Abstract Ideas are not Patentable, Long Live Ideas

On June 19 of this year, the Supreme Court passed down what some consider to be a landmark decision, Alice Corp. Pty. Ltd. v. CLS Bank Int’l. The short of it is that an abstract idea alone cannot be patented. This is not a new rule by any means. But figuring out what constitutes an abstract idea and what pushes an idea over the patentability edge has always been a struggle.  Though this recent decision did not provide much extra guidance, it did solidify what appeared to be a waning rule: you can’t, like, OWN a basic concept maaaaan.

One of the first, and perhaps the most famous applications of this rule was in 1854 when the Supreme Court told Samuel Morse that he could not hold a patent on the use of electromagnetism to transmit messages. Since then, the rule has ebbed and flowed at all judiciary levels, several times appearing to nearly fizzle out or change to allow patents on basic concepts that can be used to make money. But the rule has come back stronger than before. In 1972, the Supreme Court used the rule to invalidate a patent on a mathematical algorithm for converting numbers in binary-coded decimal form into pure binary form, stating that “[a]n idea itself is not patentable.”  Again in 2010, the Supreme Court struck down a patent on hedging risk in commodities transactions.  And now, in Alice Corp., the same court invalidated a patentee’s exclusive rights on using a computer-mediated transaction auditor to hedge default risk. 

This makes sense.  After all, the point of patent law, according to the U.S. Constitution, is “to promote the Progress of Science and useful Arts.” Arguably, patents bestowing rights to exclude others from using basic ideas would harm, not promote that goal. 

But nowhere is it written that unpatentable abstract ideas have no value. The law is simply that you cannot get exclusive monopoly rights on such ideas. We at ideaphore challenge the concept that an unpatented, or even a yet-untested, idea has no value at all. It is only because there has been no outlet for them – no way to turn them into money – no way to be recognized for them – and no way to protect them in transit to a company that could use them – that people have held back their best ideas. That is, until now. 

What can we do with an idea if it is too abstract or if we are not interested in spending the money to find out whether it is patentable? We at ideaphore are proposing a new system: pitch enough of the idea to get interest without giving everything away and then sell the rest, together with all of the thought and all of the work you have already put into it, at a fair market price. That is the basic premise of ideaphore.

Inspiration often strikes randomly and without regard for patentability. And the thought, work product, research, writing, and prototyping that follows inspiration is often very valuable.  When it is valuable, the inspired would often rather sit on the product of their inspiration than to give it away for nothing, even to someone who can use it.

Just because an idea is basic or small does not mean that a particular employee at a particular company has considered whether it would bring value to that company. Sometimes the best innovations come from answers to questions you never thought to ask.

Long live ideas. 

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Breaking Down Walls

At ideaphore, we have made it our jobs to break down the walls that have been built between businesses and their customers. The imaginary walls erected to make it seem as though the only way to find out what your customers want is to do so secretly, behind closed doors and one-way mirrors, and through a myriad of hooks and crooks.

Your suggestion box is dated, dangerous, and difficult for customers to find.  Your surveys ask the wrong questions and the wrong people respond providing limited insight amidst a lot of noise.  Your support forum and website usage analytics capture problems, not solutions and are expensive to mine.

You will stare at heatmaps of where people clicked on your site and charts of how long they stayed on what page. You will mine all the hashtags and sift through all that is trending.  You will go on time consuming coffee dates with people in the industry whom you hope have useful insight that they are willing to give away for free.  And you will read tons of emails, support tickets, and message boards with absolutely no intellectual property protection for the things that you and your employees read. These are all inadequate tools that provide some useful data that you can use for your business.

Nothing compares to the power of just telling your customers and potential customers that you are listening. Nothing beats telling them exactly what terms you are willing to listen to their feedback on. Nothing removes the fear of sharing ideas better than both sides understanding what contractual terms govern the conversation, before the conversation begins.  And if you pay the best idea creators, the ones that keep coming back with great insights that inspire your employees to think and act, the ones that provide you with the best negative and positive feedback, then the wall impeding trust and understanding comes tumbling down.  You can finally look your customer in the eye, and they you.

