The Importance of Intellectual Property (IP)
for Enhancing the Competitiveness of Small
and Medium-Sized Enterprises (SMEs)
Dr. Guriqbal Singh Jaiya
Director
Small and Medium-Sized Enterprises Division
World Intellectual Property Organization
guriqbal.jaiya@wipo.int
www.wipo.int/sme
Spotlight is on knowledge
in today’s economy
• Knowledge, Weightless, Information, Digital
or Service Economy
• Factors of production: Land, Labor, Capital,
Intangibles (Knowledge)
• Knowledge as useful Information (or
Service)
• Information as a “Public Good”
• Information as Property
Centrality of Knowledge
KNOWLEDGE
underpins
PERFORMANCE
Knowledge
Capital
Knowledge
Capital
Labour
Labour
Pre -industrial
era
Industrial era
Capital
The « knowledge
economy »
Knowledge
Labour
US COMPANIES’ INTANGIBLE
ASSETS AS % OF TOTAL ASSETS
Intangible assets
Physical assets
1982
2000
Market-oriented Economy
• Playing Field: Unfair competition; free riding
• National Legal Systems: Diversity
(bilateral/regional/ international treaties or
agreements)
• Adding Value : Meeting or exceeding market
needs or expectations
• Market research: Consumers’ needs, competing
products or substitutes, gaps
• Technological innovation as an element of
marketing
Challenges in Today’s Economy
• Government regulation, market participants and
consumers; globalization, deregulation, quotas, tariffs,
subsidies, market access or non-tariff barriers
• Supply exceeds demand; fickle demand, risk, lean retailing
• Trust and relationships: Consistency vs. Innovation
• Changing needs: need for creativity and/or innovation
• Mass production, custom made, personalization, cocreation/designing
• Supply, demand, production, value chain or network
• Innovation/creativity: Customer, supplier, consultant,
partner, competitor, standards, product liability, risk
sharing, ownership
Competition and Cooperation in
Today’s Economy
•
•
•
•
•
Property: Right to Exclude/use/enjoy
Share/leverage
Physical vs. Intellectual Property
One to one vs. one to many
Physical manifestation/link to carrier/medium or
fixation
• Nature of competing/substitute products:
Functional, equivalent, class, set, related goods
The Challenges to the IP System
•
•
•
•
•
•
•
Expand, adapt, fine tune, harmonize
New categories (Sui generis systems)
National, regional or global
National treatment vs. reciprocity
Digital environment and E-commerce
Legal jurisdiction, applicable laws
Fit for purpose: Clear, fast, cheap and
effective
• Simple and cogent
SME Competitiveness (I)
• In a knowledge-based economy, competitiveness
of enterprises, including SMEs, is increasingly
based on ability to provide high-value-added
products at a competitive price
• Globalization and trade liberalization has made it
crucial for most enterprises, including SMEs, to
become internationally competitive even when
operating wholly in the domestic market
The challenge of adding value in
today’s economy
• Raw materials/Inputs: Processing (Value addition) =
Value added output/component; product; sale; Profit
• Value addition: Better: Functional/technological or
aesthetic/non-technological; Rational/Emotional
(More for Less)
• Price; access/availability; consistency
• Individual, Enterprise (legal person), Chains,
Networks; consortia; Open Innovation (IndustryGovernment-Academia)
• Ownership vs. access to knowledge
SMEs Competitiveness (II)
• To become and remain competitive, SMEs need a
coherent business strategy to constantly improve
their efficiency, reduce production costs and
enhance the reputation of their products by:
–
–
–
–
–
Investing in research and development
Acquiring new technology
Improving management practices
Developing creative and appealing designs
Effectively marketing their products
Everything Depends on 5 Key Choices:
• Choosing the right business to be in
• Creating the right strategy
• Building the right systems
• Designing the right organization
• Getting the right people
A business is a combination of ...
• Technology in the product or service,
• Technology used to make the product or provide
the service,
• Features of the product or service, and
• Customer needs met by the product or service,
… that creates a potential or real economic
relationship between a buyer and a seller.
Business strategy is ...
