Who Says Innovation Belongs to the Small? (NYT)

This read further highlights the importance of the creation of a deliberate network and innovation infrastructure to nurture this kind of change (whether public or private) - it simply does NOT happen in a vacuum.

An essential element for it to flourish is that the innovators and inventors MUST be close enough to the technology and systems they're trying to innovate so that the resulting innovation is relevant and not the case of a "solution looking for a problem".

Who Says Innovation Belongs to the Small?

By STEVE LOHR

FOR more than a decade, the prevailing view of innovation has been that little guys had the edge. Innovation bubbled up from the bottom, from upstarts and insurgents. Big companies didn’t innovate, and government got in the way. In the dominant innovation narrative, venture-backed start-up companies were cast as the nimble winners and large corporations as the sluggish losers.

There was a rich vein of business-school research supporting the notion that innovation comes most naturally from small-scale outsiders. That was the headline point that a generation of business people, venture investors and policy makers took away from Clayton M. Christensen’s 1997 classic, “The Innovator’s Dilemma,” which examined the process of disruptive change.

But a shift in thinking is under way, driven by altered circumstances. In the United States and abroad, the biggest economic and social challenges — and potential business opportunities — are problems in multifaceted fields like the environment, energy and health care that rely on complex systems.

Solutions won’t come from the next new gadget or clever software, though such innovations will help. Instead, they must plug into a larger network of change shaped by economics, regulation and policy. Progress, experts say, will depend on people in a wide range of disciplines, and collaboration across the public and private sectors.

“These days, more than ever, size matters in the innovation game,” said John Kao, a former professor at the Harvard business school and an innovation consultant to governments and corporations.In its economic recovery package, the Obama administration is financing programs to generate innovation with technology in health care and energy. The government will spend billions to accelerate the adoption of electronic patient records to help improve care and curb costs, and billions more to spur the installation of so-called smart grids that use sensors and computerized meters to reduce electricity consumption.

In other developed nations, where energy costs are higher than in the United States, government and corporate projects to cut fuel use and reduce carbon emissions are further along. But the Obama administration is pushing environmental and energy conservation policy more in the direction of Europe and Japan. The change will bolster demand for more efficient and more environmentally friendly systems for managing commuter traffic, food distribution, electric grids and waterways.

These systems are animated by inexpensive sensors and ever-increasing computing power but also require the skills to analyze, model and optimize complex networks, factoring in things as diverse as weather patterns and human behavior.

Big companies like General Electric and I.B.M. that employ scientists in many disciplines typically have the skills and scale to tackle such projects. Their advantage is in “being able to integrate innovations across these complex systems,” said James E. Spohrer, a scientist at I.B.M.’s Almaden Research Center in San Jose, Calif.

Technology trends also contribute to the rising role of large companies. The lone inventor will never be extinct, but W. Brian Arthur, an economist at the Palo Alto Research Center, says that as digital technology evolves, step-by-step innovations are less important than linking all the sensors, software and data centers in systems.

Today, Mr. Arthur said, the unfolding “digitization of the economy” is in some ways a modern rerun of past technology waves, from steam power to electricity. “It’s not individual inventions that matter so much, but when large bodies of technology come together and have an impact across the economy,” he said. “That’s what we’re seeing now.”

In computing, some technological frontiers require size and deep pockets. To be competitive in Internet search and some other Web services, which cater to hundreds of millions of users worldwide, a company must build data centers of gargantuan size, and only a handful of companies can design and afford them, led by Google and Microsoft.

“There are just a few companies in a position to do computing and process data in a way never done before,” observed Richard F. Rashid, Microsoft’s senior vice president for research.

The innovation tilt toward big companies, to be sure, is a rebalancing. There is still plenty of bottom-up innovation, including promising start-ups in the environmental and energy businesses. At the individual level, tinkering users have made significant contributions in fields as diverse as software and sporting goods.

STILL, the pendulum of thinking on innovation does seem to be swinging toward the big guys. In health care, institutions that have done best in improving the health of patients with chronic conditions like heart disease and diabetes have been larger, integrated systems like Kaiser Permanente in California, Intermountain Healthcare in Utah and the Geisinger Health System in Pennsylvania. They have the scale and incentives to invest in things like wellness programs and electronic health records.

