Every day, we are bombarded with reminders that we need to plan early for our financial freedom. Indeed, millions start contributing to retirement savings accounts decades before they actually leave the working world, or invest in college funds the minute their children are born. Ultimately, the early planning and investment pays off in most cases assuming the strategy was sound to begin with and was revised from time to time to adjust to ever changing market conditions. Well, putting in place an IP strategy is very much like financial planning; it’s rarely too early to start, and after setting your plan into play you can’t assume that you can simply sit back without some adjustments over time to reflect changes in circumstances. The important thing is to start the process and accept that it is just that, a process, not a one-time event.
Firms that develop and deploy intellectual property strategies in the early stages of investment, development and commercialization of products-services are in the best position to leverage their assets against competitors and with partners. Early IP strategies allow firms to craft and refine their offensive and defensive plans coherently, making IP a core feature of the business. This in turn leads to risk mitigation and increased value of investments reflected in the firm’s IP.
Too many organizations believe they have an IP strategy just because they filed a few patents. In reality, these filings were not made in most cases as part of an overall plan and may end up being of little value to their owner. As an author puts it: “Filing a patent before having a global strategy in place is like shooting without aiming first!”
Indeed, various studies sadly reveal that less than 10% of patents filed around the world are actually used by their owner. Furthermore, half of all patents issued end up being abandoned after 10 years ... and this rate goes up to 66% during the life of the patents. Considering that each patent may cost up to $25,000 for a single country filing and over $250,000 over the life of the patent (assuming some international filings), investing in the *right* strategy is paramoun
t, especially for smaller firms with limited budgets.
This is why firms should work closely with professional IP strategists around initiatives ranging from freedom-to-operate analysis (risk mitigation n), patent landscape surveys and directed inventions (prioritization), inbound licensing and acquisitions (foundation), and outbound licensing and patent sales (monetization). The risks of losing valuable IP, time and opportunities are too great to ignore having a solid IP strategy. The inability to implement and refine an IP strategy in the face of competitive pressures can doom even the most talented firms and innovative products. As the saying goes: innovation without protection is like philanthropy… Others will love you, especially your competitors!
IP strategies can fit into broader paradigms. For example, a recent issue of Intellectual Asset Management outlined such a paradigm as:
- Strategic IP potential- a company’s capacity to create or acquire IP of merit.
- Strategic IP position- the organization and development of the IP portfolio, including its content, scope, geographic coverage, timing and risk profile.
- Strategic IP operations- the selective investment in, and use of, IP resources based on enterprise focus, economic use of resources, freedom of action and operation, risk of mitigation, speed and simplicity.
- Strategic IP advantage- the deliberate use of IP to shape markets.
- Strategic IP pace- the ability to command the initiative through rapid and effective decision making.
Under such a paradigm, as a company’s IP strategy matures, each level builds on adjacent levels, with the overall IP plan benefiting from the cumulative contributions of each phase. At any time, firms may be at varying stages for different commercial initiatives. The extent of maturity firms need to develop in the IP strategy levels corresponding to their resources, market position, revenue model and competition.
Due to the importance of IP in competitive and collaborative ventures, firms late to the game may need to work with external IP strategists familiar with industry best practices and “lessons-learned” in order to make up for lost time. The guidance of such seasoned specialists will help firms lessen risks, avoid costly mistakes, accelerate the implementation of their IP plans and adopt strategies optimal for their respective markets.
Investors should work with IP strategists experienced in valuating and advising on IP strategy to ensure ROI from their investment firms. IP due diligence and strategy formulation should be central to any investment discussion, from initial to late stage financing. Much of the value created (over 85% according to several studies) by firms lies in intangible assets. Similarly, new product launches and commercial initiatives should also serve as triggers to evaluation and refinement of a chosen IP strategy. Other triggers should alarm firms and investors to have a discussion with an experienced IP strategist, including increases in relevant markets of: patent assertion, patent filings, mergers and acquisitions activity, venture funding, as well as patent sales and acquisitions. The benefits of IP strategies are too great, as are the potential losses from progressing blindly.
IP strategy can be seen as encompassing the full life-cycle of a firm. In terms of the past and present, IP strategists can help firms allocate and use existing resources in their IP plans. As forward looking collaborators, these specialists can help position firms to compete in business and technology markets, making them more attractive to customers and investors.