• the group of dynamic, integrated decisions that
position the business in its competitive
environment
R&D Strategy
Marketing Strategy
• Basic and applied research
• Product/market definition
• Product/process innovation
• Pricing
• Lead or follow
• Distribution
• Promotion
Production Strategy
• Customer support
• Facilities
Financial Strategy
• Integration
• Capital structure
• Capacity
Legal Strategy
• Cash flow
• Quality
• Intellectual property
protection
• Production technology
• Corporate
• Operations control
• People management
Objectives
• Growth
• Profitability
• Diversification
• Innovation
• Market share
• Working environment
• Corporate citizenship
Strategy Sets a Dynamic Loop in Motion
Marketing Strategy
R&D Strategy
Production
Strategy
Legal Strategy
Financial
Strategy
Execution
• People
• Systems
• Organizational
structures
Results
SMEs Competitiveness (III)
• For this, SMEs must make significant investments of
time and resources
• Without intellectual property protection there is a
strong risk that investments in R&D, product
differentiation and marketing may be stolen/copied
• Intellectual property rights enable SMEs to have
exclusivity over the exploitation of their innovative
new or original products, their creative designs and
their brands. The exclusivity creates an appropriate
incentive for investing in improving their
competitiveness
“Technology-Push Linear Model of Innovation”
Basic Research
Applied Research
Invention
Development
Production
Marketing
The Innovation Process
• An innovation starts as an idea/concept that is evaluated,
refined and developed before it is applied or acted upon.
• Innovations may be inspired by reality (known problem).
The innovation (new or improved product development)
process, which leads to useful technology, requires:
–
–
–
–
–
–
Research
Development (up-scaling, testing)
Production
Marketing
Sale
Use/Consume
• Experience with a product results in feedback and leads to
incrementally or radically improved innovations.
New/Improved Product
Development
Stages in a New/Improved Product Development
process:
• Ideas Generation
• Ideas Screening
• Concept Development and Testing
• Business Analysis
• Beta Testing and Market Testing
• Technical Implementation
• Commercialization
Ideas, Creativity and Innovation
• Creativity
The ability to make or otherwise bring into existence
something new, whether a new solution to a problem, a
new method or device, or a new artistic object or form.
• Innovation
1 : The introduction of something new
2 : A new idea, method, or device
• Creativity = Idea + Action
• Innovation = Creativity + Productivity
• Innovation = Idea + Action + Productivity
IDEA to PRODUCT
Internal,
External, or Joint
Internal,
External,
or Joint
@Entrepreneur@
Internal,
External or Joint
Business
model
Idea
Business
Strategy
Manufacturing or
Business Process
Invention
Functional or
Technological
Innovation
(Tech/Non-tech)
Form or
Appearance
Marketing (Branding)
Technology (Internal, External or Joint)
Financial, legal or
organizational
Product (Internal, External or Joint)
IDEA to MARKET
Idea
Technology
Creative Expression
Technology
Fixation/Replication/Distribution
Technology
Product
Technology
Marketing
Idea to Profit
Idea
Business Model
Intellectual Property
Product
Relationship of Trust
Marketing
Value Extraction (Sale)
Understanding the Process of
Innovation
The Process/Steps of Innovation
Pre-IPO
$
Expansion
• Legal Entity
• Viable
• Market acceptance
• Heading to IPO or M&A
• High Growth
• Founders = Mgt Team
• Bright Idea
• Head Count
• Minimal Revenue
• Experimental
Start-Up
• Multiple Cycles
• Slow Growth
• Research
• Support Functions
• Business Plan
• Administration
Seed
• Proof of Concept
• Marketing
• Revenue Growth
Idea / Concept
Time
The Needs of Each Stage
$
•Recruitment
•Business
•Corporate and
Development
Secretarial
•A & P
•Financial
•Market Access
•Training
•PR and Marketing
•Networking
Expansion
•Business
•Business Plan
Development
•International support and
•Prototype/ POC
Mkt. Access
•Project Management
Start-Up
•Diversification strategies
•Business Premises
and support
•Project Management
•Recruitment
•Management Training
•Training and Incentives
Seed
Idea / Concept
Time
IP Management Needed in all stages
Basic Message 1
IP adds value at every stage of the value chain
from creative/innovative idea to putting a new,
better, and cheaper, product/service on the market:
Trademarks/ GIs
Ind. Designs/Patents/Copyright
Patents /
Utility Models/Trade secrets
Patents /
Utility models
Invention
Commercialization
Marketing
Financing
Literary / artistic
creation
Copyright/Related Rights
All IP Rights
Industrial Designs/
Trademarks/GIs
Product Design
Licensing
All IP Rights
Exporting
Basic Message 2
• IP Strategy should be an integral part of the
overall business strategy of an Enterprise
• The IP strategy of an Enterprise is
influenced by its creative/innovative
capacity, financial resources, field of
technology, competitive environment, etc.