In a new book on health care, “The Innovator’s Prescription,” Mr. Christensen and the co-authors, Dr. Jerome H. Grossman and Dr. Jason Hwang, say that such large integrated systems “have the scope to create within themselves a new disruptive value network.”

In an e-mail message last week, Mr. Christensen, a professor at the Harvard Business School, said that big companies do tend to resist disruptive innovation but that size need not spell failure. “The good news is that, once they recognize the benefits of disruptive thinking,” he wrote, “the big companies have all the resources necessary to induce change.”

Counting Down to the End of Moore’s Law (NYT)

Counting Down to the End of Moore’s Law

By Saul Hansell

“We’re looking at a brick wall five years down the road,” Eli Harari, the chief executive of SanDisk, said to me earlier this week.

Brendan McDermid/Reuters Eli Harari

In 1990, when SanDisk, which he founded, shipped its first generation of flash memory — the sort that can remember information even after you turn off the power — each chip stored four million bits of information. Today, the biggest chip SanDisk makes holds 64 billion bits.

In other words, the capacity of flash chips has doubled 14 times in 19 years. That’s faster, Mr. Harari boasted, than Moore’s Law — the observation by Gordon Moore, the co-founder of Intel, that the capacity of semiconductors doubles roughly every two years.

Normally, when I’ve talked to chip executives about the limits of Moore’s Law, they are confident, in a vague sort of way, that they will be able to continue to increase the capacity of their chips one way or another.

Mr. Harari was a great deal more precise about the brick wall his company is heading toward: “We are running out of electrons.”

“When we started out we had about one million electrons per cell,” or locations where information is stored on a chip, he said. “We are now down to a few hundred.” This simply can’t go on forever, he noted: “We can’t get below one.”

SanDisk and other flash memory makers have figured out how to cram even more information into that tiny cell. Until a few years ago, each of those cells worked the way most computer memory does — it represented either a zero or a one. Now the chip can actually count how many electrons are in a cell, and depending on the number it can write and read up to 16 states (recording a number between zero and 15, or four bits to a computer).

Let’s stop for a second to take stock of the wonder of all this. The last flash memory card I bought for my camera held two gigabytes (16 billion bits). It cost me $6. And somewhere inside it is something that is counting electrons 40 at a time. An electron, in case you forgot your high-school physics, has a radius of 2.8179 × 10−15 meters. In layman’s terms it is pretty much the smallest thing you could ever count.

The problem here is that the way current flash technology stores those electrons, they don’t always follow instructions, especially as the memory card gets older.

“When you have a billion cells, you cannot uniformly control them to one electron,” Mr. Harari said. “If I want 40 electrons, plus or minus two electrons, I can do that when the device is new. But seven years out, it will start to smear.” In other words, the electron count will start to vary from one cell to the next.

SanDisk, to steal a line from a bigger Silicon Valley company, has an app for that. The controllers on each of its chips keep track of these errors and compensate for them.

There is still some more engineering to do. The company can try to make cells smaller, get more bits per cell and improve the controllers.

But at the end of the day, Mr. Harari said, it probably can double the capacity of its chips only two more times. Once the industry goes from its current 64-billion-bit chip to a 256-billion-bit chip (that’s 32 gigabytes), it will hit that brick wall.

Then what?

Your camera and music player will certainly be able to store a lot of files. But you won’t be able to count on next year’s iPhone having double the capacity at the same price.

He may be heading for a brick wall, but Mr. Harari has a plan: Head up.

“When Manhattan ran out of space, they built skyscrapers,” Mr. Harari said. “It’s the same for us.”

Right now semiconductors are all based on the particular properties of circuitry etched onto a flat piece of silicon. Four years ago, SanDisk bought Matrix Semiconductor, a company that was trying to develop a way to stack multiple layers of very tiny memory cells on top of one another.

(SanDisk is far from the only company trying to explore the third dimension in flash memory. Bill Watkins, the former chief executive of Seagate, recently joined the board of a company, Vertical Circuits, that uses a silver ooze to stack memory chips.)

So far, Mr. Harari said, the company has been able to build chips with four or eight layers. That’s the good news. The bad news is that they can write information to those chips only one time. That might be all right for distributing software or video games, but most flash memory is sold for use in devices like cameras, which need memory that can be erased and rewritten.