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Open Innovation is the New Paradigm

In 2003, the world of corporate research and development (R&D) took a giant, if somewhat quiet, leap forward. That year, Henry Chesbrough announced in his book that we were experiencing a Kuhnian Paradigm Shift. The kind of shift that is only recognized when the current principles can no longer explain what is happening. The kind of shift that is so important that it’s named after some philosopher dude. The old paradigm, Chesbrough dubbed “closed innovation” – and the new paradigm: “open innovation.”

In the closed innovation world, everything is done inside the building. You place your employees within the four walls you have built and they do everything. They think of the product. They keep it a secret. They research it. They build it. They test it. They bring it to market. They service it. They think of improvements. And they update it. And this all keeps going in a circle until, for some reason, customers stop buying your products.

Open innovation looks outside the four walls of your building for both the R and the D. It brings ideas from the outside and allows you to mix them with your internal ideas and knowledge to build products. And it provides a channel for you to build ideas in house and sell them to others. 

This seems obvious now – almost second nature – especially with everyone becoming electronically networked. But it went completely against the grain of the most successful and famous companies on the planet. Every company thought that they had hired the best, trained them the best, and that their employees had all the answers.  They only internalized ideas that came from employees they controlled, which makes the universe of creative minds very small. And what do outsiders know anyway? 

They know a lot.

Several societal changes have taken place that pushed us into this paradigm shift.

• Information and knowledge are now more widely spread out. Skilled employees have more mobility to go from one company to another. This makes company secrets more difficult to keep in-house.
• There is an increasing number of college graduates and skilled foreign workers.  And people can live and work from almost anywhere. There are more people who can solve complicated problems and they are more spread out.
• Increased access to venture capital means that things can move faster. The time it takes to get a product to market or even to change it after it is already out there has been shrinking at a thrilling rate. And the shelf life of technology has been getting shorter and shorter.

All these changes mean that closed innovation is not sustainable for most, especially small, companies. 

It’s not that Chesbrough invented the concept. Proctor and Gamble started its open innovation initiative back in 1999. But Chesbrough’s book drove a giant thumbtack into the R&D roadmap of every company. There is now a stark noticeable difference between closed and open innovators. You can tell an open innovator by their agility, notoriety, and the love of their customers.  And while some closed innovators still thrive, they are now outnumbered.

With the advent of the lean startup movement pioneered by Steve Blank and Eric Reis, building a startup product or service is about getting feedback from customers and potential customers. The customer is involved early and constantly. This provides businesses mobility that they never had before. If businesses can get customers and potential customers thinking about what problems they need solved and sharing those thoughts, the business can make moves within the industry faster, with more confidence, and with a higher success rate. A company that builds products based on the educated guesses of their own employees cannot keep up with an open innovator. It’s not (just) that employees make mistakes, it is that their thought process becomes constrained to trying to please their boss rather than the customer. Between crowdsourcing, crowdfunding, and the agile development/customer development stack, a startup or new venture cannot get off the ground without open innovation.

All this open innovation gets complicated for the customer and the business. We think the conversation between a business and its customers and other creative individuals should be simple and available to everyone. And that’s exactly what we have done. If you’re excited about collaborating to create tomorrow’s best products and services, wait until you see what we have in store. When we get going, we will go from experiencing a paradigm shift to having experienced it. 

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Learn How To Learn Without a Teacher

How do we learn what to do to make a living?

We spend a good portion of our early lives learning slowly by climbing a hierarchical ladder of teachers until we reach a specific trade.  From parental tutelage to broad elementary school studies to possibly slightly more focused college and even more focused graduate studies, someone is there to tell us what to learn, even if we don’t always comply. We answer to a set person until we reach someone willing to pay us and teach us at the same time.  This final apprenticeship often follows the same learn, test, reward progression as most of the schooling before it.  Because there is no apparent change from school-learning to on-the-job-learning (at least at first), many that make it all the way through to a job never perceive the subtle change. That fundamental difference between being and doing.

Sure, your boss will tell you what to do.  And the larger the corporate entity, the more predetermined your work will be.  It’s natural, and indeed expected, that you make your immediate superior happy in your work.  But at some point, you must put an ear to the ground yourself.  You must know what your boss knows, what makes your particular product or service valuable.  How is that different from the way we have all been taught to learn you ask?