• BUT: Ignoring the IP system altogether is in
itself an IP strategy, which may eventually
prove very costly or even fatal
Basic Message 3 (More for Less)
• Own Use
• Licensing
• Franchising
• Merchandising (Mickey
Mouse, Hello Kitty)
Invention and Innovation
– An invention is an idea or concept for
a new product or process.
– An innovation is the successful entry
to the market of a novel product,
process, or business model.
– Creating an innovation from an
invention is a high risk venture.
From Invention to Innovation
While invention depends upon
creativity,
successful technological innovation
requires integrating new knowledge
with multiple business functions.
Innovation – What is it?
The creation of new ideas/processes which
will lead to change in an enterprise’s
economic or social potential
[P. Drucker, ‘The Discipline of Innovation’,
Harvard Business Review, Nov-Dec, 1998, 149]
Why do we need Innovation?
Conclusion? - - If a company does not continue to introduce
new products periodically, or at least significant improvements
on existing products it will eventually be on a “going out of
business” curve.
Continuing to come up with the “right” product for the
market takes a lot of innovation (plus a lot of “perspiration!”).
What is Innovative Thinking?
– A means of generating innovation to achieve two objectives
that are implicit in any good business strategy:
• make best use of and/or improve what we have today
• determine what we will need tomorrow and how we can
best achieve it, to avoid the "Dinasaur syndrome«
– Innovative thinking has, as a prime goal, the object of
improving competitiveness through a perceived positive
differentiation from others in:
• Design/Performance
• Quality
• Price
• Uniqueness/Novelty
Obstacles to Successful Innovation
• Competitive position
• Market judgement
• Technical performance
• Manufacturing expertise
• Financial resources
Innovation
How to classify newness and degree of
innovation and what to focus on:
• New to the firm?
• First in the market?
• First in the world?
• Incremental or radical innovations?
Marketing principles…….
•
Identify opportunities and threats
•
Identify customer needs
•
React to a competitive environment
•
Careful planning to make a New or improved product
•
Use the 4 P’s….
•

Product service

Price

Promotion

Place (distribution)
Retain flexibility to react to changes
The Development of Technology: From
Knowledge Generation to Diffusion
IMITATION
Supply side
Basic
Knowledge
Invention
Innovation
Diffusion
Demand side
ADOPTION
Innovation Process
Invention
Innovation
Imitation
• The adoption of an
innovation by similar firms
• Usually leads to product or
process standardization
• Products based on imitation
often are offered at lower
prices but with fewer
features
The Innovation Process
• An innovation starts as an idea/concept that is refined
and developed before application.
• Innovations may be inspired by reality (known
problem). The innovation (new product development)
process, which leads to useful technology, requires:
– Research
– Development (up-scaling, testing)
– Production
– Marketing
– Use
• Experience with a product results in feedback and leads
to incrementally or radically improved innovations.
The Innovation Process
Translation of Creative Idea into Useful Application
Analytical
Planning
To Identify:
Product
Design
Market
Strategy
Financial
Need
Organizing
Resources
Implementation
To
To Obtain:
Accomplish:
Materials
Organization
Technology
Product Design
Human Resources
Manufacturing
Capital
Services
Commercial
Application
To Provide:
Value to Customers
Rewards to
Employee
Revenue to Investors
Satisfaction of
Founders
The Profitability of Innovation
Profits
from
Innovation
Value of an
innovation
• Legal protection
Innovator’s
ability to
appropriate
value from an
innovation
• Ease of imitation
of
technology
• Complementary
resources
• Lead time
Appropriating Value from Innovation
Barriers to Integration
Different Time
Orientation
Interpersonal
Orientation
Different Goal
Orientation
Formality of
Structure
Facilitators of
Integration
Shared Values
Leaders’ Vision
Budget Allocation
Effective
Communication
Time to
Market
CrossFunctional
Integration/
Design Teams
Product
Quality
Creation of
Customer
Value
Value
Appropriation
from
Innovation
Product Development Strategies
Old
Market
New
Market
Old Product
New Product
Market
Penetration
Product
Development
Market
Development
Product
Diversification
There are several types of new products. Some are new to the
market, some are new to the firm, and some are new to both.
