Intellectual Property
Management
What
is IPM | Why IPM | IPM under
CICM | Main Goals | Requirements
| How-to of IPM
What
is Intellectual Property Management
Intellectual
property management is the management of patents, brands, copyrights
and trade secrets that are the basis of the competitive advantage of
a certain business unit and the organization as a whole. It involves
the recognition of such intellectual property (IP) rights that are of
competitive and commercial value to the business unit and its adequate
exploitation.
Why
IPM
Patents
(technological inventions and business methods), trademarks (brands,
slogans and trade dress), copyrights (software, literary and artistic
works) and trade secrets (any commercially valuable proprietary information)
have proven to be very valuable business assets. The knowledge economy
has witnessed a proliferation in the number of IP rights that major
organizations may have – tens of thousands of patents, tens of
hundreds of brands, extensive libraries of brands and billions of dollars
worth of trade secrets. Even smaller organizations have found that the
IP they hold is one of the main determinates of their competitive power,
market position and future prospects. IP also has a great potential
not only as a competitive weapon that creates entry barriers for the
competition, but also as a commercial tool used for revenue generation.
The latter use is enabled by the nature of IP itself where it is seen
as a bundle of rights that can be licensed in full or in part, in lieu
of the product it originally supported or independently creating a multitude
of investment opportunities. A business that misses on managing IP as
competitive and commercial tools is set to jeopardize its competitive
position and undercapitalize its most valuable assets.
IPM
Under the CICM Approach
The
goal of the IPM stage under the CICM model is to maximize the value
created and extracted at the previous stages by using the legally defined
protected intellectual capital, i.e. IP , for two main purposes: securing
strong competitive positions and generating revenues. This entails realizing
the potential of IP both as a competitive weapon and a business asset.
For this to happen, IPM should infiltrate all levels of the organization,
and hence be reflected in the management objectives of the organization
and individual business units. The main distinction that CICM draws
when it comes to IPM is that a business should distinguish between two
types of IP the primary and secondary forms. The primary form is that
type of IP which is at the basis of competition in a certain industry
e.g. patents in the chemical industry, brands/trademarks in the consumer
products industry, and copyrights in the entertainment industry. Trade
secrets providing a blanket protection for information is relevant to
all industry and is defined as an ancillary IP to all the other primary
forms. Secondary forms of IP are those that the business unit own and
can use in support of their primary form to reinforce a particular competitive
position related to a specific product or technology – e.g. brands
for chemical business to business company.
Main Goals of IPM
To
effectively capitalize and manage the primary form of IP that a business
unit and the organization as a whole owns, management should consider
the following in defining its objectives:
1.
Know and assess the IP wealth of the organization and assess its current
and potential uses, particularly in relation to the primary form of
IP.
2.
Build a strong IP portfolio by combining weak with strong IP, reinforce
strong IP through acquiring additional supporting same or different
forms of IP, and abandon low performing IPs.
3.
Adopt IP strategies that enable the use of IP as a competitive weapon
(lawfully) to hamper competition’s efforts in securing a strong
competitive position for short and medium term purposes.
4.
Adopt IP strategies to sustain and create new competitive advantage
in the long term.
5.
Adopt IP strategies for the commercialization of IP as a business
asset to expand both geographically, and to enter related/analogous
new markets through licensing.
6.
Take IPM to the operational level by effecting the necessary changes
to the structure of the organization, and allocating responsibility
to IP teams and units. This would enable every business unit to devise
detailed investment plans for leveraging the IP portfolio.
7.
Infiltrate in the culture of the organization awareness about the
proper use of IP through establishing sound management practices both
to preserve the value of IP and guard against risks related to infringing
the IP of others.
8.
Provide tools and systems to enable IPM at the operational levels.
In particular design tools for the valuation and assessment of IP.
Main
Requirements
Having
a working knowledge of IP (by business managers, accountants, and other
personnel entrusted with business asset management) is essential for
strategic business management and for maximum value extraction from
the most valuable business assets. To effectively manage IP management
needs to:
1.
First and foremost have a shift in seeing IP not as legal instruments
but as business assets capable of being used for competitive and commercialization
purposes.
2.
Realize that protection of knowledge assets through the acquisition
of IP rights is an essential step in protecting the business asset
base of the enterprise, which amounts in some businesses to 80%. Failing
to understand and thus acquire IP to protect an organization’s
knowledge assets may seriously jeopardize the competitive advantage
of a business unit. A working knowledge of IP is instrumental for
a business unit preservation and enhancement of its competitive power.
3.
Appreciate the risks associated with managing IP related to infringement
of the business strategic IP assets. Failure to effectively protect
IP may result in extensive losses particularly at a time where misappropriation
of trade secrets, pirating copyrighted works on the Internet and otherwise,
producing counterfeit products, and infringing patents are on the
increase. Devising protection plans to deter violation of the organization’s
rights is essential. Akin to that is implementing a clearance procedure
that serves to instill a culture that prevents the IP of others as
well which may make the organization liable for millions of dollars
in damage awards.
4.
To incorporate understanding of the primary form of IP in the design
of the intellectual capital management model since intellectual property
management is the final stage where the value derived from the business
intellectual capital is maximized.
How-to
of IPM
Achieving
the objectives of intellectual property management involves undertaking
a number of steps including the following:
A.
IP Audit – Unlike a legal audit, and IP audit for business
purposes focuses on the primary form of IP and not every form of IP
that the organization owns. The main purpose of the audit is to recognize
the actual and potential future value of the IP and the actual and potential
use of it by the various business units. This will later inform the
strategic planning phase where the primary form of IP are placed in
groups to be used for competitive purposes, commercial purposes or to
be abandoned.
B.
IP Portfolio – Following the IP audit the audit team
should create an IP portfolio for the whole organization providing a
snapshot of the organization’s IP base as well as its relation
to the various business units’ competitive advantage and future
plans. This is then divided into various sections that are handed to
the various business units for proper exploitation. IP strategies should
be forged to strengthen the IP portfolio by reinforcing the strong IP
with added protection (improvement patents, sub-brands, or derivative
copyrights for example), by combining weak IP with stronger ones, and
by abandoning least performing IP for cost reduction or donating it
for tax deductions.
C.
Strategy and Synergy Teams – The effective management
of IP requires two main functions that can be carried by various teams,
departments or units. The first is a strategy function based at the
business unit level where management forges the appropriate IP strategies
and marries them with the overall business strategy, and devises plans
for taking such strategies to the operational level. The second function
relates to leveraging IP across the whole organization and outside by
a cross functional team. That team aims at creating synergy in the use
of a particular group of the IP portfolio internally across the various
departments and business units, and externally with customers and other
partners.
D.
Valuation and Assessment Tools – The expert valuation
of individual IP is essential particularly in cases of litigation, major
licensing transactions or joint ventures, and mergers and acquisitions.
But such valuation is very costly and thus is not suitable for management
purposes. That is where qualitative and quantitative valuation and assessment
tools become essential for the effective management of IP. Assessment
tools are mainly qualitative and deal with the strength and scope of
the IP right, while valuation tools are quantitative and aim at assessing
the actual or potential value of an IP right through looking at sale
revenues, royalties, and growth rates of the business units.
How to build an intellectual property management system is explained
step-by-step in the book: Comprehensive
Intellectual Capital Management
