Q&A with Arvin Patel: How IP Can Help Your Company Win & What It Means for AI Founders
By Brija Johnson, UCLA Ventures
I recently had a chance to sit down with Arvin Patel, one of the Board Members of the UCLA Technology Development Group and a thought-leader on all things related to intellectual property (IP). In addition to his Board role, Arvin serves as the Chief Licensing Officer of New Markets at Nokia Technologies and is a Director of Video Compression R&D and AI Strategy at Nokia Bell Labs. He previously held senior positions at Intellectual Ventures, TiVo, Technicolor, Rovi, and IBM.
We had a chance to catch up after his talk on AI IP strategy at SF Tech Week, an event hosted by UCLA Ventures. Our conversation focused on how founders can leverage intellectual property in their business effectively. We also paid special attention to the current hot topic in tech— artificial intelligence.
Brija: To kick things off, what is intellectual property (IP) and why should founders and investors associated with UCLA Ventures care about it?
Arvin: Great question! IP is not a widely understood topic, especially amongst the startup community, so it’s good to define it first. Intellectual property is essentially the ownership over any creation of the mind such as inventions, artistic works, designs, symbols, and images. There are four main ways to protect your IP: 1) patents, which protect inventions and new processes, 2) trademarks which protect brand names, logos, and symbols, 3) copyrights, which protect original works of authorship, including literature, music, and art, and 4) trade secrets, which protect confidential business information and know-how, like algorithms or customer information.
So, why should you care about all this stuff? Well, the short answer is that IP can help your business win. If you can develop and execute the right IP strategy for your business, it will give you a huge advantage over your competitors.
Brija: Can you share some examples of how IP helps you win?
Arvin: Glad you asked. There are so many ways it can help you win but let me give you three to start.
First… capital raising. For founders, raising capital can be one of the most challenging and important tasks early on. It can literally make or break a company. According to PitchBook, between 2011 and 2020 deal sizes for startups with patents were 40% to 60% larger than those for startups without patents. Startups with patents were also more likely to get funding than ones without any patents.
Second… separating yourself from the pack. Aside from increasing the value of your business, IP plays a key role in creating moats around your products. If you build a strong portfolio around the key innovations and features of your product, you can make it very difficult for someone else to copy you. For example, Apple has long maintained a strong lead in facial authentication in smartphones. Despite Face ID being launched seven years ago with the iPhone X, there hasn’t been another smartphone competitor that has come close to matching Face ID’s speed and security. Why is this? Well, Apple developed a very strong patent portfolio early on around core innovations used in Face ID like 3D facial tracking and scanning and biometric data processing and verification. This makes it next to impossible for another smartphone maker to have the same kind of implementation while those patents exist, which are typically 20 years from when they were filed.
Lastly… selling your company or going public. Eventually, you’ll want to capitalize on the value you’ve created by cashing in on some of your company’s shares. When looking at exit opportunities, IP is a major indicator of success. Startups with a patent portfolio are much more likely to be publicly listed. According to PitchBook, public listings and acquisitions were 2.1x higher on average for patent-seekers between 2011 and 2022.
Brija: Okay, so IP is a super useful tool to create business value, but how do you go about developing useful and valuable IP?
Arvin: Broadly speaking, there are a few steps you need to take to build a winning IP strategy.
First, you need to map out the underlying technologies for your product or service and how they interconnect. At Nokia, we call this a “technology stack.” You need to understand what goes into your product first before you can strategize on how to protect it.
After creating your tech stack, you then need to identify the “technology chokepoints” within the tech stack. Think about technologies that are unavoidable in order to compete in your market and that drive demand for your product or service.
Lastly, align your IP strategy with your business strategy and play to your strengths. What is the business objective you want your IP to help achieve? Make sure you are putting your IP to work whether it be offensively or defensively.
Brija: Would you be able to walk us through an example of what a technology stack looks like?
Arvin: Sure thing. Given that AI is the hot topic of conversation right now, I’ll give a provide a generalized AI tech stack as an example. The way I see it, you can think of AI in three core layers: 1) hardware 2) software/models/platforms 3) applications.
At the bottom we have the hardware that powers AI products. Think of GPUs and related infrastructure. In the middle, we have the underlying AI mathematical models and algorithms. Things like neural network models, AI coding libraries, and model training methods lie here. At the top of the stack, we have applications and solutions. This is a very broad space and where most new companies are competing in.
Each layer of the stack varies in the strategy you’d use to build out a strong IP position.
Brija: Okay, let’s revisit the “technology chokepoints” you mentioned. How do you identify them?
Arvin: That’s the challenge every start up needs to tackle, and it depends on your company’s technology stack and what you’re trying to accomplish as a business. But, in general, a technology chokepoint does three things: 1) covers a profit generating feature that drives demand for your product or service, 2) covers essential technologies required to compete in your market, and 3) is enforceable through IP law. A technology that meets these three checklists is a “technology chokepoint” and should be the highest priority areas for you to build a portfolio around.
Brija: Are you seeing any major IP trends in AI? What should our audience be doing about them?
Arvin: The biggest takeaway is that the AI patent race is on. Companies aren’t waiting around to develop their AI IP portfolios. AI is the fastest growing patent domain currently. The World Intellectual Property Office (WIPO) estimates that AI patent filings grew 718% faster than total patent filing growth during the five-year period from 2016-2020. ~60% of all AI patents ever filed have been filed in the past three years! We are in the golden age of AI technology, and the patenting activity reflects that.
The companies leading this charge are unsurprisingly Big Tech. Everyone is trying to build moats around their innovations and claim their share of the AI prize pool. What this all boils down to is that the time for AI patenting is now.
I’ve also seen a lot more AI-related patent litigation cases, particularly in AI hardware. The good news is that AI is still a very young field and is rapidly evolving. Technologies that were once cutting edge a few years ago are now obsolete, and there are constantly new opportunities to take advantage of if you’re a start-up founder.
Brija: Thank you for your time, Arvin! There are lots of nuggets here that should be valuable to our audience.
Arvin: My pleasure!
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If you would like to connect with Arvin or learn more about UCLA Ventures, email Brija Johnson at brija.johnson@tdg.ucla.edu.