Some are minor modifications of existing products while some
are completely innovative
Product Life Cycle
–
–
–
–
Introduction
Growth
Maturity
Decline
Product Life Cycle
Maturity
Decline
Growth
Sales
Introduction
Time
New Product Development
Stages in a New Product Development process:
• Idea Generation
• Idea Screening
• Concept Development and Testing
• Business Analysis
• Beta Testing and Market Testing
• Technical Implementation
• Commercialization
Technology Adoption – Diffusion of Innovation
New Product Adoption Process
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Area under curve sums horizontally to form first three stages of the
product life cycle.
Technology Adoption – Diffusion of Innovation
Time
Take up Rate
Early
Adopters
Innovators
Innovators:
Early adopters:
Early majority:
Late majority:
Laggards:
Early
Majority
Late
Majority
venturesome; greatest need
opinion leaders; needs driven
deliberate
skeptics
traditionalists; suspicious
Laggards
New Business Models Emerge
Then…
Now…
CRO’s
Product
Development
Product
Development
Cycle
Tool
Companies
One Integrated
Company
CRM’s
Testing
Services
Many Distributed
Companies
New Regional Model Emerge
Then…
Now…
Region D
Region A
Region B
Manufacturing
Region C
Research
Trials/Testing
Services
Development
Self-contained
regional clusters
Region G
Region E
Region F
Specialized,
networked regions
Commercialization Model
Strategic Investment is the Foundation of a
Successful Commercialization Model
What Investors Look for?
 Novelty; world-class; evidence of commercial
interest; clear path to market
 Unencumbered, or encumbered by
reasonable conditions (Equity, royalties)
 Protection (Non-disclosure agreements,
Patents, Designs, Brands, Copyright)
 IP protected by one or more Patents is the IP
required to implement the business plan
 “Freedom to Operate”
Innovation, Intellectual Property
and Poverty Reduction
Critical Ingredients for Innovation:
• Intellectual Capital
• Human Capital
• Financial Capital
• Proximity
• Social Network Capital
Complementary Resources
Manufacturing Distribution
Finance
Core
technological
know-how
Service
Complementary
technologies
Marketing
Other
Other
Bargaining power of owners of complementary resources
depends upon whether complementary resources are
generic or specialized.
Alternative Strategies for Exploiting Innovation
Licensing
Risk &
Return
Competing
Resources
Examples
Outsourcing
certain
functions
Strategic
Alliance
Joint
Venture
Shares
investment &
risk. Risk of
partner
conflict &
culture clash
Small risk, but
limited returns
also (unless
patent position
very strong
Limits
investment, but
dependence on
suppliers &
partners
Benefits of
flexibility;
risks of
informal
structure
Few
Allows outside
resources &
capabilities
To be accessed
Permits pooling of the
resources/capabilities of
more than one firm
Konica
licensing its
digital
camera to
HP
Pixar’s movies (e.g.
“Toy Story”)
marketed &
distributed by
Disney.
Apple and
Sharp build
the
“Newton”
PDA
Microsoft
and NBC
formed
MSNBC
Internal
Commercialization
Biggest risks &
benefits.
Allows complete
control
Substantial
resource
requirements
TI’s
development of
Digital Signal
Processing
Chips
Uncertainty & Risk Management in Tech-based Industries
Technological
uncertainty
Sources of
uncertainty
Market
uncertainty
Selection process for standards and
dominant designs emerge is complex
and difficult to predict, e.g. future of 3G
Customer acceptance and adoption rates
of innovations notoriously difficult to
predict, e.g. PC, Xerox copier, Walkman
Cooperating with lead users
early identification of customer requirements
–assistance in new product development
Strategies for
managing risk
Flexibilility
—keep options open
—use speed of response to adapt
quickly to new information
—learn from mistakes
Limiting risk exposure
—avoid major capital commitments
(e.g. lease don’t buy)
—outsource
—alliances to access other firms’
resources & capabilities
—keep debt low
Innovation risk
RISK
RESEARCH
COSTS
DEVELOPMENT
COMMERCIALISATION
Mortality of New Product Ideas
The “ Right” Innovative Product?
