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Patents - A Critical Element In Quantum Business Planning

How do patents play a role in quantum business?

There are many potential innovations using quantum technology, as described in this website and throughout the literature.

A key challenge is how to create commercial value from those opportunities. Virtually all developers focus on the potential economic benefit that can be obtained from a successful quantum product. That is the goal for any business that is investing in developing this technology. But it is also an important goal for universities. Although universities do not themselves commercialize technology, they pass the technology they develop on to private enterprise for commercial exploitation in return for payments that subsidize further university research. Likewise, government funding is intended to seed technological development by private enterprise to bring products to the market and provide financial benefit, including increased employment, investment and tax revenues.

One of the first steps in quantum business planning is to try to envision what aspects of quantum innovations will be useful in the future, and what the market will be for those innovations. Compounding the complexity of this question is the fast pace at which quantum technology is evolving. As a result, developers must anticipate the market demand of the future, when development of technology is completed, not what is in demand today, when development is still in process – which may become yesterday’s obsolete technology by the time of completion. After forming that vision comes the truly difficult step – developing workable and affordable technology to address the demand of tomorrow, thus providing commercial benefit to developers.

Not all developers will be successful.

Some will misunderstand the market for the technology they are developing and will create innovative quantum technology having marginal commercial value. Others will correctly understand the market, but fail to develop technology. Those who are successful developing commercially useful quantum technology will face yet another challenge – how to protect their technology from competitors. Edwin Land, of Polaroid fame, provided insight to this problem: “The only thing that is keeping us alive is our brilliance. The only way to protect our brilliance is patents.” Land protected his brilliance with 535 United States patents.

Patents can protect innovation in a number of ways. Most dramatically, successful patent litigation can exclude others from using the invention or impose a post-trial royalty that renders further use of the invention uneconomical. The mere threat of patent infringement litigation may dissuade others from using an invention because of the substantial risks and costs of patent litigation. Finally, a patent owner can agree to license the invention to others, thereby obtaining royalty revenue, resulting in leveling the competitive playing field.

Although patents can have tremendous value, that is only true if an invention is claimed properly in a patent. What should be claimed? First, it is important to understand that it typically takes about three years from the filing of a patent application for a patent to issue, and a patent has no force until it issues. Accordingly, it is important to project what the commercial significance of an invention will be in three to ten years, and to seek claims that capture those projections. A patent that covers a narrow snapshot of what is used today is rarely valuable and usually leaves most of the value of the invention on the table for others to use.

In addition to projecting how the invention will be used after the patent issues, it is also important to project who will be using the invention.

Perhaps the value of the invention will be in a component (like a microprocessor); perhaps it will be in a device (like a computer); perhaps it will be in a system (like a network); or perhaps it will be in the use of the invention (like a user of bar codes or RFIDs to track products). Whoever the key competitive users of the invention may be, it is critical that the patent claims apply to those competitors’ activities.

Another important consideration is to ensure the developer owns the patent. If someone else has an ownership interest in the invention or has other rights to the invention, the value of a patent will be compromised, and may be negligible. For many types of inventions, this is a simple question – the initial owners are the inventors, and they are employees of a company who have agreed to assign their invention to their employer as a condition of employment. Quantum technology inventions generally present more complex ownership issues. Often the inventions result from the collaboration of inventors from different companies and of various consultants. Joint development agreements commonly include provisions about who will own the invention, who can use the invention, and who can enforce patents on the invention, which must be understood and must be commercially acceptable. Government funding can provide an important source of development funding, but generally comes with “strings” attached that define ownership of the invention and limit the ability to restrict the use of the invention by third parties.

Patents are an important component of any business plan to exploit quantum technology. However, the value provided by patents does not necessarily result merely because an invention is valuable. Developers must understand the future commercial significance of their inventions, and ensure their patents cover how those inventions will be used in the future.

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