7.3.4 How to implement

Before analyzing some specific IP strategies we present a general framework providing you with a detailed roadmap on how to start drafting an IP strategy for your organisation:

Some General Guiding principles1
Synchronize with the business strategy:

Table 1: General Guiding pinciples for developing an IP strategy

While companies in the headline such as Philips have the luxury of in-house lawyers and alliance specialists to help them to collaborate safely, what can a smaller company do to maximize the return it obtains on its ideas, while protecting other ideas from being stolen? There follows some recommendations for protecting and managing IP:

Assign senior IP leadership
If possible, employ a senior-level manager whose job is exclusively IP management. If this is not possible, locate ultimate responsibility of IP issues with one senior manager whose time is split with other responsibilities. High-level, consolidated IP responsibility increases the likelihood that the company will use IP as a strategic asset, rather than seeing it as an area of compliance.

Implement a management system
Understand exactly what is owned in terms of IP, even if a monetary value cannot be placed on it at this time. At the most basic level, this can be a spreadsheet outlining the nature of the IP, its ownership and any rights that other parties have to use or exploit it2.
It is advisable to maintain proper invention records for all research activities. All supportive data and conceptual ideas should be included in these records. This evidence may be used to support your priority over another invention or in infringement proceedings or to invalidate a competitor’s patent.
Have clear policies and procedures in place to determine the ownership and to deal with assignment of rights. Contracts with employees or external consultants should have clear provisions on IP ownership. File patent applications in a timely manner to ensure proper protection. 3

Align IP and business objectives
Only invest money and resources to protect and manage IP that fits with company strategy. Review IP assets regularly, at least annually, in the context of business efforts and direction. Remember, strategic discoveries that would be hard to track and enforce if patented may be more useful to a company if kept a secret.

Exploit IP
Maintaining idle IP is costly. However, unused IP can still be profitable. Options include licensing IP, investing it as a part of a joint venture or using it to block competitors’ activities. Companies can also decrease costs by identifying less valuable IP and letting those patents expire. Review portfolio regularly and critically to ensure that funds are not wasted by maintaining IP, when the products/ services covered no longer need such protection. 4

Important tips to be considered while developing an IP Strategy

  • Create awareness in your organisation of the importance of an IP strategy.Preserve confidentiality of a new technology until professional advice has been sought.5
  • Check trademark databases to avoid using an existing trademark and protect trademarks before launching a new product or service with a new brand name. It is important to consider export markets when doing so and avoid using brand names that may have an undesirable meaning in a foreign language.6  
    (See also component 12 of this guide: Foreign language and intercultural competences for innovation).
  • Make sure that trade secrets are kept within the enterprise and prepare, where appropriate, confidentiality agreements when negotiating and sharing information with business partners in order to protect trade secrets.
  • For export-oriented firms, make sure IP is protected in all potential export markets. In the case of patents, it is important to bear in mind that an enterprise generally has 12 months from the date of filing of a national application to file the same patent application in other countries.
  • Use your IP portfolio as leverage when seeking sources to finance your business (e.g. include IP assets, particularly patents, utility models and industrial designs, in your business plan as it may help to convince investors of the market opportunities open to your enterprise).
  • Use patent information available in patent databases to develop your business strategies.
  • Monitor the market and make sure that your IP assets are not being infringed. If violation of your IP rights is detected it may be advisable to contact a lawyer.
  • The checklist is by no means exhaustive. These are some of the basic strategies that have been successfully pursued by enterprises that have fully integrated IP rights into their business strategy.7

A. Patent Strategies

A number of generic patent strategies are described in the IP literature. The following are examples of the most important strategies: 8

“Ad hoc” patent strategy
This strategy is a result of ad hoc efforts and limited resources. One or a few patents are used to protect an innovation in a special application. There are many possibilities to invent around and their costs are low. Several small companies follow this approach to IP strategy due to low cost.

