Developing an IP Strategy for enterprises and SMEs
ACCORDING to the Organisation for Economic Cooperation and Development (OECD), “Intellectual Property Rights are instrumental for SMEs for a number of reasons: to protect and build on their innovations; position themselves competitively vis-à-vis larger enterprises in global markets, gain access to revenues, signal current and prospective value to investors, competitors and partners, access knowledge markets and networks, open up new commercial pathways, or segment existing markets”.
Decisions about IP must be part of the larger business strategy. The entire business picture must be kept in mind when making IP specific decisions because they are relevant to every other aspect of the business. Several role players need to be involved in the discussions.
What is an Intellectual Property Strategy
It is a set of measures formulated and implemented by an enterprise or an SME to encourage and facilitate effective creation, development and management of intellectual property. It outlines how to develop infrastructures and capacities to support inventors of IP to protect, develop and exploit their inventions.
It is a comprehensive document, which outlines how all the policy developments and implementation take place in a coordinated manner within an enterprise or SME framework. An IP strategy starts with the business goals and business issues, it involves deciding how you plan to use IP to support your business goals. It is informed by your own IP position and also that of competitors.
It identifies IP gaps and strengths for you and competitors. It drives how you extract/seek potential IP, how you will evaluate it, and what type of protection you will seek once you get it. An IP strategy determines how you will monitor and enforce your IP and is supported by internal IP processes.
Key elements of an Intellectual Property Strategy
An IP strategy must be intergrated through-out the firm and should involve all the relevant players. The preparation of a written IP strategy must include a detailed process to be followed when dealing with IP.
It must also involve the setting up of necessary management structures to handle IP issues, the awareness and education within the firm as well as innovation gate system. When approving funding for a new research venture, an enterprise or SME must simultaneously decide on taking it through the innovative process and consider IP aspects, reviewing its strategy periodically.
Why an Intellectual Property Strategy?
It strengthens an enterprise or SMEs ability to generate economically valuable IP assets. The goal of an IP strategy is to provide a plan over time whereby all stakeholders can work together to create, own, and exploit innovations, new technologies, and works of creativity.
Because IP is the means of owning technology through innovations, it is important for developing countries with a history of economic colonialism and neo-colonialism to leverage on IP as a tool for changing the paradigm to value-added products, not only to concentrate on natural resource exploitation.
SMEs have an important role to play. IP ownership gives bargaining power in contract negotiations with international partners and it permits owners to achieve profits through product sales, revenues through licensing, access to needed technologies for public benefit and IP also generates revenues and jobs for its owners.
According to the International Monetary Fund and the World Bank Development Indicators, 2016, the worldwide licensing market is valued at over $200 billion for “authorised use of intangible, non-produced, non-financial assets and proprietary rights (such as patents, copyrights, trademarks, industrial processes, and franchises) and for the use, through licensing agreements, of produced originals of prototypes (such as films and manuscripts)”.
The US licensing market is estimated at $100 billion/year and academic technology transfer contracts (licensing and sponsored research) are worth over $1 billion in the US.
What makes a strong Intellectual Property Strategy
Aligning it with your business strategy, using multiple forms of IP and keeping it current (periodic updates and revisiting it under unusual circumstances).
Executing it! It is a plan to be carried out, not a report to file away. Ensure that owners and deadlines are assigned.
It is important to communicate the IP strategy throughout the company “This is why we have a trademark and here is how to use it.” Getting advice where/when it is needed.
Why a strong Intellectual Property Strategy is Important
It allows businesses to use IP in a systematic and uniform fashion in the process helping them to prioritise resources, including time and money. It can lower risk as IP can be leveraged – to find partners, get better terms in a deal, out license for revenue, etc.
Strategy point: Commercialisation through, Selling, Collaboration, Licensing Selling of IP is a strategy, which SMEs can pursue. They can follow this strategy by making an attractive offer to sell their IP, through providing enough information to potential buyers to convince them of its worth, monitoring and eliminating infringing competition, limiting opportunities for ‘work-arounds’, as well as negotiating good contracts.
Collaboration is another IP strategy, which SMEs can use to leverage on their IP. Ways of collaboration include standards setting organisations (SSOs) to increase inter-operability etc, working with complementary product producers such as phone apps and open innovation.
To increase efficiencies in a complex and competitive market, collaborations are important. They can also be a result of insufficient internal resources, lack of know-how and inability to generate opportunities alone as well as to comply with national policies or laws, for instance, requirement to involve SMEs in some tenders.
Licensing is a prudent strategy, which SMEs can use to derive benefits from their IP. Consideration has to be given to analysing licensing fees/royalties versus prices earned on the competitive market.
Where there is strong or more efficient rivalry, it is prudent to license. Licensing is also appropriate for a market leader when there are many potential licensees. Monsanto, for example, has granted (fair) licenses to many seed companies. Technology in patents can be licensed and someone else might have invented the solution you need, saving you the effort.
Technology in your patents can be licensed out and you can use this to build partnerships. Licensees might have access to bigger markets (especially if your invention is a component in a larger product). This helps you decide what sort of license? Exclusive Licence (not even the patent owner may use) Sole License (the patent owner may also still use), Non-exclusive Licence (multiple licensees) Compulsory License; licence of right.
Strategy point: Enforcement
Litigation is very expensive — find alternatives and be absolutely sure of the strength of your case — do more patent searches to check whether your patent is strong. Mediation and arbitration are confidential processes, and can lead to customised solutions. Sell licenses, even at reduced prices and offer complementary know-how.
In the next installment I will deal with the issue of how enterprises and SMEs can use trademarks and branding to gain a competitive edge on the market.
Aleck Ncube is an Intellectual Property Scholar. He can be contacted on firstname.lastname@example.org or follow me on Twitter: @aleckncube