 The right product is one that becomes available at
the right time (i.e., when the market needs it), and
is better and/or less expensive that its competition.
 To have the right product, therefore, one must:
 Predict a market need
 Envisage a product whose performance and
capability will meet that need
 Develop the product to the appropriate time
scale and produce it.
 Sell the product at the right price
Innovation and Competitive Advantage
Difficult for
competitors to imitate
Commercially exploitable
with present capabilities
Provides significant
value to customers
Timely
Competitive
Advantage
Entrepreneurship 1
• Defined simply, it is . . .
“New Entry”
• That is, “entering new or
established markets with new
or existing goods and services.”
Entrepreneurship 2
Entrepreneurship drives innovation,
competitiveness, job creation and economic
growth.
It allows new/innovative ideas to turn into
successful ventures in high-tech sectors
and/or can unlock the personal potential of
disadvantaged people to create jobs for
themselves and find a better place in society.
Entrepreneurship 3
Entrepreneurship, in small business or
large, focuses on "what may be" or
"what can be".
One is practicing entrepreneurship by
looking for what is needed, what is
missing, what is changing, and what
consumers will buy during the coming
years.
Entrepreneurship 4
Entrepreneurs have:
–
–
–
–
–
A passion for what they do
The creativity and ability to innovate
A sense of independence and self- reliance
(Usually) a high level of self confidence
A willingness and capability (though not
necessarily capacity or preference) for
taking risks
Entrepreneurship 5
Entrepreneurs do not (usually) have:
– A tolerance for organizational bureaucracies
– A penchant for following rules
– A structured approach to developing and
implementing ideas
– The foresight to plan a course of action once
the idea is implemented and established
Entrepreneurial Success
1. People (Entrepreneur /Entrepreneurial
Team)
2. Opportunity (Marriage of Market and
Product/Service)
3. Access to Resources (Land. Labor,
Capital, Knowledge
And the fit amongst these three elements
(Business Model)
Strategic Entrepreneurship and
Innovation
• Entrepreneurship is concerned with:
– The discovery of profitable opportunities
– The exploitation of profitable opportunities
• Firms that encourage entrepreneurship are:
– Risk takers
– Committed to innovation
– Proactive in creating opportunities rather than
waiting to respond to opportunities created by
others
Dimensions of an
“Entrepreneurial Orientation”
•
•
•
•
•
Innovativeness
Risk Taking
Being Proactive
Competitive Aggressiveness
Autonomous
Major factors determining success of
a new product in the market
• The product provides functional
advantages
• Lower price for comparable product
• More attractive design (look)
• Reputation of brand
• Easy access: Available in the main retail
shops
• Consistent product quality
• Excellent after-sales services
Competitive Advantage
Criteria…
Low cost producer
Product differentiation
Niche market
Need two
processes: NPD
and
NB(usiness)D
Breakthrough
Innovation
An opportunity
driven path to
marketa different
business design
New Product
Development
New Business
Development
Innovative
New Products
New
Businesses
Protection of IP
Value adding
Ideas
Confidentiality or Nondisclosure
Agreements (Trade Secrets)
Research
Technologies
Products
Collaborative Research
Agreement
Patents
Technology Licensing
Agreement
Intellectual Property Questions
Intellectual Property (IP) Issues/questions during New Product Development
(NPD):
Can the innovation be legally protected? For how long?
How does one protect an innovation from imitators? How much will it cost?
When to protect? Do you need to rely on an IP expert?
The answers are complicated by the fact that one or more types of legal
frameworks may be used to protect a particular innovation, product, process,
or creative work. These include trades secrets, trademarks, designs, patents,
and copyright.
It is necessary to know which are applicable and when each is appropriate.
This varies somewhat from jurisdiction to jurisdiction. The advice of a
lawyer that specializes in these matters is essential.
