MANAGING IP AS A SET OF BUSINESS ASSETS | WEEK #12

Hey guys!

This blog post is a second installation of Assignment #12. I went online and found some relevant research about IP in terms of using it as a business asset. I will be basing my analysis off of this article from the World Intellectual Property Organization's (WIPO) website:

http://www.wipo.int/wipo_magazine/en/2008/01/article_0008.html

By themselves, business assets have no significant value. This is a fundamental property of intangibles, such as IP - they become valuable only in the context of the business. More specifically, IP and other intangible assets become valuable when their roles in supporting the corporate business strategy are made explicit.

There are 3 main steps to effectively use IP as a strategic business asset:

1. Define what your company expects to gain from the management of its IP;
2. Determine the specific roles IP can play in support of your company’s business;
3. Select and pursue a basic IP strategy to meet these objectives.

DEFINE EXPECTATIONS OF IP MANAGEMENT

When analyzing what a company expects to gain from IP management, there are typically 5 functions that IP as a strategic business asset can serve:

1. Defensibility - Using IP for defensive purposes and to protect your own innovations only
2. Cost Control - Still have a defensive approach, but looking to for protection while also trying to minimize the costs of maintaining the IP
3. Profitability - Companies reach this level when they either license their IP or use it to support a business activity
4. Integration - IP is integrated across all levels of a company's business activities and is used for a wide range of business roles
5. Visionary - Management takes a long term view of the IP's role in the companies business activities and in the industry as a whole

DETERMINE WHAT BUSINESS ROLES CAN IP PLAY?

In order to determine what business roles IP can play, first, review the company’s strategic vision and its corporate strategic plan. Then, ask yourself what IP might do to support the company’s business strategy and hasten its journey toward the long-term vision. Thirdly, look at the table and select the IP business roles that seem most applicable to your company.

Objective	Patents	Trademarks	Know-how	Relationships
Conflict avoidance/ resolution	• Protection (exclude others) • Design freedom • Cross-licensing (defensive) • Litigation bargaining power	• Protection (exclude others)	• Protection (trade secret)	n/a
Revenue generation	• Patents: sales, licenses, infringement policing • Increased bargaining power • Market penetration • Increased speed to market	• TM: sales, licenses, co-branding, infringement policing	• Sales, licenses, joint ventures, strategic alliances, integration, increased speed to market
Cost reduction	• Tax donation • Litigation avoidance • Access to technology of others • Improved knowledge transfer	• Litigation avoidance • Access to technology of others	• Litigation avoidance • Improved knowledge transfer	• Reduced marketing costs
Strategic position	• Reputation / image • Competitive blocking • Barrier to competition • Consumer/ supplier control • Optimization of core technology	• Name recognition • Consumer loyalty • Barrier to competition • Joint venture • Strategic alliance	• Reputation / image • Barrier to entry	• Reputation / image • Consumer loyalty • Barrier to entry

EXTRACTING VALUE FROM IP

There are several ways to extract value from IP once you have finished conducting basic IP growth strategies. There are four basic strategies for IP value maximization and growth, and they should be tailored to the needs of your company:

1. To minimize risk, focus on process compliance, processing product clearances and protecting innovations in the marketplace. A key activity for those pursuing this strategy is portfolio building and cross-licensing to avoid litigation.
2. To reduce costs, screen the portfolio to eliminate unnecessary patents, tightening the criteria for protecting innovations with patents, creating a standard country-filing list, minimizing exceptions, tightening internal review processes, and aligning the trademarks and brands with products.
3. To maximize business and legal value, seek to profit from direct use of the IP itself, rather than only through the products and services protected by the IP.
4. To maximize strategic value, focus on utilizing IP to change the nature or direction of competition, relying on strategic patenting, refocusing R&D and rethinking partnerships with customers, suppliers, or any other relevant parties.

Once you have maximized the value of an IP, there are only 6 ways to convert it directly into cash:

1. Sell it
2. License it out
3. Use it as the basis for a joint venture (to provide access to needed physical assets)
4. Use it as the basis for a strategic alliance (to gain access to markets you may otherwise be denied)
5. Use it to protect products and services in order to extract premium prices for them
6. Create and spin-out a new company based on the IP