Over the past year or so, an argument that used to be confined to law offices and R&D labs has spilled over into the mainstream media: namely, whether or not the U.S. patent system encourages or discourages innovation in today’s economy. In the past 60 days, the issue has been covered by The Economist’s Free Exchange blog, Tesla Motors turned it into great PR with their “All Our Patent Are Belong to You” blog post (odd grammar explained here) and the Supreme Court made its first software patentability decision since 2010. For companies, especially those in patent-rich fields like software, electronics, or pharmaceuticals, this means patent disputes now have the potential to play out on two fronts: the courtroom and the newsroom. As a result, companies involved in patent lawsuits now have to succeed in battles on both fronts to decisively win the war. For a company that places any value on its public appearance – i.e., almost all of them – winning in the court of law but losing in the court of public opinion can actually be the worst outcome for their business. Being forced to pay damages or losing an important piece of IP is damaging, but ultimately finite; a tarnished brand, on the other hand, can follow a company indefinitely.
The recent suit filed by Bose against Apple for allegedly infringing on some of their noise-cancellation patents is a perfect example of the PR dangers of a patent dispute. While a legal win here would be great for Bose, a PR loss has the potential to be very damaging. Beats and Apple are two brand-driven companies that are beloved by a large percentage of the world’s consumers.
Bose makes great products, and their first-class noise cancelling technology is an important differentiator for them. However, as Beats has proven, people don’t buy headphones solely for their sound; the brand matters just as much (if not more). Ask any hardcore audiophile to choose between headphones by Beats and Bose and nearly all will choose the latter. The average consumer, though, will give significant consideration to the brand while making their choice – and for better or worse, Apple and Beats have a definite advantage there.
At the end of the day, Bose succeeds when it sells headphones, and favorable patent rulings are only useful inasmuch as they serve that goal. For that reason, success in this case will have to mean winning both the legal dispute and the PR battle: if the latter goes against them, it’s possible that consumers will see their win not as an important victory for IP rights but an unjust ruling that stifles two of their favorite brands. Fair or not, the Bose brand is David to Apple and Beats’ Goliath; if Bose isn’t careful, the enormous weight of the Apple logo could turn their legal win into a Pyrrhic victory.
To prevent this from happening, Bose needs to have a proactive communications plan ready for the Beats demographic - specifically, 17- to 35-year-olds, where Beats is the top selling brand. Bose may have a great reputation with older business travelers who rely on their noise-cancelling tech for flights, but they’re much weaker in Beats’ demographic.
If Beats loses the case, it wouldn't be hard for them to position themselves as a scrappy underdog whose innovation is being stifled by Bose’s patent enforcement. Since Bose doesn't want young people to perceive them as an industry bully that’s picking on a brand they like, Bose needs to be ready to win this fight as well. Remember, Bose doesn't actually have to be a bully to be perceived as one; as with most PR battles, the facts of the story end up being less important than the way they’re told.
On Monday of this week Beats fired its first salvo in this conflict, telling the ITC that a ruling against them in this case would strongly harm consumer choice. In this new age of highly publicized patent lawsuits, Bose’s success will depend as much on their PR team’s ability to debunk that claim as it does on their counsel’s ability to argue the case. Companies in patent-rich industries should take heed.
Jennifer Hrycyszyn is the Vice President of Business Development at Greenough. Follow her on Twitter: @hrycyszyn