Olympus and Medical Devices: Where is the IP Aspect?

I want to change course a bit and talk about business journalism as it applies to IP. Goodness knows that the current economic turmoil has witnessed a dramatic increase in the quantity, if not necessarily the quality of business-related articles, so much so that we face the risk of stimulus overload. That said, the core sources of print business journalism (with or without a complementary on-line presence), such as the Wall Street Journal and the Financial Times, seem to be flourishing. How well are they doing with respect to IP matters?

That question ran through my mind when I read with interest an article in the December 15, 2008 issue of Business Week entitled "The Inside Track in Medical Devices", written by Arlene Weintraub. I have been a subscriber of the magazine for 30 years, so I approach it with a combination of respect and critical eye. The article in question reported on the success of Olympus in the field of medical video cameras. More particularly, Olympus is described as the first company to incorporate high-definition tv (HDTV) signals in a video camera device that enable doctors to examine the certain internal organs.

The success of the foray of Olympus into HDTV applications is attributed to a confluence of factors. First, the company exploited its technology in image-sensor chips (a key component of HDTV) with an eye towards improving its surgical cameras. Second, the company succeeded in sharpening its images by combining its HDTV technology with a technology that filters out obscuring colors, realizing a further refinement of the visual images received. Third, Olympus succeeded in adding these capabilities to a narrow (6 mm diameter) camera that could easily manoeuvre within the relevant internal portions of the human body.

Since launching the product in 2005, the company has succeeded to the extent that revenue now exceeds all other aspects of its business. Well and good?--not exactly. Danger (for Olympus) lurks, especially in the form of rivals that appear to be able to sell a competing product for 10% less. The concern is that hospitals will opt for these lower cost alternatives at the expense of the Olympus product.

Olympus--will it continue to enjoy the commanding heights?

The foregoing is all quite interesting, but I have some nagging questions. There was nothing in the article that shed any light on the role of IP in this saga. At least one major study (Allison, Lemley, Moore and Trunkey, "Valuable Patents", The Georgetown Law Journal, 92(3), 2004) concluded that there tends to be more litigation in the medical device industry than many other fields. However, nothing in the Business Week article even suggests that Olympus engaged in litigation with respect to its HDTV technology in this field, much less that it enjoys a favorable patent position vis a vis its competitors.

If true, this is strange. Either Olympus does not enjoy significant patent protection in the field, or its competitors have done such a good job at design-around that the patent position of Olympus has failed to provide it with a competitive advantage, or know-how is particularly important. Whatever the case, it would have been edifying for the Business Week article to delve a bit more into the issue.

There is also the question of why the competitors enjoy a cost advantage Is it because Olympus has tried to garner a premium based on its goodwill and reputation (an IP-related consideration), or is it due to cost and other advantages of its competitors? Here, as well, the article does not offer much insight.

Don't get make wrong. I have no complaint with the article as far as it goes. I only wish that the it had considered these IP points as well. IP and business concerns, as they come together in the world of technology and innovation, are usually a seamless web. I think that the business press needs to more fully recognize this fundamental point in its coverage of relevant developments.