Last week, I carried the story on Neurofocus’s acquisition of what the firm calls the “core patent” for neuromarketing. Subsequent to that announcement, I spoke by phone with Dr. A.K. Pradeep, President and Chief Executive Officer of Neurofocus. Here are some highlights of our conversation:
The Neuromarketing Patent
Several motivations drove Neurofocus to acquire the neuromarketing patent from the inventors, Gerald Zaltman and Stephen M. Kosslyn. According to Pradeep, the inventors had been in discussion with most of the leading firms doing brain-based marketing and advertising studies, but were seeking hefty royalties from potential licensees. Furthermore, patent acquisition firms were looking at the patent as well – its broad nature and comprehensive claims would be good bargaining chips if the neuromarketing industry continued to grow. (The best-known example of this strategy involved patent holding firm NTP’s extraction of more than half a billion dollars from BlackBerry maker RIM based on a patent that may well have been close to being declared invalid. NTP’s aggressive litigation forced RIM to settle before the patent case worked its way through the courts.)
Given the choice of locking Neurofocus in to years of royalty payments to the inventors or facing the unknown demands of a financially-driven patent holding firm, Neurofocus began negotiation for ownership of the patent. According to Pradeep, the process was aided by the patent owners’ desire to sell the patent rights in a way that didn’t stifle development of the nascent industry.
The second motivation in acquiring the patent was to allow Neurofocus to invest in improving neuroimaging-based market research with the security of knowing that any breakthroughs they made wouldn’t immediately be leveraged by their competitors.
Pradeep terms the coverage of the patent “broad,” and says that it applies to using any neuroimaging technology (including fMRI, PET, and CAT scanning) for analyzing advertising, marketing communications, and even products.
“Competition is a great thing”
Asked about the willingness of Neurofocus to grant licenses to use brain imaging technology to other neuromarketing firms, Pradeep said, “Competition is a great thing” and stated that Neurofocus was open to licensing and “want to keep innovation going.” After the patent announcement, I contacted several other neuromarketing firms but received either no response or a “no comment” reply.
The Future of fMRI
Pradeep isn’t a big fan of fMRI as it is currently used for marketing studies. The equipment is designed for medical and academic environments, and doesn’t present an environment conducive to consumer research. The subject must lie immobile in a tube, and the ways the subject can interact with the environment, products, etc. are severely limited.
Asked about Ray Kurzweil’s prediction of exponential growth in the spatial and temporal resolution of brain imaging technology, Pradeep didn’t disagree and said that brain imaging technology was following a path not unlike Moore’s law for semiconductors. The challenge in making brain imaging more useful to marketers is less in resolution, he said, than in signal processing. Imaging technologies can generate so much data so quickly that processing and interpreting it is the biggest challenge. (And, I suppose, every increase in resolution compounds the data problem.)
Pradeep doesn’t lack confidence in the main technology employed by Neurofocus now, dense array EEG analysis, boldly stating that it is “capable of answering all of today’s marketing questions.” He sees a future generation of consumer research oriented fMRI devices as being able to answer the “questions of tomorrow.” These fMRI devices, for which Neurofocus is establishing a 3-5 year development program, would be more consumer-friendly and more mobile, and would be designed specifically for marketing vs. medical or academic applications. Conducting marketing evaluations which combine fMRI and EEG data for the same subject is another area of interest to Neurofocus.
Beyond TV Ads
Neurofocus sees a world of applications for their current technology as well as future technologies. Websites, remote controls, various products, even flavors and aromas, are all fair game according to Pradeep, and many of these are currently underway with the firm’s EEG technology.
It’s clear that Pradeep has abundant enthusiasm for the field of neuromarketing, both in its current capabilities and in the promise of even more amazing future. It also seems that the acquisition of the “brain imaging for marketing” patent puts Neurofocus in the driver’s seat for the imaging-based portion of neuromarketing industry. I hope that the patent purchase does indeed drive Neurofocus to invest aggressively in its own technology, while still allowing others to develop their own profitable neuromarketing ventures. Watch this space for more on the patent impact story.
I’m very sorry to read this post. Broad patents are almost always bogus and easily debunked with prior art. In this case, i think that doctors have been using this imaging techniques to map out processing/activities of the brain to achieve successful surgeries. It’s hard not to see “prior art” and “obvious consequence” in what i (read here and) understand about this patent, so it could have been contested, rather than bought (a cheaper process also).
I also think that this is bad for Neurofocus. It gives an easy Plan B if the company has problems competing with other firms. This kind of patent VERY easily changes into a tax for the field.
What does neuromarketing has to say about complacence? The pressure to be successful changes everything, even the best good intentions.
Please also note that i’m not in this field (nor in the patent field) but on computing, and so my opinions might not be reasonable for this field.
Yet, the example in the article of how RIM (BlackBerry) had to pay US$ 612 M for a broad (bogus) patent should put you to think about this…
I understand Jose’s sentiment, but wholeheartedly disagee with it !! If one studies the patent literature carefully, (and many of my high-tech clients have, and so have teams that I led in working on corporate strategies with them), it is not the technology or underlying science that is covered by the Neuromarketing patent, but the APPLICATION of the underlying neuro-imaging science to the area of marketing and advertising.
The closest example I can find is that the “Kalman Filter” is not patentable, but the application of the Kalman filtering algorithm to a specific area of industry that is eminently patentable.
I am sure that while companies my find it appropriate to contest patent awards, (and there is a moral right to do so in egregious circumstances), it is prudent from a business and application standpoint to consider licensing rather than litigation. Everytime I have had to get in front of a board and outline the IP strategy, the question I get asked is whether it is “financially prudent” to license rather than litigate. In corporate governance parlance, we call it “duty of care”, and “financial stewardship” without letting egos get in the way.
I was heartened to read that NeuroFocus was open to any and all licensing arrangements with potential competitors in the spirit of encouraging growth in the neuromarketing field. This is an enlightened approach, and must be welcomed by other players in the field.
It is indeed interesting to read that potential rivals of NeuroFocus had a “no comment” response to your queries. This disputes Jose’s contention that this has to do with “complacence”. I think it has to do more with the attitude of those that tried to purchase the patent, failed to do so, and are hoping that NeuroFocus is not diligent in pursuing claims, past, present, and future. Given the daily news, activities, and PR coming out of NeuroFocus, I doubt the company will be passive regarding its asset acquisitions. It may be better for competitors to consider negotiating with NeuroFocus rather than litigating with it and its investor with deep pockets – Nielsen. Some business problems that are easily solved with good intent and negotiation skills instead of litigation and business losses.
Hmmm… this field of neuromarketing is getting very interesting, and competitive by the minute. Perhaps I should consider coming out of retirement for one last hurrah !!!
– Quince
This is a bogus patent and a bogus acquisition. Any serious company that would want to challenge it, will do so. All the methods in the patent, besides the BS, were prior knowledge. The inventors invented absolutely nothing. The only reason why it hasn’t been challenged yet, it’s that nobody takes neuromarketing seriously. It’s a fad, anyone with a brain realizes that. The same idea was spun by the inventors of the polyghraph decades ago and it went precisely nowhere. I’m not saying that a few people won’t make money with this, in the short term. That is exactly the plan. The rest is hype.