Why Does a Business Need an IP Strategy?

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.

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:

• Define the business objective and relate it to revenue generation.
• Conduct a “current state-of-the-technology” IP search and map the competitive landscape.
• Identify competitors, partners, and their strengths and weaknesses.
• Analyze industry development speed and window of opportunity.
• Identify sources of sustainable competitive advantage and barriers to entry.
• Assess potential for in-licensing or out-licensing technologies.
• Exploit brand identity and exclusive relationships along the value chain.
• Identify critical IP elements for success and timing for acquisition or protection.
• Document agreements with clear ownership and confidentiality provisions.

In Part Two of this series, we will discuss additional elements needed to complete an IP strategy, including testing vulnerabilities in patents, addressing “design around” challenges, and creating an optimal foreign filing profile to maximize protection while minimizing costs.