Benchmarking National - PRO INNO Europe

The first step to ensure that IP management is integrated into day-to-day business
operations is generally to write down and codify the IPR strategy in a respective
document. This document explains what procedures are to be followed when
important aspects concerning the IP of the firm arise and/or sets out responsibilities
for different IPR-related tasks. For the latter, many companies have set up dedicated
IP departments. Some of them were former patent departments, and the name
change alone indicates the higher significance of focussing on IP protection
instruments as a whole rather than only on patents. Though the organisational
embedding and the level of autonomy assigned to these departments vary greatly,
it is on average acknowledged that clear lines of responsibility are needed.
Following the establishment of an adequate IPR supporting structure, the challenge
is to raise awareness on IPR matters throughout the company. To this end,
company-internal trainings are the primary instrument of choice – distributing the
IPR strategy documents alone may not be sufficient as the documents may end up
as “…weighty volumes…used…as door stops” (Matthews et al, 2003: 46). In day-today
business operations, it is eventually important to “think IP” and act accordingly.
This entails a process of continual learning, revision and refinement, based on
company-internal observations and also on intelligence concerning the activities of
competitors.
The income-generating function revisited – The significance of business
models
The income generating function of IPR is, in addition to the marketing/
reputation creating functions of IPR, worth a more detailed look in the IPR
management context, as it may have consequences for the whole organisation of
a business. Such changes in corporate organisational structures can be especially
observed in the manufacturing industries of the ICT sector.
The ICT manufacturing industries are nowadays characterised by very short
product life cycles, very low production costs and low profit margins. At the same
time, however, there is also high pressure regarding the development of new
innovations, which is in turn mostly associated with high R&D costs. Many products
are made up of a variety of technologies, whereby each of the technologies may
be protected by their own range of patents.
A key factor in the context of IPR: open innovation
Traditionally operating companies may not be flexible enough to cope with the
challenges presented by such a business environment. 8 A possible, and widely
chosen, alternative way to tackle this issue is to open up the R&D departments and
enter in joint-venture agreements with other companies (mostly other large
competitors, but also SMEs) in order to share development costs (Elevald, 2007).
This is often done on a per-innovation or per-technology basis, and the nature of
such agreements entails a range of different forms of co-operation – sometimes
loose R&D cooperation agreements, sometimes membership in an alliance (e.g.,
the alliance on a particular DVD format), but often also separate legal bodies
(“joint” spin-offs). As a result of this open innovation approach, the rigid onecompany/one
R&D department model tends to break down into a conglomerate
of larger firms and SMEs, characterised by mutual trade interests and complicated
mutual ownership structures involving also competitors.
In this environment, revenue is only to a small extent created by having end-users
pay a margin on top of development and production costs. Instead, the primary
source of income is derived from licensing to other producers who sell the endproduct
under different brands to consumers. The inherent risk of litigation
resulting from patent infringements (considering, as stated before, that many ICT
products employ technologies protected by many different patents) is reduced by
8 Traditionally operating companies would in this context denote companies with a single large R&D department
which works only for the firm it is part of, which develops the innovations, has them patented, and hands them over
to production and marketing, from where they are sold with a profit margin to end-users.
39
SMEs IN THE IPR WORLD