort of work shifting to countries like India and China, the U.S. needs to get better at producing ideas and intellectual property. Because of that trend, patents will become even more important over the next 10 years.

Nancy Cronin: The common mistake most companies make is not having a strategy. They’ve not thought about the ways in which IP can contribute to the long-term value of the company. Companies know that they need to protect their products and technologies through the patent process, but they usually don’t take the next step. They forget they actually have to decide how to use patents.

Are they going to litigate when their patents are violated? Are they going to license them? Are they looking to use IP creatively against their competitors?

John Cronin: Companies don’t always think of their intellectual property as an asset. Most companies don’t even have an inventory of their patents, let alone a valuation of them. They think of intellectual property as simply the cost of doing business – because you have to protect what you’re doing.

HOW Online: So you’re helping companies assume a more proactive posture regarding their patents, and you’re helping them manage risk in the process. Looking at this from a “HOW” perspective, I would imagine that all this work sets the stage for further innovation.

John Cronin: Inside the circle of innovation is a smaller circle called invention. And inside that is a smaller circle of invention is Intellectual Property or IP. So intellectual property is at the center of invention. Smart inventors invent the right few inventions to create large innovations, protect a subset of these right few inventions.

Bringing innovations to market requires investment. It requires negotiations between buyers and customers, and lots of other things to make it real. When inventions are protected, it allows businesses a certain freedom to bring their work to market. They can talk about their inventions more freely, leverage them in negotiations but be assured they wont lose them.

Nancy Cronin: If you had no way of protecting your ideas, you’d shelter them. You’d be very reluctant to talk to other people about them, worried that other companies might copy your innovations and steal your market share. IP allows companies to be less risk averse, more strategic in their behavior, and fosters “safer” collaborative efforts between companies.

John Cronin: And if you do it right, you can really leverage your business. How did Google get to be so big so fast? By smart management of its intellectual property. What about YouTube? They don’t even have patents. Their brand is their intellectual property. Try to start a competing company by another name and see how well it goes. IP management protects innovation in many forms.

HOW Online: After your work at IBM, you started ipCapital Group, the company you run now. Judging from your success, I assume that a lot of your clients have a great need to set up their own patent factories.

John Cronin: I started the company in 1998 as a consulting practice. We just had our tenth year in business, and I find that the concepts we developed at IBM are still new to hundreds of our clients. We educate, help extract inventions, do patent mapping and develop IP strategies, document inventions, and so on. We started to recognize that everybody needed what we were doing, so we invested millions of dollars to create a “methodology”, a systematic approach, that we could use with any client.

We have also built a strong practice licensing intellectual property. A client will call and say, “We’ve got inventions, and we’d really like to find somebody who would like to license them.” So we figure out the target licensee and how much the licensing fee should be, and then we approach the licensee and negotiate a deal.

HOW Online: This has been really fascinating. We’re eager to share your thoughts with our community. Thank you for your time.

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