Mr. Harari said the company’s engineers were making good progress. But he didn’t have the Pollyanna view of some chip executives that Moore’s Law will apply forever.

“When you have a new material, all bets are off,” he said. “Until you have it, you don’t have anything.”

In Innovation, U.S. Said to Be Losing Competitive Edge (NYT)

The question to ask is, assuming PR wants to play this field (and everything points that it intends to...however misled) what is PR doing to counter this effect?

In my opinion, the answer ought to be EDUCATION. But this is exactly what PR has NOT been doing. Most of the education in PR has been virtually privatized to the point that over two thirds of admissions to the public system of higher education comes from private schools.

It's no secret that, similar to the US, the public education in PR has failed to prepare the next generation of technology workers and as a result setting both countries decades behind the current leaders in this industry.

To be able to compete in the international arena of technology both the US and PR must engage in an aggressive push for education - even if this strategy will show results in 10 years.

PR cannot afford to lose more than one generation in getting ready its technology aspirations. The next 5 years will be critical in making such changes.

In Innovation, U.S. Said to Be Losing Competitive Edge

By STEVE LOHR

The competitive edge of the United States economy has eroded sharply over the last decade, according to a new study by a nonpartisan research group.

The report by the Information Technology and Innovation Foundation found that the United States ranked sixth among 40 countries and regions, based on 16 indicators of innovation and competitiveness. They included venture capital investment, scientific researchers, spending on research and educational achievement.

But the American economy placed last in terms of progress made over the last decade. “The trend is very troubling,” said Robert D. Atkinson, president of the foundation.

Measuring national competitiveness and the capacity for innovation is tricky. Definitions and methods differ, and so do the outcomes. For example, the World Economic Forum’s recent global competitiveness report ranked the United States first. Much of the forum’s report is based on opinion surveys.

A report last year by the Rand Corporation concluded that the United States was in “no imminent danger” of losing its competitive advantage in science and technology.

The new report, published on Wednesday, offers a more pessimistic portrait. Its assessment is in line with a landmark study in late 2005, “Rising Above the Gathering Storm,” by the National Academies, the nation’s leading science advisory group. It warned that America’s lead in science and technology was “eroding at a time when many other nations are gathering strength.”

President Obama has often said that in the future, international prosperity will depend on the United States becoming an “innovation economy.” The administration’s economic recovery package includes added spending for areas favored by innovation policy advocates, including higher research and development spending and funds for high-technology fields like electronic health records. But the administration has no coordinated innovation agenda.

Some countries, including Singapore, Taiwan, Finland and China, are pursuing policies that are explicitly designed to spur innovation. These policies typically try to nurture a broader “ecology of innovation,” which often includes education, training, intellectual property protection and immigration. This is in contrast to the industrial policy of the 1980s in which governments helped pick winners among domestic industries.

The foundation study, according to John Kao, a former professor at the Harvard business school and an innovation consultant to governments and corporations, is an ambitious effort at measurement. He called its conclusions “a wake-up call.”

In the foundation report, unlike some competitiveness studies, results were adjusted for the size of each economy and its population. Consequently, the United States ranked sixth in venture capital investment (Sweden was first); fifth in corporate research and development spending (Japan led); and fourth in science and technology researchers (again, Sweden was first).

Over all, the most innovatively competitive nation was Singapore, which embarked on a national innovation strategy years ago, investing heavily and recruiting leading scientists and technologists from around the world.

Mr. Atkinson of the foundation said the United States should act more like the individual states had been doing for some time. They have government programs to attract investment and talent and improve work force skills of local people.

The study’s specific recommendations include federal incentives for American companies to innovate at home, ranging from research tax incentives to work force development tax credits. Public investments and regulatory incentives can accelerate the use of information technology in health care, energy systems, transportation, government and education.

You Can Still Find an Angel Investor (Entrepreneur.com)

You Can Still Find an Angel Investor

There will always be angel investors, in good times and bad.

By Asheesh Advani | Entrepreneur Magazine - May 2009

URL: http://www.entrepreneur.com/magazine/entrepreneur/2009/may/201232.html

I can’t read any more articles about how angel investors are supposedly abandoning entrepreneurs during this recession. In my view, it’s neither true nor what I have observed, despite the media hype. There will always be angel investors, and there will always be entrepreneurs--in good times and bad. The main difference is that it takes much longer to raise money in recessionary times. Entrepreneurs have to deal with rejection more often and expand their pipeline of investor leads. Here are three keys to finding your own angel.

