Innovation is critical to success, yet implementing a systematic process to strategically plan, create, and leverage innovation remains a challenge for many companies. Intangible intellectual assets are much more difficult to identify and protect than traditional physical goods.
With all the focus lately on lawsuits and patents, it’s easy to forget how these valuable assets came into being: smart inventors created good ideas, and smart companies took the time to invest in the patent process.
From the employee ideas that go unnoticed to the licensing income not collected, a strong intellectual property (IP) program ensures these opportunities are captured and maximized. How a firm’s IP is protected has serious implications: it influences the competition, the return on R&D investment, and the bottom line.
Compared to physical assets, intellectual assets are much more difficult to create, protect, and capitalize on. They also behave differently from typical assets. The competition can easily copy ideas and concepts, which forces companies to decide when and how they will choose to enforce their IP rights.
With its complex supply chain and low margins, the electronics industry in particular is especially vulnerable to IP skirmishes. Due to the intense competition inherent in the industry and the technical complexity of today’s consumer electronics devices, there is an ongoing swirl of patent litigation in the marketplace.
Consequently, aligning IP strategies with the business strategy has never been more crucial. Electronics firms that can align their IP strategy to their business strategy and leverage frameworks for guiding internal development and focus will be able to protect their IP assets. More importantly, they will be able to find innovative new ways to do business and drive new revenue streams.
Path To Success
IBM has long been a big investor in IP creation. Our value was tied up in digital concepts and ideas more than physical products much sooner than most other companies. The company currently manages one of the largest IP portfolios in the world, generating approximately $1 billion annually in IP-related income from the licensing of patents and other IP.
In 2011, IBM set a new U.S. patent record marking the 19th consecutive year that it has led the annual list of patent recipients, with IBM inventors earning a record 6180 U.S. patents.
Underpinning our approach to IP management are some fundamental beliefs that we have about what makes for great innovation. To start with, we firmly believe IP should be leveraged as a strategic asset and a thorough process should be put in place to manage it, from concept through the patent application process to the ongoing monitoring and leveraging of the assets.
To get this started, electronics firms need to lay a foundation by assessing their existing IP portfolios (including patents, trademarks, service marks, trade secrets, copyrights, domain names, and publications) to identify gaps and exposures so future patenting activities can be aligned with company objectives and improve the quality and value of their IP portfolio.
The next step involves building the IP process in a way that encourages the patent strategy to carry through the entire invention process. A lot of effort should be spent training the inventors and establishing the infrastructure to support the IP lifecycle process.
An idea must take many steps to become a patent, a product, or an asset that benefits the organization or society. Managing this complex process for dozens or thousands of ideas requires a systematic approach as well as a diverse team of experts and tools.
The people involved in every step of this process need to be trained in the overall process and their specific area. This includes the inventors, the senior inventor advocates, the people who review submitted ideas, the team that manages the worldwide portfolio, the legal team, the licensing or sales team, and the executive management team.
Finally, companies will need to work on maturing the capability so they can leverage the IP system to meet their goals. This phase tailors know-how transfer to a client’s specific need for maximizing its IP portfolio and program. A key aspect includes strategies for expanding the IP portfolio into new arenas such as promoting societal objectives, capturing new markets, and improving capitalization of R&D investment as patent laws evolve.
Safeguarding The IP
Protecting innovation through an IP portfolio is also a necessary part of the program. This includes preventative measures such as policies that prohibit program participants from taking IP to other companies or countries and establishing rigorous trade secret policies.
Collaborative environments require clearly defined IP ownership parameters. “What’s mine is mine, what’s yours is yours, and what’s ours is ours” is the guiding principle for some industries, such as IT, but this approach can become increasingly complex in applied research engagements with a significant profit potential. IP rights can become a critical part of the negotiation strategy.
The “property lines” between IP owners are not always clear. There can be significant overlap among patents, creating complex infringement issues. Protecting an IP portfolio requires both a strong enforcement policy when others infringe, as well as a defense strategy for managing adversely held patent assertions. This includes mitigating IP theft in countries with less stringent IP protection laws and enforcement.
To summarize, by using a rigorous IP framework companies can:
- Provide freedom of operation and minimize the risk of commoditization
- Identify new income stream opportunities
- Maximize return on investment and capitalize on the intellectual assets contained throughout their organizations
- Identify cost savings
Done right, managing IP is first and foremost about creating a culture of innovation and getting people to think rigorously about how their ideas can be applied in products and markets. While anyone can copy an idea or a vision, copying a culture of continuous innovation in an enterprise is much harder.