Types of IP Rights
•
•
•
•
•
•
•
•
Trademarks (Brands)
Geographical Indications
Industrial Designs
Patents and Utility Models
Copyright and Related Rights
Trade Secrets
New Varieties of Plants
Unfair Competition
Legal protection of IP
grants exclusive rights
• Innovation - improvement
of functional aspects or
fabrication process of the
product
Patents, Utility
Models
• Design - the product’s
appearance (Looks)
Industrial Designs
• Brand - commercialization
/ marketing of the product
Trademarks,
Geographical Indications
Example
• Patent for the fountain pen that
could store ink
• Utility Model for the grip and
pipette for injection of ink
• Industrial Design: smart
design with the grip in the shape
of an arrow
• Trademark: provided on the
product and the packaging to
distinguish it from other pens
Source: Japanese Patent Office
Another Example
• Invention of CD player
protected by patent
• Brand on CD player
protected by trademark
• Design of CD player
protected by industrial
design
• Music played on CD player
protected by copyright
What is a Trade Secret?
• Three essential requirements:
– The information must be secret *
– It must have commercial value because it’s
secret
– holder must have taken reasonable steps to
keep it secret (e.g. confidentiality agreements)
* “not generally known among or readily accessible to persons
within the circles that normally deal with this kind of information”
Case Study on Trade Secrets
Monday April 9 3:45 AM ET
Fruit of the Loom Sues Competitor
CHICAGO (AP) - Fruit of the Loom is suing competitor
Gildan Activewear Inc., accusing the Montreal company of
stealing trade secrets to grab a competitive edge in the
cutthroat apparel business.
Fruit of the Loom contends the reports include production
goals for plants in El Salvador, Honduras and Mexico that
would allow Gildan to estimate production costs. They
detail sales to specific customers, trends in demand and
budget information.
Case Study: FBI Arrests Man
Selling Software Debug Code
•
•
•
•
HINDUSTAN TIMES, New Delhi, August 28, 2002
Shekhar Verma arrested August 25, Ashok Hotel
Geometric Software Solutions Limited (GSSL)
Confidentiality Agreement (Not to disclose, sell,
transfer, or assign any information on the project
• US Software Giant, SOLID Works, engaged GSSL for
debugging source Code of “Solid Works 2001 Plus”
• Left GSSL in June 2002; took copy of source code
IP Rights: Copyright
• Rights given to creators for their literary
and artistic works
• Protected works: books; newspapers; computer
programs; databases; films, musical compositions;
choreography; paintings; drawings; photographs;
sculpture; architecture; advertisements; maps and
technical drawings; no registration
• Generally protected for 50 years after the death of
the author
• Extent of overlap between copyright and design
laws
A Bundle of Exclusive Rights
Economic Rights
- Reproduce or make
copies;
– Distribute to public;
– Sell, rent*, lease*, lend,
license;
– Display or perform to
public;
– Adapt and Translate
(“Derivative works”);
Inherit, Gift, Sell or
License
Moral rights**
– Right of paternity: of
acknowledgement;
– Right of integrity: to object
against mutilation and/or
distortion of work;
** Moral rights cannot be
transferred; but may be
waived.
* Generally applies only to certain types of works: i.e. Cinematographic works; musical
works, or computer programs.
Copyright Works
Films
Literary
Dramatic
Sound Recording
Artistic
Music
What are Related Rights?
There are three kinds of “related rights”:
Rights
of performers
•
Actors
•
Musicians
•
Singers
•
Dancers
… or generally
people who
perform in their
performances;
Rights of
producers of
sound recordings
(also called
phonograms) in
their recordings
(cassette
recordings,
compact discs,
etc.);
Rights of
broadcasting
organizations in
their radio and
television programs
and in Internet
broadcasts such as
‘podcasts’.
Marketing principles…….
•
Identify opportunities and threats
•
Identify customer needs and expectations
•
Respond to a competitive environment
•
Carefully plan to make a New or Improved Product
•
Use the 4 P’s….