• Resilience is rewarded. Dealing with rejection is nothing new for most entrepreneurs. When I raised money from angel investors in the last recession, I was turned down twice as often as I was encouraged to have a second meeting with an investor.
  
• Persistence is rewarded. It’s also important to have a systematic approach for dealing with investor objections. For example, the most common form of objection in today’s market environment is some variation of “I don’t want to liquidate my stock market investments to invest in something new,” or, “This is not a good time for me to make investments.” A good response would be, “Are you convinced each of your stock market investments will outperform an investment in my startup?”
  
  
  
• Patience is rewarded. Building your investor pipeline over several months is critical to raising money under these conditions. Many entrepreneurs don’t like to raise money, and they don’t think about it like prospecting for new clients. The truth is that it’s very similar. You need to make a prospect list, manage it with a contact management database and send periodic updates to investors to deepen the relationship over a period of months. It takes time to raise money, and entrepreneurs are usually in a rush.

In 2007, angel investors were interested in hearing a pitch about revenue growth, and the decision to invest involved some amount of fear of losing the opportunity. In 2009, angel investors want to hear you tell them about earnings growth, and the decision to invest is based on how much affinity they have for the business concept and the principal owners. But no matter the year, the goal of your first meeting with an investor is to get a second meeting. Resilience, persistence and patience will ensure you get enough first meetings and second meetings to meet your fundraising goals.

Asheesh Advani is president of Virgin Money USA, author of Investors in Your Backyard and founder of CircleLending, which pioneered the business of managing person-to-person loans and mortgages and was acquired by the Virgin Group.

Biotech Can Survive the Recession, But It Won’t Be Easy (Wired.com)

Puerto Rico needs a strategy that is both sustainable and touch with reality. Having biotech high in its investment purse puts PR in direct competition with powerhouses like United States, Singapore, India, and China.

Moreover PR lacks both the infrastructure and the human capital to engage such industry and therefore placing over 10yrs behind industry players...which translates into probably twice as many years in such a fast moving arena.

Biotech Can Survive the Recession, But It Won’t Be Easy

ATLANTA, Georgia — There’s plenty of money available for biotech researchers with big ideas, but that funding is harder to get than ever before, and some of it may come from strange places.

Stem cell companies could be running on bailout money, and gene therapy firms may be fueled by cash from the Russian government. Only the strongest startups will pry funds out of American investment firms.

“I think that there is money available for new companies, but they have to come with a perfect business plan, perfect area to innovate in and a very strong management team,” says Karl Handelsman, a managing director at CMEA Capital.

Long gone is the golden age of biotech research, when venture capital firms would give any biologist with a business plan carte blanche in exchange for a small stake in their company. In 2007, venture investors poured more than $5 billion into the sector, according to PricewaterhouseCoopers, including $1.5 billion in the first quarter of that year. Nowadays, investors are clinging to their money. Over the first three months of 2009, biotech firms only grabbed $576 million, the worst quarter since fall 2001, after the September 11 terrorist attacks. But even in the midst of a recession, some emerging technologies shine so bright that investors can’t resist. You can do a lot of research with $576 million.

Handelsman is cautiously optimistic about next-generation vaccines and is thrilled about the long-range potential of synthetic biology. He gushed over Intellikine, a San Diego startup that is taking advantage of some very intense biological research to find new drugs for cancer, autoimmune disorders and inflammation.

That sort of enthusiasm may be rare right now. Even the most promising businesses will find that venture capital is coming at a remarkably high price.

“I’ll get 90 percent of your company for $5 million,” said Steven Burrill, an investor who has started countless biotech companies. “I used to be able to get 10 or 20 percent of your company for $5 million. So power is clearly on the side of the people with capital, against the side of people without it.”

In a packed auditorium at the Biotech Industry Association convention in Atlanta, he explained that entrepreneurs can’t do things the way they’ve been doing them for the past 30 years. If someone tried to start a company today, using the same tactics that made Genentech a drug-discovery powerhouse, they would fail.

Burrill added that it’s much easier to commercialize drugs outside the United States, so his home country will be getting new medical technology far later than other parts of the world.

