Holding a patent means defending a patent, which can be expensive and distracting. The median cost to fight a typical patent infringement case in court is $2.5 million, according to the American Intellectual Property Law Association. The average time to trial is two to two-and-a-half years, the association says. Allstate, for one, is undeterred. In May, the company filed a lawsuit against Nationwide Mutual Insurance, accusing its rival of infringing on its first customizable insurance patent, granted a year ago. Nationwide's Vanishing Deductible offering, which decreases a customer's deductible for each year of accident-free driving, steps on optimization systems and methods Allstate owns, the suit says. When Allstate was granted two more patents in that family in July, the company added more infringement claims to the suit. Nationwide hasn't yet filed a response and continues to sell the Vanishing Deductible product. "We plan to vigorously defend our position," a Nationwide spokesman says.
One of the big factors in formulating patent strategy, says Adduci, is determining whether the competitive boost outweighs the burden. Adduci has considered seeking patents for recent software development work for an iPad project at Boston Scientific, a $7.6 billion medical device maker. The work, which he declines to detail, is innovative enough to patent, he speculates. But a patent would bring no payoff for Boston Scientific. "We're not a commercial software house, so I'm not going to bring it to market," he says. "We've thought about it, but honestly, the pain-gain ratio isn't there."
Homesteading the Future
A decade ago, the Web-based business methods that companies raced to patent eventually forced the patent office to create new rules for examining such inventions. But they remain controversial: New regulations that took effect in September now permit companies and people accused of infringement to challenge the validity of some patents without going to court. The regulations are narrow, affecting only patents for automated financial services. Still, challengers can request that the patent office take another look, hoping to have the patent revoked.
Today, many of the most interesting patents are not so much about business methods but about using technology to get ever-closer to the customer. Manipulating customer behavior is one popular goal of recently patented IT inventions, made possible by the union of mobile, social and analytics technologies. Often the manipulation is couched as a consumer benefit, but corporate profit is always kept in mind.