Sociology Index

Intellectual Property Management

Intellectual Property Rights

Companies can reap the benefits of smart intellectual property management strategies as it competes in a global market. There are many things we can't control in a business but we can control IP. Intellectual property management can help a company to gain and sustain competitive advantage. How the production and exchange of technology differs from more traditional economic goods? 

Since the year 2000 a lot of work has been done in the area of Intellectual Property Rights (IPR) management. It is absolutely essential to educate employees or partners about their rights and responsibilities regarding intellectual property. Business or even an individual can achieve success through development and marketing that takes due account of intellectual property rights.

Enforcing intellectual property rights is expensive in countries around the world. It's important to get things right from the start. Just having a patent isn't enough to protect an invention from the fierce competition of the market.

Success, for a large number of companies, has been driven by the development of intellectual property. A company must invest resources in intellectual property because the industry has become IP-intensive. Information dissemination is rapid today calling for greater protection of ideas.

People are now aware of the importance of intellectual property management and trade secrets protection. They no longer fear that their competitors will have access to the information and copy it.

Managing intellectual property is absolutely important for a company's growth and development.

Granstrand's comprehensive study examining IP use, management and strategies in general, and in Japan in particular, is Economics and Management of Intellectual Property (Granstrand, 1999b). In addition to the detailed account and analysis of the results of his own survey of large Japanese corporations, the author compares the Japanese situation and the strategies of large corporations in Sweden and also occasionally in the US.

Granstrand's historical overview of Japanese patenting provides an enlightening introduction to the subject. The Meiji dynasty opened Japan to the world in 1868 and introduced a patent system inspired by the US and Europe 3 years later. The Tokugawa dynasty introduced the ‘Ordinance Prohibiting Innovations’ in 1718 in order to prohibit ‘new things’.

Granstrand reminds the reader that with regard to the monopoly power conferred by patents, an important distinction to be made is that a patent provides first of all a monopoly on an input: (1) many other costly complimentary inputs may be needed before monopoly profits are gained and (2) as with many inputs, a patent may be substituted by other patented or nonprotected solutions.

For detailed observations on the semiconductor industry's IP management and strategies in consortia - Tilton (1973), Ham et al. (1998), Grindley and Teece (1997) and Headley (1998).

Grindley and Teece (1997) provide a detailed account of the pro-active approach to IPR management in Semiconductors and Electronics and specifically linking IPR to core business, developing patent portfolios and the licensing practices of leading firms (RCA, ATT&T, IBM, Intel, Hitachi, Hewlett-Packard, etc.). The article offers examples of how leading companies managed IP and created patent portfolios, and how these were generating royalty revenues from firms that had less to offer in exchange. The licensing strategies were shaped by public policies.

The growing interest in the management of IP has resulted in efforts to improve its measurement. IP performance is now measured in ways other than simple patent counts. The emerging measures combine quantitative and qualitative aspects and enable organizations to better evaluate and manage their patent portfolios Bratic et al. (2002).

Valuation of IP
One of the most important steps in managing IP is to establish its value. Valuation is the process of ascribing value to technology. Valuation is particularly crucial for the commercialization of early technologies, for licensing and for mergers and acquisitions (M&A).

Probably the best sources on the valuation of IP in general are Razgaitis (2002), Smith and Parr (1998) and Lamb in Simensky et al. (1999, Chapter 5) and Damodoran (1994).

Razgaitis recommends using multiple methods of valuation. Multiple methods produce value or a coherent range of values that make sense from those multiple perspectives.

Managing of IP assets
The evidence of corporations being increasingly capable of extracting value from intellectual assets is provided by the growing importance of licensing. This increase in importance had, according to Manfroy (2002), the following consequences:

(1) Corporate vision changed and many corporations created the position of Chief Technology Officer.

(2) Emergence of the Intellectual Capital Model. A model of a company from the intellectual assets perspective that explains how the different pieces of a corporation fall together, how they interrelate and their impact on a corporation's intellectual assets and profitability.

(3) Attention is given to intellectual assets management.

(4) With the increasing importance of intellectual assets licensing professionals are demanding increased remuneration.

Rajrathnam V P, Attorney/Advocate and IPR Consultant -