The lean philosophy was initially developed for manufacturing. It considers as waste the expenditure of resources for any goal other than the creation of value for the end customer and seeks ways to eliminate such waste. For non-tech businesses, the product is typically the only source of revenue, however for an innovative technology company, the ‘customer’ can not only be a customer of its product but also a customer of its IP, through licensing. For current generation innovation and technology driven businesses, IP is one of the most valuable assets and drivers for the company valuation. Businesses are initially focused on developing a product that customers are willing to buy, getting customer feedback and refining the product accordingly.
Whereas developing a product that customers are willing to pay for is critical in the initial stage, in order to develop a successful business, the product has to offer unique value, and also be differentiated from competition. If there are multiple competitors who offer a similar and undifferentiated product, there is a price war sparked that leads to discounts for the consumer but losses for the startup and its investors. After building a unique and differentiated product that customers are willing to pay for, it is also important to sustain the differentiation and create competitive advantage to sustain growth and profitability.
Intellectual Property Rights such as Trademarks (for brands), Patents (for technology), and Trade secrets (for know-how or secret sauce) build and sustain competitive advantage. Whereas for lean startups, since both time and money are valuable resources, the cost versus benefit of registering IP has to be determined. But when the IP that is created and protected is strategic and aligned to the company’s business strategy, the benefit far outweighs the costs. A core component of Lean Startup methodology is the build-measure-learn feedback loop. The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a startup can work on tuning the engine. This will involve measurement and learning. The same build-measure-learn feedback loop can be applied to create a minimum viable patent.
The minimum viable patent tries to protect not just an idea or a technology, but the unique value proposition of the startup’s MVP and the technology behind it. The minimum viable patent can be filed as a provisional patent application to give the startup ‘patent pending’ status for a year. Once the provisional application is filed, the startup can go through the ‘build-measure-learn’ cycle in order to convert the minimum viable patent into a strategic and valuable patent. This ‘build-measure-learn’ cycle involves distinguishing it from ‘prior art’ which include publications and patents as well as competing products, and also positioning the patent by writing claims that cover strategic variants of the product that competitors are likely to come up with. The feedback comes through prior art searches that are conducted for different versions of the product as well as changes made based on customer feedback and competitor activity.