•

Product service

Price

Promotion

Place (distribution)
Retain flexibility to respond to unforeseen changes
Building Trust and Relationships
• A Brand is a consistent, holistic promise/pledge made
by a company; the face a company presents
•A Brand serves as an unmistakable symbol for products
and services
•“Business card” a company proffers on the competitive
scene, to set itself apart from the rest
Source: Association of Professional Design Firms, APDF, http://www.apdf.org/Public/Index.asp?Page_ID=74
Trademarks
• Trademarks are valuable business assets
• Interbrand 2003 Annual Survey of the world’s most valuable
global brands:
Coca-Cola: 70.45 billion US$ Microsoft : 65.17 billion US$ IBM: 51.71 US$.
“Brand” Companies
Nike...
Adidas...
Reebok...
Levi-Strauss…
…Own No Factories
Value of a brand value is
affected by...
•New inventions
•Adaptability to change (Management,
Employees)
•Changes in consumer tastes
•Situation and trends in the economy
•Industry trends and brands trends
•Impact of technological developments
Example no. 1
• Decades ago, Coca-Cola decided to keep
its soft drink formula a secret
• The formula is only know to a few
people within the company
• Kept in the vault of a bank in Atlanta
• Those who know the secret formula have
signed non-disclosure agreements
• It is rumored that they are not allowed
to travel together
• If it had patented its formula, the whole
world would be making Coca-Cola
Example no. 2
• Patent for stud and tube
coupling system (the way
bricks hold together)
• But: Today the patents have
long expired and the company
tries hard to keep out
competitors by using designs,
trademarks and copyright
Industrial Designs
Business (Idea) point of view:
– Make your product appealing to consumers
– Customize products in order to target different
customers (e.g. Swatch)
– Develop the brand (e.g. Apple ’s « Think
Different » strategy; i Pod)
Patents
Example: Ring-pull Cans
The inventor licensed the system to Coca-Cola at 1/10 of a
penny per can. During the period of validity of the patent the
inventor obtained 148,000 UK pounds a day on royalties.
Introduction to IP Management
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Legal
Technical
Business
Export
Financial
Relationships
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Accounting
Tax
Insurance
Security
Automation
Personnel
Hierarchy of IP Value
Biz Strategy
Driver
Build Markets and Relationships
Design Freedom
Manage Competition
Protecting Inventions
Potential Return
Deliver Revenue
Building an IP Strategy
Build Your Portfolio
Biz
Strategy
– Strategic Patenting
– Purchase Patents
Deliver Revenue
Markets Development
Design Freedom
Manage Competition
Protecting Inventions/Recognition
Deploy Your Portfolio
– Design Freedom
– Manage Competition
– Enter new Markets
IP Environment
Other Competitors
Established Leader
Disruptive
Technologies
Suppliers
You
Customers
Converging
Technologies
Complimentors
Strategic Patents Protect Value
• Value Comes From Use, Not Technical Sophistication
– Patents, like land, get their value from location
– Patents only valuable if they read on other people’s revenue
• Finding The Best Place To Build A Castle Means:
– Focusing on important market needs
• What will the market demand?
• Will technology become a standard?
• What are our competitive advantages?
– Keeping an eye on the larger landscape
• What alternatives exist or will converge?
• Who are we likely to have IP disputes with: now and future?
• Where are the necessary business chokepoints?
Technology is the fuel - Business Strategy is the driver
Building Strategic Patents
• Think Portfolio Development vs. Patent Generation
– Identification of areas that need development
– “Big Patents” vs. “Lots of Patents”
– Invest in a Continuation strategy
• Focus On Areas Of Greatest Creativity
– Early Stages of Development
– Standards Activities
• Include “Directed Invention” Program
– Use superior market knowledge to site “castles”
– Top thinkers gathered for purpose of developing patents
– E.g. Intertrust and Walker Digital (Priceline.com) based on this
Portfolio Investment Strategy
Goal:
X%
Y%
Focused
on our
Products
Focused
on our
Ecosystem
Manage
Competition
Focus: innovations in
our products
Goal:
Freedom to
innovate, enter
new markets
Focus: innovations likely
to be used by
those likely to
assert
Z%
Purchase
Patents
Wild Hares
Goal:
Prepare for the
unexpected
Focus: where
technology
could move
Goal:
Design Freedom
against key IP
Threat
Focus: Patents targeted
on revenue of
specific IP Threat
IP for Business Series
• Making a Mark
(Trademarks)
• Looking Good
(Designs)
• Inventing the
Future
(Patents)