In what is the first of a two-part series, this article will seek to dispel the misconceptions of clearance studies and explain the value of integrating clearance studies into the product development cycle. The second article will provide real-world insight into how clearance studies can be integrated into the product development cycle along with tips and tricks for maximizing the value while minimizing the cost of clearance studies.

  • Clearance Studies: A Vital Strategy for Small and Mid-sized Enterprises to Streamline Product Development, Part I
  • Clearance Studies: A Vital Strategy for Small and Mid-sized Enterprises to Streamline Product Development, Part II

Clearance Studies: A Vital Strategy for Small and Mid-sized Enterprises to Streamline Product Development, Part I

 

Clearance studies are an often-misunderstood aspect of Intellectual Property strategy. Start-ups to mid-size businesses alike often perceive clearance studies as being more trouble than they are worth; expensive, time consuming, and not providing much value. With this reputation, why do large or sophisticated businesses integrate clearance studies early in the product development cycle?

In what can only be described as a head in the sand approach, many small businesses choose to avoid the topic of intellectual property for fear of falling into a bottomless pit of information and cost. One would certainly carom off the topic of clearance studies on their descent into the darkness. The less you know, it seems, the less trouble you can find yourself in; how can you willfully infringe if you did not know about the patent? Infringement is infringement, lawsuits are expensive, responding to cease-and-desist letters is no fun, royalty payments are a royal pain in the you know what, and redesigning your product after launch is a non-starter. Clearance studies can help avoid these issues while simultaneously helping to build your IP portfolio.

Here are a few reasons why integrating clearance studies into the product development cycle can benefit small businesses. 1) Clearance studies can identify potential liability early on, allowing designers to design around any potential issue, allow management to enter into royalty agreements before receiving cease-and-desist nastygrams, and allow IP attorneys to put opinions in place early to avoid willful infringement; 2) By having an eye on IP during the product development cycle, the IP mining process moves contemporaneously with the clearance process, making it easier to identify potential protectable IP and build out your IP portfolio early on and attract potential investors; and 3) Clearance studies instill a culture of IP thinking. By thinking about IP strategies early on, both IP risk management and building a valuable IP portfolio become an integral part of the business plan.

“Clearance studies are expensive!” you may proclaim. Clearance studies can be as expensive as you want to make them. It is always advisable to integrate a reputable IP practitioner early in the process, but much of the legwork can be handled internally before having to involve attorneys and agents. The engineers, designers, and managers are aware of major and/or unique aspects of each design. Identifying these design aspects not only reveals areas of potential liability, but also areas of potential protectable IP. Further, launching a business requires an understanding of the business’ major competitors. Identifying these competitors early on enables a business to initially focus on the IP of these competitors to avoid future liability while also identifying business’s that can be a potential revenue stream through licensing the business’ IP portfolio.

IP portfolios, again? Why is this mentioned over and over? Leveraging IP is a substantial area of value for businesses and is often overlooked. Would IBM go through the trouble of obtaining 9,130 U.S. Patents in 20201 if a patent portfolio had no value? In fact, in 2017 alone, IBM received approximately $1.2 billion in revenue from licensing its IP.2 Sure, this is an extreme example, but it makes clear that a robust patent portfolio is an extremely valuable business asset.

Now, what exactly do you do with the information you gathered during the integrated product design and clearance study process? Call an IP practitioner! Armed with the information you have gathered on your own, you have avoided the costly process of having a law firm identify potential problem areas of your product design and identifying your competitors. It is substantially less work, and less expense, for the IP practitioner to start further up the ladder than having to start at the first rung. Additionally, the product design has been optimized to avoid the low hanging fruit type IP, thereby reducing the amount of analysis required by the IP practitioner to determine whether a redesign is necessary, if an opinion should be put in place, and if other considerations need to be made in the product development process. The legwork done early on by the business allows the IP practitioner to focus on fortifying the clearance study by adding to it, not creating it, and analyze a significantly smaller list of competitor IP, which, as you may have guessed, significantly reduces cost.

Additionally, such a sharp focus on your product’s design in view of the IP landscape has revealed potential protectable IP! Yes, IP portfolios again. Many businesses spend considerable capital mining for IP. The process of integrating a clearance study into the product development cycle has begun the IP mining process for you. Such is the value of having an IP focused approach when building a business. Why leave clearance studies to the Fortune 500®? Having an IP focused approach can help your business become more profitable and attractive to investors.

In the next article of the series, tips and strategies for integrating a clearance study into the product development cycle will be addressed. The article will cover areas of focus, the type of searching that should be done, and the type of information that should be provided to the IP Practitioner, when the time comes. Further, areas where it is best to have an IP practitioner involved during the clearance study process will be covered in addition to how a business can work most efficiently with the IP practitioner to maximize the value while minimizing the cost of the clearance study process.

William T. Valet 

 

1 Last visited February 5, 2021.
2 Last visited February 5, 2021.

Image Credit: Photo by ThisIsEngineering from Pexels

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.