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.