“I think a lot of people, today, are writing the obituary for our industry, talking about how tough it is” said Burrill, before explaining why he has a brighter outlook.

Smart companies will adapt to the dark financial climate, he says. They will find unusual sources of funding, like government money and foreign investors, and eventually the biotech industry will be stronger than ever.

Who Owns Your Great Idea? (NYT)

Who Owns Your Great Idea?

By SAMANTHA STAINBURN

Peter Zummo, a senior double-majoring in design and mechanical engineering at Rensselaer Polytechnic Institute, is used to explaining the products he thinks up for his studio-class assignments. But last spring, he found himself answering questions of a different kind in a conference room at Rensselaer’s office of technology commercialization, which tracks and patents inventions made on campus.

Mr. Zummo and his classmate Matthew Naples, who was attending the meeting via speakerphone, had designed a water bottle that could be filled with sand and reused as a brick to build housing in developing countries. The director of the office, Charles Rancourt, sitting across the table from Mr. Zummo, wanted to know: When had they come up with their design? Had they held brainstorming sessions on campus or off? What equipment had they used to produce their prototypes?

Colleges and universities own the ideas and technologies invented by the people who work for them, including professors and graduate students who are paid to do research. Most universities also own inventions created by students using a significant amount of their resources, even if the inventors are undergraduates like Mr. Zummo and Mr. Naples, both 21.

The question of whether the two students or R.P.I. owned their invention was a tricky one. They had first designed plastic bottles that snapped together, Lego style, with two other students for a freshman design class project that challenged them to solve a social problem. Their idea was to keep the billions of water bottles that people in developing nations throw away each year out of landfills while providing the poor with free building materials. They presented a paper and a prototype in class, but “it was a crude concept, and we never really hit our goals with our first rendition,” Mr. Naples says.

As juniors, he and Mr. Zummo decided to tinker with the design again on their own (the rest of the original group didn’t want to join them), brainstorming off the Troy, N.Y., campus and interviewing bottle manufacturers about the molding process and materials. They developed a new design that was cheaper to manufacture and could withstand more types of stresses than the first.

With entrepreneurship booming, especially in ­courses that mix M.B.A. candidates with budding physicians or engineers, more and younger students are coming up with ideas that have commercial potential. While formal programs offer classes in managing intellectual property, plenty of students develop their ideas with little knowledge of how ownership is determined or the pros and cons of involving the university.

“Universities want to get whatever revenue streams come out of inventions so they can build more labs, have more research going on and hire more professors,” says David Schwartz, executive editor of Technology Transfer Tactics, a newsletter for people working in the field. Lisa Rooney, director of Ohio University’s tech transfer office, notes another interest: “Most universities have a broader economic mission to help out their communities and states, and licensing or starting new companies is a way to do that.”

Colleges and universities obtained fewer than 250 patents a year before 1980, when the Bayh-Dole Act gave them ownership of inventions developed through federally financed research. Now they acquire about 3,000 a year, according to the Association of University Technology Managers, whose members work in tech transfer offices. In 2006, association members made $45 billion from licensing fees and equity in spinoff companies; research powerhouses like Stanford and New York University made $61 million and $157 million, respectively.

University help can be a boon for student inventors, too. A third to half of the money generated by a product is typically assigned to the student, with the rest split between the student’s department and the university. That’s a better deal than the zero percent collected by scientists working for corporations. And universities cover the legal fees involved in obtaining patents on inventions they own, which can easily total $15,000 a patent.

“You can imagine a 20-year-old who develops something isn’t going to have access to venture capital money or the expertise to patent it,” Mr. Schwartz says. “The tech transfer office can find the resources to move it forward.”

Of course, the offices negotiate deals that are best for the university, notes Peter Corless, a partner at the law firm Edwards Angell Palmer & Dodge in Boston. He specializes in protecting biotech and medical device inventions at academic institutions. “If they can, they’re going to give some deference to the inventor, but their first allegiance is to do something for the university,” he says.

Erez Lieberman, a 28-year-old graduate student doing federally financed research at the Harvard-M.I.T. division of health sciences and technology, discovered this tendency after the Massachusetts Institute of Technology pushed through a patent on a technology he created as an intern at NASA in the summer of 2007. His algorithm detects whether a person is standing correctly or is off balance, and Mr. Lieberman, currently in the sixth year of his Ph.D. program, has started a company called iShoe to develop products using the technology, including insoles that can help prevent elderly people from falling. Because M.I.T. is co-owner of the invention with Harvard and NASA, Mr. Lieberman knew he would have to negotiate a licensing agreement that would give his company exclusive rights to the technology, but he was taken aback by M.I.T.’s tough negotiating stance.