That difference is who you are expected to listen to.  No longer is your goal to listen to a single person who will provide you with instructions on what to know and do to reach a success mark.  You must learn how to learn without guidance, without a set teacher.  Everyone becomes a source of learning: your boss, your coworkers, your subordinates, the supporting staff and consultants, your customers, your potential customers, prior customers that you lost, your competitors’ customers… you get where I’m going with this.  Your only chance at true autonomy is to listen. Listen daily and keep notes. Listen in the hope that you may hear, compile, and understand what it is that people will pay you to do.  

That is the message behind the “there are no answers inside your building” mentality of today’s most well known entrepreneurs.  Though you may have fallen into the habit of answering to a set person who has been assigned to you, recognize that this does not hold true in the real world and is a dangerous practice to keep.  It is unsafe to place trust in the knowledge of a small group of people in a conference room to figure out what problems need solving, how to solve the problems of the many, and how to extract value for you and your company.  The more sources of thoughtful feedback you can get and utilize, the better your chances for success.  

The internet gives us access.  It bypasses the limitations of those six degrees of Bacon we scrape through to get email introductions. It renders obsolete the arms-length approach of distributing postcard surveys at a mall with the sole feedback motivator being a sweepstakes for a free vacation to the Florida keys.  ideapho.re is our vision of a place you can go to learn from each other.  A community built specifically for customer development.  It allows companies to compile a useful database of raw feedback from people they can directly compensate for thoughtful, well-articulated ideas.  It makes learning from one another accessible on tap.  

ideapho.re is crowdsourced innovation.  What are you learning?

What We Are Doing and Why

About a year ago, the three of us formulated a hypothesis:

People often have valuable ideas, insights, inspiration, solutions, and feedback (let’s call these all “ideas” for brevity). More specifically, ideas to improve currently available products or services. Often, those ideas go nowhere because they are not, by themselves, inventions worth patenting or starting a new business around. They are usually only beneficial to the right people or companies that already make the related product or service. But these same people will not give their thoughtful, creative, valuable ideas away for free, especially explained in well-articulated prose or drawings. Without patent protection, it is currently too costly, complicated, and time consuming to get these ideas into the right people’s hands.

Our powers of legal analysis and drafting, programming, mathematics, and (of course) heart combined, we formed ideaphore LLC to solve that problem. At ideaphore, we are building an elegant, fun to use marketplace using the lean launchpad startup method. Our platform is powered by a simply worded, but robust, set of user agreements that we have written from the ground up.  These agreements combined with our web application will create a direct Open Innovation channel between those that can use idea generation to create a product or service and individuals that can provide those ideas. We are innovating innovation.

Our system allows individual experts or creative customers (sellers) to post an idea pitch directly to a company or to a category of industry professionals (buyers). The post is made up of two portions. The pitch portion is completely public and does not contain the actual idea. It is, in essence, an elevator pitch with a price and business card attached. In the idea portion, the seller fully explains, describes, and teaches the idea to the best of their ability, and this part is kept hidden. To see the idea portion, buyers that are interested must pay the price set by the seller (unless it is free). This is where the magic happens and our revolutionary contractual arrangements take over.

We are starting with the simplest possible arrangement, money for an idea and nothing else. The Seller gets their price — minus our transaction fee — and the Buyer instantly receives a shiny new, well thought out, articulated and/or drawn idea that they can evaluate and decide whether to implement at their leisure. Only the most basic intellectual property rights are exchanged so that each party leaves the transaction as though they created the idea independently of the other.  No further royalties or work are required from either side. Simplicity is the key. We will also create several other transactional arrangements for users to choose from based on feedback from buyers and sellers; we will grow with our members.    

We are in the process of testing and refining our hypothesis.  Very soon, we will be launching the first version of our web app.  Let us know if you want to play with it early, before the public release.

In the next few entries, we will explore the current ways companies use Open Innovation to get ideas from individual experts and creative customers and explain how ideaphore solves many of the known pains of these systems (which we will, from now on, refer to lovingly as “the Old Way”).