New entrants into Mobile Payments must be aware of the intense patent related activity in this space and their projects need to include activity to mitigate risks, better compete, obtain a negotiating position in collaborations, create assets and better identify and leverage unique capabilities.
A discussion recently led us into a search on the topic of mobile payments patents. We had observed some of the recent M&A activity centred around purchase of companies who had filed for patents a long while ago. The major draw in this case could be the possession of mobile payment patents – this allows the acquiring company the ability to launch services that could otherwise have been held as infringement, and also to prevent others from doing the same. As we delved into what seems to be a minefield of “patent trolls” and other hazards, I thought it may be useful to share on some of our findings.
Why should you bother? For 5 main reasons :
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Risk Mitigation: Finding out after launch that your new service is in violation of existing patents can put a real spanner in your business case and could prove a very costly mistake indeed.
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Competition: Identify patents that may potentially block your new propositions, and consider opportunities patenting your new designs may have, to block competing initiatives.
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Collaboration: Owning patents could help you achieve a good negotiating position with partners. But do bear in mind and plan for what happens beyond the partnership.
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Asset Creation: Owning patents increases the value of the firm. This is an important consideration especially for start-ups who have an intention to sell off their company somewhere down the line.
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Leverage: Undergoing the process of protecting one’s unique capabilities helps focus your mind on how to build revenue streams on the back of them, with new business models that you may not have considered.
Within the space of Digital Money and across the 32 services we analyse, it seems there are so many patents already established that it is a wonder that services continue to launch around the world each day, with so much in common at the core of the offer. Our search on mobile payments alone provided 5122+ findings!
Some of the interesting ones related to mergers, acquisitions and partnerships with a “patent slant”. We were particularly interested in those involved in high profile news over the last year:
- Microsoft and Apple joined to purchase Nortel patents
- Google purchased Motorola Mobility for $12.5b
- MasterCard partnership with C-SAM who claim to have 11 issued patents
High profile mobile wallet and mobile payment filings we found included
- Apple wallet
- Microsoft wallet
- Google wallet
- MasterCard (various)
- Visa (various)
We found patents to be a central part of player strategy with players using them to :
- Consolidate a strong market position
- Provide new revenue streams through the licensing or sale of patents
- Gain investor money to develop and market new products
- Increase negotiating power in partnering agreements
- Attract and retain key personnel and further develop products
- Provide a positive image to potential investors, customers, manufacturers and distributors
- Create a culture based on innovation, brand presence and design
- Secure overseas markets, distributors and alliances
Some of the most interesting innovation is emanating from start-up companies. We wondered how these could possibly afford the kind of patent checks that are probably business-as-usual work for schemes and large companies. We thought we would do our little bit to help and have created knowledge entries that may conveniently be browsed by new entrants into the mobile payments space. You should be able to locate some of the links under the topic, Patents covering alternate payments. By the way, do also use our Search tool at the right-hand side, top of every page to see particular data for the main players and initiatives of interest.
Needless to say this is not going to cover all the work you must do but we hope it will provide pause for thought and provide a bit of structure and context. A good start would be to see what Apple has filed this month. Lance Whitney provides an excellent account of the Apple "Method and system for managing credits via a mobile device". That seems to be a great place to start your journey.
Remember often you may choose secrecy as your preferred route with respect to your own innovations, but you will still need to do a piece of work to ensure that your service is not in violation of existing patents.
As always, do let us know if we may be of help. Shift Thought has appropriate knowledge, skills, experience and toolsets to support these requirements.