“I wasn’t aware of the fact that more or less the day after the patent was filed, I would be facing a conversation like, ‘We take a substantial royalty and $75,000 now, and it’s all yours,’ ” he says. “That was a surprise.”

Jack Turner, associate director of M.I.T.’s tech licensing office, says: “We endeavor to get what we think is a fair deal for M.I.T. and the inventors and for the companies we’re licensing. At the same time we don’t want to license something exclusively to someone who’s going to end up not doing anything. We write into the agreement those elements of the business plan that we consider essential for the technology to find its way into use. If they can’t do that, we can get the technology back and find another home for it.”

Ultimately, Mr. Lieberman says, the fact that M.I.T. doesn’t automatically kick the license to an inventor is for the best. “It enforces discipline on you,” he says. “The process has been valuable for us in terms of thinking hard about what needs to happen, how do we raise money and what kinds of milestones make sense.”

He’s hopeful that he can raise funds for the license through angel investors or a joint venture with a hospital. But now that he knows how expensive and complicated the licensing process is (not to mention having to check in in the future to show he’s on track), Mr. Lieberman is avoiding using university resources as he develops the technology further. Last summer he paid an engineer and a computer programmer through iShoe to work off campus to improve the design of his insole and write software that lets it communicate with wireless devices. Using $25,000 worth of legal services he won in April in a business plan competition for space-derived technologies, he has filed for two additional patents, owned by iShoe, based on their work.

If a student has money to develop and protect an invention on his own, should he? It depends. Turning the job of commercializing a product over to a university is a better bet if you have no interest in business or if finishing school is a priority. “The mission of a student is to research, get their degree, and move on with their life, and if you start fooling around with this stuff too much, it’s a total distraction,” says Peter Corless, the intellectual-property lawyer. But if retaining control over an idea is important — say, you don’t want your technology licensed to a company that pollutes oceans — the expense and hassle of doing it yourself might be worth it.

Lone-wolf inventors should get a written statement from their university confirming they own their idea, Mr. Corless advises. “You want to get these things cleared up when there hasn’t been a lot of value recognized,” he says. “If you try to clear things up later, people’s memories change.”

R.P.I. determined that the bottle design belonged to Mr. Zummo and Mr. Naples. The university offered to patent the bottles and get them into the market if they transferred ownership of the design to the university. The students chose to go it alone, deciding that the standard slice of royalties R.P.I. gives to inventors, 35 percent, was too low. An intellectual property lawyer who’s a friend of Mr. Zummo’s family waived his fees to help them file a provisional patent, and the students started looking for ways to raise $18,000 to mold several hundred actual bottles they can test and show to companies interested in licensing the technology from them.

They’re not flying entirely solo, though. Last month, the university determined that while the students own the design, R.P.I. owns the idea for the bottles. The students must license it from them, at a cost of about $250 a year and 25 percent of the profits generated by the idea. That, though, comes to only 0.5 percent — an “idea” being worth less than the “design.”

“What we’re giving up is obviously nothing, and if someone infringes on our rights, now it’s R.P.I. against them,” Mr. Naples says.

The bottle negotiations helped convince R.P.I. to rethink its royalty-sharing policies for students in studio courses: it’s now 75 percent for the inventors, 25 percent for the university. For one, the university recognizes the distinction between the ideas coming out of undergraduate design classes and those coming out of a research center or lab, Mr. Rancourt of R.P.I. says.

“Given the early stage of development, a significant amount of work needs to happen to prove the idea,” he says. “At the same time, they have real potential, and our goal is to encourage them.

Samantha Stainburn writes about higher education and entrepreneurship for Crain’s Chicago Business.

What Business Owners Should Know About Patenting (WSJ)

What Business Owners Should Know About Patenting

By STUART WEINBERG

Thomas Edison once said, "To invent, you need a good imagination and a pile of junk." He might have added a third ingredient: a patent. Without one, inventors can't sell, license or protect their creations. Edison understood that very well: He held 1,093 patents, still a record for an American.

