III. Why Does a Business Need an IP Strategy?—Part One

(By P. Krishna Mohan)        Date : March 22nd,2019

So, what is an IP strategy? In the simplest of forms, it is a plan for using intellectual property (IP) to benefit a business. As I have noted in my earlier articles, IP has become very influential in determining a company’s market value, gain competitive advantage to drive higher prices, and identify new revenue generating opportunities. A company can be in a negative earnings position for several years but still command a respectable market value from the way it leverages its IP. It stands to reason therefore that knowing how to maximize the leverage gained from IP, namely by having an IP strategy, would be just as important as having a robust business strategy. 

As an example, in the technology arena, Qualcomm, Intel and Apple can command higher prices for their products and retain their market position by minimizing the ability of competitors to copy their knowhow. How and what they patent, register as trademarks or hold as trade secrets, and how they identify infringers is dictated by their internal IP strategies which serve as templates for their organizations to follow. As organizations grow in size, a well-developed and broadly communicated IP strategy is necessary so that all employees can make more consistent decisions on how to handle IP every time the issue arises.

How does one go about developing an IP strategy? At its core, an IP strategy is all about understanding what the company wants to do with its IP. What are its strengths and weaknesses? What are the gaps in its internal technical capabilities and can licensing technology from an external source help close those gaps? What IP is worth protecting and what can and should be monetized through licensing and sales? What mechanism should there be in place to identify the infringers?

There are many ways to develop an IP strategy for a business. One method that I have found especially useful in my professional experience is a basic nine step template that can be used in most situations.

  1. Define the business objective and relate it to how it will make money.
    • Will the business sell new products, reduce costs with a new process, license its patents and knowhow or use some other revenue generating mechanism? 
  2. Conduct a “current state-of-the-technology” IP search and map the competitive landscape.
    • Who are the competitors and partners?
    • What are their strengths and weaknesses?
    • How rapidly is the industry developing?
    • What is the “window of opportunity” to make money with our current level of technology?
    • How does the business fit in vs. our competitors?
  3. Identify all the potential sources of sustainable competitive advantage. What barriers to market entry exist today or can be created?
    • Should the business in-license critical technology rather than developing it in-house? This can speed up product development and market entry while potentially saving costs. 
    • Exploit its brand identity.
    • Develop exclusive relationships with key players, both upstream and downstream to lock in the route to market.
  4. Identify which IP elements are critical to business success, when they are needed and how they can be acquired.
    • Patents can temporarily block competition, but they are also costly to obtain, maintain and enforce.
    • An in-license can provide a faster, cost effective route to market. An out-license can generate cash.
    • Brands and trademarks can provide long-lasting advantage if they are supported by appropriate marketing communications.
    • Trade secrets provide a competitive advantage but diligence is required to maintain their confidentiality.
  5. Document all agreements with suppliers and customers that clearly define ownership of IP.
    • Whenever possible, file patent applications before disclosure of any innovation even if it is under a confidentiality agreement.
    • Limit the sharing of confidential information to the minimum needed to execute the agreement.
    • Clearly articulate what happens to IP and proprietary information when the agreement is terminated.

In the Part Two in this series to be published in April, we will discuss the remaining elements needed to complete our IP strategy. These include testing vulnerabilities in our patents to “design around” challenges and identifying the gaps in our protection. We will also highlight how to setup an optimum foreign filing profile, to maximize protection while minimizing costs.

P. Krishna Mohan recently retired as Global Director of Licensing, E.I. DuPont de Nemours and Co., Wilmington, DE, USA. He consults with individuals and companies on Business Management and Intellectual Property matters and can be reached at  kitmohan@gmail.com.

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