‘’Sniper’’ strategy
Many patentees use the "sniper" strategy. They rely on a few patents to cover their core technology and do not concentrate on protecting possible modifications or improvements of that core technology. This is an inherently risky strategy, however, particularly if the core patents are found wholly or partially invalid, and there are no additional patents to cover improvements or modifications of the original technology. Another risk associated with a lack of regular updating is that the original patents and the technology they protect may become obsolete.

This strategy is applied when an organisation does not intend to practice the patents, but it uses them as viable alternatives against its competitors.

“Blanketing” and “flooding”
In this case, efforts are made to turn an area into a jungle or a minefield of patents e.g. by bombing every step in a manufacturing process with patents, more or less systematically. This strategy may be used in emerging technologies when uncertainty is high, regarding which R&D directions will be fruitful or in situations with uncertainty about the economic importance of the scope of the patent.

 “Prestige” Strategy
Some companies perceive that prestige and leadership, which accompany a patent, may help their business and provide the driving force for this strategy. Academic and research institutions are also known for filing patent applications to achieve recognition of their research work. A small company may also seek patent coverage to impress potential investors and to market the uniqueness of its technology.

“Scarecrow” Strategy
The patent owner may have no intention to enforce its rights, but instead insinuate that competitors stay clear of the area he has protected. The patent acts merely as a “scarecrow” to keep competitors away from the owner’s business. This strategy is more prevalent in industries unaccustomed to large-scale patent filings and frequent patent disputes. More sophisticated companies will seek ways to design around the patent, whereas less sophisticated companies prefer to keep their distance rather than invest in a costly design-around analysis.

Have you experienced the implementation of one of the above strategies in your organisation? Do you believe that one of the above mentioned strategies could be used for your organization’s intellectual property protection? Apart from the ad-hoc strategy, which is usually followed by SMEs, don’t you think that your company could adopt some elements from other patent strategies to implement a more systematic IP strategy?

B. What are the most usual types of licensing and where could they be used?

A number of generic licenses are described in the IP literature. Examples of these strategies are as follows:9 

Non-Exclusive License
It is the most common type of license. A license is said to be non-exclusive if the rights granted to the licensee may also be granted to others. A typical example is the use of a commercial software product.

Exclusive License
A license is said to be exclusive when the licensee is the only entity that is granted the licensed rights. A typical example of this type is when the owner of a fast food franchise may be granted the exclusive right to use franchise trademarks within some specified geographical area.

Patent (or other IP) License
The owner of a patent (or other type of IP) is given the legal right to exclude the unauthorized use, manufacture, sale, offer for sale, or import of products or services that include the protected subject matter.

Joint Development License
It is common for one technology-based company to enter a joint development agreement with another in order to collaborate in development of a product calling for the special resources of each company. When development of the new product is completed, the joint development license will grant each party whatever rights may be required to market the product.

Cross License
It is essentially two licenses combined into one agreement and it is used when each party to the agreement wants to obtain certain rights to the other’s party property.

Conditional License
Contracting parties will sometime agree that if one party fails to do something, a license is created. For example if a software vendor fails to deliver sufficient quantities of its products to a distributor, the distributor may be granted a license to reproduce such products from master copies for the limited purpose of satisfying orders placed in accordance with the distribution agreement.

A sub-license provision grants the licensee the legal authority to license the IP to others. This would be common when the original licensee completes the R&D in a patent portfolio context, where others have contributed patents to the jointly managed portfolio.

Advantages of licensing include:

  • Cost effective return on R&D investments by entering into new markets where the IP owner may not be able to access
  • Establishing new relationships, which will lead to R&D collaborations
  • Licensing provides a means of control and ongoing access to the development of the new technology.

1 www.falcoarcher.com/FalcoArcherIPStratFndm0105.ppt m
2 Jane Hogan (2005), Open innovation or open house: How to protect your most valuable assets, Medical Device Technology, 16(3), pg.30
3 www.liip.org/pdfs/GPG_EN.pdf
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5 www.wipo.int/sme/en/ip_business/managing_ip/ip_strategy.htm
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7 www.1000ventures.com/business_guide/ipr/sme_guide_managing_ia_bywipo.htm
8 InnoSupport: Supporting Innovations in SME, 7.4 IP management strategy, 2005
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