For many small businesses, knowing when and how to obtain patents can be confusing. So, too, can be knowing what to claim in the patent and when to sue over infringement and --when not to.

To help clarify these matters, we spoke to James McDonough, an intellectual-property attorney at Fish & Richardson P.C. who specializes in advising start-ups and small companies on intellectual-property strategy and technology commercialization. Mr. McDonough talks about the current climate for patents and looks at the perils companies face and what steps they should take to protect themselves.

WSJ: Is it more difficult to obtain patents than it was five or 10 years ago?
Mr. McDonough: It is getting harder to a certain degree. The [U.S. Patent and Trademark Office] appears to be rejecting claims at a greater rate the first time through. I think that reflects a backlash in response to some of the problems we've seen with the issuance of poor-quality patents and how they are being misused by patent trolls [a derogatory term for a company whose only business is to buy patents to collect license fees or court-awarded-infringement damages].

WSJ: What does it cost and how long does it take to secure a patent?

Mr. McDonough: It's hard to say with certainty how long it will take, but, depending on the technology that's being patented, it can take anywhere from two to five years for a patent to issue. As far as costs, expect to spend anywhere from $10,000 to as high as $30,000 for highly complex technologies. Patentability searches account for up to a thousand of that, application fees can add up to another couple thousand, and the rest is attorney fees for patentability opinions, initial patent drafting, and [Patent and Trademark Office] action responses and appeals.

WSJ: Who doesn't really need to hire an attorney? Who really should and at what point?

Mr. McDonough: The only time I would not advise an inventor to seek counsel from an attorney is if the act of patent drafting is itself a hobby to the inventor and he has no intention of selling the invention. If there is even a remote chance that the inventor will commercialize the technology, he should get an experienced attorney involved as early as possible in the process.

WSJ: Where do most companies go wrong when they're trying to get a patent?
Mr. McDonough: First, a small company may want to start patenting without thinking through its long-term [intellectual-property] management strategy. Before patenting, you should work with a skilled intellectual-property attorney to develop a plan for building your IP portfolio. A common problem we see is a portfolio that is driven purely by research. A good IP portfolio should be designed in a way that accurately covers the business objectives of the company while protecting the technologies around which the company is built and exploiting niches of the technology field that are not yet patented.

WSJ: What's another mistake companies often make?
Mr. McDonough: An inventor may want to apply for a patent at the wrong time. For instance, it may be too early if the invention is not yet developed to a point that it can be sufficiently described in the patent. It is too late if, for example, the inventor publicly used or sold the invention more than a year ago. If it is too early, an attorney might advise the inventor to spend more time researching and developing the invention before patenting, but if it is too late, the invention may no longer be protectable.

WSJ: I've heard some inventors may claim too little or too much in the patent.
Mr. McDonough: Often, an inventor's instinct is to describe his invention by describing its specific parts, which can result in inadvertently limiting the scope of the patent. As a general rule of thumb, the claims should include all possible versions of the invention, which can be accomplished by using broad, functional language in the patent. The inventor and attorney will work together to refine the scope of the patent to ensure it is as broad as possible while still being able to withstand a lawsuit.

WSJ: Is patent infringement more common than it was five or 10 years ago?
Mr. McDonough: I don't know if there's more infringement, I just think that there's more patenting going on. Also, the value of a lot of large companies nowadays is based on their IP.…So now you're seeing companies actively seeking to protect their assets.

WSJ: If a small company believes a large company is infringing on its patents, should it sue?
Mr. McDonough: That's a difficult choice for a small company. It's become a little easier lately because a lot of law firms out there will take on a plaintiff-side patent case on a contingency-fee basis if they think it's a good case. But generally it's pretty difficult to bring an infringement suit against a really large company because of the amount of resources available to large companies as compared to small companies. It is generally accepted in the industry, that a patent-infringement suit can cost $2 million to $4 million in legal fees. So, it's often not ideal for a small company to try to sue a really large company.

WSJ: What are some alternatives to suing for infringement?
Mr. McDonough: You might approach the larger company and offer a license, or attempt to establish a partnership. If a company doesn't have the means to sue now, it might choose to temporarily ignore the infringement and try to get its product to market first to generate sales. Sometimes you have no choice but to bring an infringement suit.