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Where
does your company stand?
Prof.
James Conley is currently conducting
a study on success factors in patent
management. If you would like to
take a short survey and receive an
individual benchmark evaluation and
a summary of the study's results,
please participate.
Online
Survey
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Practice: James Conley
Managing intellectual property
in the global marketplace: The practitioner's perspective
By
James
G. Conley, clinical professor of technology, and
professor of industrial engineering management
A recent Alan
Greenspan address to the Institute for Economic Policy
Research makes a clear
point. The future of America's economy, and those of other
advanced industrialized nations, is increasingly dependent
on the production of new ideas, inventions and other commercially
significant innovations that may be secured by intellectual
property rights (IPR).
This commentary is a wake-up call to
business leaders operating in the global market who seek
to build and sustain competitive advantage through innovation.
If Greenspan's observations are foreshadowing, the strategy
and tactics for how global enterprises realize value from
investments in innovation is shifting toward the proactive
management of IPR.
Unfortunately,
the idiosyncratic lexicon of property law (including such
concepts as infringement,
disparagement, functionality and invalidity) is typically
the domain of intellectual property (IP) lawyers. Procuring
the services of these professionals is expensive, and their
opinions are difficult to translate into actions. Legal
maneuvers and the associated costs are the epitome of what
may be called "frictions" in the engine of commerce. While
it is generally agreed that these agents are essential
to a commercial rule of law, there remains a tendency to
delegate complex legal matters to experts somewhere outside
the executive suite.
Our research suggests that effective
IPR management should be the domain of top management,
since success with these intangible assets requires more
than just knowledge of a particular market and its legal
ground rules. Success in IPR management requires an understanding
of corporate strategy and the logic of a business. Similarly,
microeconomic issues, such as pricing and reasonable royalty
rates, play a key role in keeping the friction forces from
slowing commercial progress. Awareness and the ability
to act on IPR issues transforms the playing field to one
where the legal ground rules are not necessarily
the more general rules of the game.
Success
in IP management goes to those who can play at the nexus
of three traditional fields:
strategy, economics and the law. This point builds on Professor
Stern's observation about interdependence.
Practically speaking, firms have two
alternatives for responding to the dynamics of innovation
and IPR management.
The first is to do nothing or maintain
the status quo. Investments in innovation and new product
development, after all, are risky and do little to address
the harsh reality of quarterly reporting.
The second alternative is to be proactive
about intellectual property management, preferably with
programs championed by top management. Such initiatives
benefit from coordinated planning of commercially significant
innovation in concert with the various IPR regimes. This
is not simply a focus on patentable inventions but rather
an effort to manage all aspects of an offering's life cycle
together with the available methods of IPR (i.e. patents,
copyrights, trademarks and secrets) to build a portfolio
of monopoly rights.
Our
research has identified multiple examples of firms that
are best-in-class,
such as Dolby
Laboratories (patents and trademark licensing), Ticketmaster
(exclusive contracts), Qualcomm and IBM (patent management),
Disney (copyrights and merchandising on character rights),
AstraZeneca ("The Purple Pill") and 3M Espe (IPR portfolio
management). Not all these firms are resource giants.
Dolby, for example, is a relatively small technology
company.
The same research characterizes the
practice of value transference, uniquely branded products
and other means for securing the differentiation associated
with innovative offerings and building it into the equity
of a strong brand. With more influential trademarks these
firms grow and leverage the advantages of powerful brands.
Small and even start-up firms can be proactive in their
IPR management (albeit with limited resources) and can
occasionally out-maneuver industry Goliaths that possess
extensive capital but limited focus and agility.
In today's emerging and competitive
market, it is axiomatic that where there is commercial
significance, there will be legal significance. When proactively
managed, IPRs are the legally significant assets that secure
investments in commercial innovations. Firms that are thoughtful
in acquiring these rights and executing on their embedded
optionality gain competitive advantage. Firms that choose
a passive approach risk becoming sidelined in the global
game of innovation and advantage.
Read
what Professor Scott Stern says about the
theory behind this practice
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