How Does Your Company Motivate and Incentivize Patent Inventions?

In today's competitive business environment, motivating and incentivizing patent inventions is crucial for fostering innovation and driving growth. This article explores various methods and strategies to effectively reward and recognize inventive contributions, ensuring that your company remains competitive and driven.

Understanding the Current Landscape

It is essential to understand the current state of incentive systems in place at your organization. Many companies offer a combination of cash awards and recognition to their inventors. For instance, our company provides a decent cash award to the inventors and an annual competition for the best innovation at the US division, with a worldwide competition for the best innovation held in Italy.

Case Study: Past and Present

Looking back, my previous company implemented a unique policy where 15% of net income from patent use was distributed among the inventors. Although this approach seemed effective, changes in internal management led to a modification in the incentive structure. The policy was altered to a flat $15,000 reward split among the inventors. This change led to an increase in patent disclosures but a significant drop in the actual number of patents awarded. This underscores the importance of thoughtful and strategic incentive policies.

Common Milestone Awards

Providing award incentives at key milestones in the patent lifecycle is a common practice. Here are some typical milestones:

Upon invention disclosure: Recognize the initial contribution of the inventor. Upon approval of an invention disclosure for patenting: Reward the formalization of the patent process. Upon filing of a patent application: Commemorate the submission to the corresponding governmental patent office, such as the US Patent and Trademark Office. Upon issuance of a patent: Celebrate the successful approval of the patent.

The type and amount of award can vary widely, including physical awards, trophies, plaques, certificates, gift cards, allowances, company stock options, and cash rewards. Each option should be tailored to your company's stage in the patent program budget and senior management support.

Patent Program Budget and Ownership

The patent team or legal department should own the patent program budget. Business units may cut this budget when they need funds, which can reduce inventor participation. It is crucial to maintain a positive relationship with the business units and inform inventors why the incentives are changing, ensuring that the incentives remain a part of your overall strategy.

Messaging is Key

Messaging and communication are critical elements in maintaining high levels of participation in the patent program. These incentives are designed to motivate inventors to participate, not to compensate for time spent on patent-related activities. Any changes in incentives should be planned in advance to avoid significant backlash.

Companies must set their incentives at a level that can be maintained as the program grows. It is important to seek additional budget as the program expands and to handle any changes in incentives swiftly and transparently. Reducing or removing incentives can have a detrimental impact on participation, and it may take considerable time and effort to restore earlier levels of engagement.

Conformance to Company Policy

Patent program incentives must align with the overall company incentive and award policy. Any mismatches may require adjustment, and changes due to budget cuts can be met with resistance from the inventor community. Keeping the incentives in line with the broader organizational strategy ensures long-term success and sustainability.

By implementing a strategic and well-communicated incentive system, companies can foster a culture of innovation and drive sustainable growth. Recognizing and rewarding inventions not only motivates current employees but also encourages new contributions.