Innovation and Patents: Pros and Cons for Procurement

Are patents good or bad for the end consumer?  OK, that’s pretty broad…how about this specific example concerning Virgin Atlantic and Delta Air Lines:

Virgin recently filed this patent infringement case against Delta over Delta’s use of a herringbone-style seating configuration in its BusinessFirst cabin. Virgin Complaint Against Delta

At issue is Virgin’s patent, granted by the U.S. Patent Office two years ago.

The implications for travel buyers are interesting.  Virgin came up with a clever way of arranging its seats in the business class cabin.  The advantages include easier access to the aisle, and more seats in the cabin for Virgin.

Airlines invest significant sums in their seating designs, and clearly hope to gain competitive advantages by doing so.  In this case, Virgin, by virtue of its patent, has the right to exclude other airlines from copying the features covered (claimed) in its patent. Less competition means some combination of more traffic and higher prices for Virgin.

Let’s set aside the issue of whether or not Delta is infringing this patent.  The facts are not clear, and Delta likely believes that either the Virgin patent should be invalidated, and/or there is no infringement. Best guess is this will be  settled in court within two years.

More importantly, what do all you travel buyers and suppliers have to say about the pros and cons of a supplier who has patents covering elements of its offerings?

Should innovation be rewarded with this form of protection, essentially as a way to create more incentive to risk R&D funds?  Or do the implications of paying higher prices for what amounts to a monopoly on a product turn you off? Vote here and let’s see what you all think.

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1-Day Air Sourcing Workshop, Dec. 14

This is the first-ever one-day workshop devoted to sourcing airlines.  Matthew Patterson and I will lead the session on Dec. 14th in Chicago.  (Sold already? Register here.) The agenda is tailor-made to those folks wanting a deep understanding of these key topics:

• How airlines price corporate accounts – what really matters
• Understanding your true leverage – quantifying Buyer Power
• What’s better than benchmarking – and why?

Three Myths About Sourcing Airlines – Part 1

Given that air travel is typically a large spend item for most companies, it makes sense for procurement folks to attack it with extra energy and creativity.  Here are three ideas that often come up:

1. Consolidate air spend across a few firms to get better negotiating leverage
2. Buy air travel in bulk
3. Leverage frequent flier miles by stripping them out of the fare price, or by pooling them for corporate use.

Unless you’re the type that likes to take long walks in the hot sun, you can forget about using any of these methods – they just don’t work.  Here’s why:

Better RFPs for Meetings via SpeedRFP

This looks like it will be a very useful tool:  SpeedRFP is creating a standard platform for populating and managing RFPs for hotel meetings and events.  Any buyer who needs to get quotes from several hotels will appreciate this.