How Managing Intellectual Property Can Build and Sustain Competitive Advantage
Value, protect, exploit
The pitfalls of poorly executed intellectual property (IP) strategies have been widely publicized in the business press. Across the technology sector in particular, multiple instances of copyright infringements and patent violations have resulted in huge penalty costs and tarnished reputations. However, navigating the patent minefi eld and profiting from astute exploitation of an IP portfolio need not be so perilous. Indeed, in an industry where the gales of creative destruction regularly wreak havoc on product life cycles, the opportunity to capture value from protected technologies has never been stronger.
Consider this, the number of technology patents registered in the U.S. is on the rise, yet companies are leaving millions of dollars worth of unrealized value on shelves stacked high with “orphan technologies”. How then can a technology firm defend, mobilize, and profi t from this neglected IP? Moreover, how can it continue to safeguard and capitalize on intangibles that already fuel their growth engine? These issues form the basis of this research on managing intellectual property across the technology sector. Case studies of blue chip corporations illustrate a number of successful IP strategies and methodologies. From these fi ndings, a new capabilities-driven approach to intellectual asset management is derived. The cornerstone of this approach is the Value-Protect-Exploit (VPE) framework that illustrates three core IP capabilities and the requisite competences integral to successful deployment:
- Value: Determine the value drivers; categorize the IP assets; value each asset
- Protect: Position the IP portfolio according to strategic objectives; analyze technology and patent lifecycles; develop and deploy patent blocking strategies
- Exploit: Formulate and deploy a licensing strategy; manage the IP regime; instigate an IP venturing program
Applications of the VPE approach are then demonstrated at both the strategic and operational levels of the technology firm. The need for clear, coherent strategic IP goals is seen as pivotal to success, supported by an organizational structure that will facilitate the implementation of the IP strategy. Once this structure is in place, patent portfolios can then be assessed in the context of evolving technology cycles and prevailing market conditions. With the latter, the research indicates that analysis of the technology fi rm’s IP environment (or “regime”) can further determine the boundaries of IP protection and exploitation available to technology fi rms and their often geographically dispersed operations.
The report concludes with a detailed discussion of the VPE capabilities. IP valuation methods and techniques are outlined that allow accurate valuation and categorization of intangibles to occur. This is shown to be a critical step in structuring an IP portfolio before developing appropriate strategies for protecting and exploiting the intellectual assets. Defensive and offensive schemas are then summarized that illustrate recent IP trends and tactics in the areas of licensing, mergers and acquisitions and tax strategies, all of which are aimed at maximizing the value captured from technology-based innovation.
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