CENSIS white paper: Intellectual Property in Business

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Intellectual Property in Business: IP basics, IP management, IP strategy IP Strategy for Expanding Companies and Corporates (continued) Importantly, this approach does not guarantee the business advantage forever. To maintain it, the approach should be dynamic and constantly fuelled by a ‘stream of proprietary knowledge’, i.e., modifications and improvements of the product. This can be done by either incorporating the newest technical knowledge and/or integrating customer and market feedback in the innovation process. 71 Having this in mind, IP rights should be seen as strategic resources in a business. As experts explain, this type of property cannot be easily duplicated by competitors ‘without them suffering a net economic loss’, and it also ‘makes for great strategic simplicity’. 72 An example of the latter is Xerox’s patent for plain paper copying, which gave the company a ‘rock solid’ advantage over competitors and allowed it to extract much monetary value. 73 However, patents and other IP rights have a limited life span, and relying solely on IP rights in your business strategy may not be the most sensible approach. Even so, you should always include IP rights in your strategy design, because beyond any doubt they can play a beneficial role in the business. You should intertwine IP rights with other ‘isolating mechanisms’ to make the most of asymmetries (differentiation advantages): these could include reputations, commercial relationships, network effects, economies of scale, tacit knowledge (trade secrets) and skill gained through experience. 74 IP strategy The ISO standard 56005 75 from November 2020 provides guidance on IP management, and places it within the IP strategy. The standard also recognises a direct/close connection between a company’s business strategy and IP strategy. The Standard advises incorporation of IP strategy in the overall business and innovation strategies, and identifies ‘increasing competitive advantage’ as one of many organisational objectives and purposes for IP (rights), next to others such as enabling collaboration or attracting or securing investment. If we were to apply Rumelt’s approach, it could take the following form in terms of IP strategy: 1. Diagnose: Define the challenge with regard to IP. For example, how does IP contribute to competitive advantage? Are there any IP-related barriers that affect business operations? 2. Guiding policies: Set IP objectives that are aligned with a business roadmap. For example, strengthen IP protection in the US, expand protection in South America, monetise IP in new markets through licensing, with no exclusive licensing of internal IP in collaborative R&D projects. 3. Actions: Take diverse steps within the IP management. The ISO standards involve: • generating and acquiring IP • ensuring IP ownership to the organisation • identifying and documenting IP • sorting and retrieving IP • exploiting and embedding IP in the business • mitigating risk related to IP • managing IP assets (e.g., abandonment). 76 It is important to identify areas of the business strategy where the IP strategy ‘kicks in’ and supports these. The ISO Standard is explicit: the objectives of IP strategy must be aligned with the business and innovation strategy of the organisation 77 . In other words, IP strategy should be recognised and utilised as a tool to advance the company’s business objectives. That is its sole purpose. 71 ibid 177. 72 ibid 135. 73 ibid. 74 ibid 164. 75 International Organization for Standardisation, Innovation management – Tools and methods for intellectual property management – Guidance (ISO 56005:2020[E]). 76 Ibid 10. 77 Ibid Clause 5.2. 40
Intellectual Property in Business: IP basics, IP management, IP strategy IP Strategy for Expanding Companies and Corporates (continued) Organisation Vision/Mission Goals and Objectives Business Strategy Business Process • Business Model • Market Situation • Merge & Acquisition Innovation Strategy IP Strategy Innovation Process • Identify • Create • Validate • Develop • Deploy IP Management • IP Research & Analysis • IP Generation • IP Acquisition • IP Maintenance • IP Exploitation • IP Risk Management Figure 3: The relationship between an organisation’s business strategy, innovation strategy and IP strategy ISO Standard 56005:2020 (E), p. 7 Take-home message: When you start an enterprise journey, you analyse and expand the knowledge about your market and potential customers, you seek funding, you build the product and your team, and much more. As an integral part of this huge business-building exercise, you should include IP and think about it in a strategic way (i.e., how will it help your business). A wise and effective IP strategy requires some entrepreneurial thinking. Your IP strategy, just like the business one, must include innovative approaches, new insights and combinations. After all, you are playing with risks and opportunities in a continuously changing environment. In such circumstances, there are few, if any, ready-to-wear solutions. 41
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CENSIS white paper: Intellectual Property in Business

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