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) 17 Setting the goals for IP strategy – examples and questions As explained before, IP strategy goals should be aligned with the goals of your business and innovation strategy. IP tools (see Figure 3) should be integrated with the business and innovation strategy. I also highlighted that IP can be used to strengthen competitive advantage. Some examples of IP strategy goals can help to show what this means in practice: • Develop an IP portfolio purely as an ‘isolating mechanism’, i.e., to exclude the competition from using the solution. This can be also achieved by incorporating IP in your brand-building processes to create the desired image of your organisation as an innovation-driven company. • Realise higher prices. This results from the above point. Large margins on sale/service prices can be achieved thanks to better performance or other benefits from a product. Once the underlying technology becomes registered, protected IP, the IP holder can exclude competitors from introducing equivalent solutions. This monopolistic position facilitates getting higher prices from the market. Branding (trade mark protection) is another means of extracting higher prices since good and desirable brands can create their own market through reputation. (Examples of the latter can be easily found in a shopping centre near you!) • Create a defensive portfolio. Through pursuing this objective, a company will try to prevent others (mainly competitors) from patenting the same idea as its own technology or existing product line (or anything close to that idea). In practice, this could involve the inventors and other people in the company sitting down with the patent attorneys to come up with as many workaround ideas as they possibly can (some ideas might only be filed to publication). In this way, the company attempts to minimise the risk of third parties enforcing their rights against it. It should be noted that this is a rather aggressive and certainly costly IP strategy. • Maximise the use of the IP portfolio, e.g., by licensing IP rights to others to commercialise or monetising the IP portfolio through IP brokers, or by attracting new R&D collaborations. • Ensure IP ownership of results that play a key role in the offered solution, e.g., by including IP clauses in R&D agreements that secure the ownership of background and foreground IP to the company. • Minimise IP risk. To achieve this goal, a company should adopt IP policies to mitigate IP-related risks, such as: − leakage of confidential information − unauthorised utilisation of the IP rights of third parties, or unintentionally infringing the IP rights of others (e.g., owing to inadequate due diligence in the IP search) − confusion about the terms and conditions for various collaborative projects − lack of clarity on the use and ownership of foreground IP generated in collaborative projects. The questions in Table 11 are designed to help you to identify the strategic position of IP in your business strategy. It is important to think about the answers in terms of short, medium and long-term strategy. Footnotes for Table 11 on Page 43 78 Alissa Meriello, ‘The Five Stages of Successful Innovation. Defining an innovation process increases companies’ future value’ (MIT Sloan Management Review, April 01, 2007). accessed 2 December 2022; Steve Blank and Pete Newell, ‘What Your Innovation Process Should Look Like’ (Harvard Business Review, 11 September 2017) accessed 2 December 2022; Martin Luenendonk, ‘The Innovation Process: Definition, Models, Tips’ (Cleverism, 23 September 2019) accessed 2 December 2022. 42
Intellectual Property in Business: IP basics, IP management, IP strategy IP Strategy for Expanding Companies and Corporates (continued) Table 11 IP strategic questions See page 42 for footnotes Question Comment Competitive advantage 1. Where do you seek your Even if your competitive advantage is not based on technology, this competitive advantage? information constitutes one or more critical trade secrets. 2. What are the strengths of your See above. company? 3. Could you obtain a significant You could consider leveraging your competitive advantage, for example, competitive advantage over your through an IP-based ‘isolating mechanism’. competitors by using your existing IP or by registering new IP? 4. Are there important ways IP could Options could include ensuring the company has IP ownership, monetising provide support to your business IP through licensing, attracting R&D projects/collaborations, or strengthening strategy? What are they? your negotiating power. Your industry and target market You could consider ranking your IP rights and identifying potential market players for out-licensing. You could identify them through, e.g., patent analyses 5. How important are inventions and IP Although it is hard to imagine an industry sector that would ignore in your industry and target market? innovations, some sectors seem to pay more attention to generating inventions and IP protection than others. Think, for example, about biotech and consumer electronics, vs coffee and carpet manufacturing. 6. How sophisticated is your industry Awareness of how competitors use their IP – e.g., purely as an isolating about IP practices? mechanism, quickly growing patent portfolios, selling IP, licensing IP – is a crucial data point that might indicate a window of opportunity. For example, you might break the standard practice of locking IP into the company and offer a brand-new business model in the sector such as crowd-sourcing new applications, or use the flexibility of the industry and out-license your IP to share commercial risk or gain a royalty return. 7. Are IP rights respected and enforceable IP is not just about litigation. However, if you feel strongly about enforcing in your target markets/territories? your IP rights, and this presents a challenge in your target markets/territories, you need to revise your approach. Perhaps this point should have a lower priority in terms of IP purposes? A good IP portfolio might facilitate R&D cooperation and be a strong card in negotiations with investors and other business partners. Innovation process 8. How do you intend to position Do you aspire to deliver ‘cutting-edge’ technology? Do you want to create a yourself in the market in terms of company known for its innovative spirit? your ability to innovate? A solid and strong IP portfolio (of diverse IP rights, not only patents) can express this goal very well. Also, a growing IP portfolio will demonstrate the results of your tech development efforts. 9. How do your company’s innovation This is all about retaining/establishing your company’s cutting edge. Relying processes compare with those of the on serendipity is not a strategy. At the same time, this approach is not about competition? over-formalising the freedom to generate ideas/inventions. Defining the stages of an innovation process, the requirements, and involving various departments/groups can support the inflow of ideas and will eventually lead to the successful implementation of a new product. An adequately tailored innovation process generates useful IP. 78 10. How long are product lifecycles in Consider whether patent protection is appropriate, even if your solution is your target market? patentable. If the product lifecycle is very short, i.e., under five years, I would always encourage you to do your own analysis to understand which aspects of your solutions are the most crucial for your business and whether they have long-term opportunities to support further product development. Think which elements of your solution would make the most out of long-term patent protection. You might consider looking at your value proposition (see Appendix 2). 11. Do you plan any scientific publications If you aspire for patent protection, your own publications prior to the patent about your solution? filing create the state of the art and are detrimental in terms of the novelty criterion for your patent applications. 43
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