Saturday, October 22, 2016

Why you should be wary of companies hiding everything for 'intellectual property reasons'

Think of Theranos. I remember reading this article when it came out, thinking 'what can they possibly be protecting?':
The technical details about Theranos' seemingly revolutionary tests are hard to come by, and the company is known for its secrecy about its founder's invention.

There's one fundamental question, one that in some ways is unanswerable without revealing information that Theranos wants to keep confidential: How, exactly, does what Holmes invented work? ... [The company] hasn't published peer-reviewed studies comparing its tests to traditional ones, and the company hasn't allowed independent experts to publicly assess its labs, citing the need to protect its intellectual property.
IP comes in many flavours: patents, designs, trade secrets, and business processes, to name a few. Not all intellectual property can be protected like a patent, but some of it can, and that means that not all intellectual property needs to stay secret.

When a company like Theranos doesn't even let independent experts in to check out the technology and say 'Yes, I've seen what they do and it works', which they could conceivably do under an NDA, it raises a red flag that something isn't right. Most medical device/diagnostic companies have at least something that can go through the patent prosecution process, which allows experts to understand how the new widget works and whether it will eventually provide value in a business model.

Sometimes the best strategy is to show everyone that at least part of your firm is not just smoke and mirrors.