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Legal: Getting strategic with your intellectual assets

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Intellectual asset management (IAM) is the catch cry of 21st century innovators. Innovation is no longer reactive to market forces; it is a proactive force integral to the business strategy of a technology-based business, and at the core of effective IAM. Do you proactively manage the intellectual assets of your company?

The critical first step is to understand your present systems, personnel and needs in IAM, setting a desirable policy and devising strategies to reach those goals. Karen Sinclair, Watermark Patent & Trade Mark Attorneys, explains.

The value hierarchy propounded in, Edison in the Boardroom: How Leading Companies Realise Value from Their Intellectual Assets (Julie L. Davis, Suzanne S. Harrison, July 2001) can help define the level of contribution your IP has to the bottom line of your business and how it contributes to your goals.

First Level – Defensive

The focus is on IP protection; in generating a patent portfolio, ensuring that the business is protected, initiating processes to facilitate further IP and enforce patents and ensuring freedom to innovate. Companies must be willing to enforce patents but are more concerned about the size of their portfolio and are playing catch-up with their competitors. IP can often be a cash sink.

Second Level – Cost Control

Companies at Level 2 continue in defensive mode, but have realised that IP is expensive but worthwhile. IP management processes are streamlined, to minimise costs, increase efficiency and raise productivity. IP committee is established to develop clear screening criteria for maintaining patents, set detailed guidelines for patent filing and renewal and systematically review the company’s portfolio.

Third Level – Profit Centre
Third level companies have changed from being defensive into understanding the true value of their intellectual assets. They see the value of IP in tactical positioning and revenue generation.

Companies look to profit directly from IP and focus on non-core, non-strategic IP with tactical value. Practices include management buy-in, establishing pro-active licensing activities, royalty audits, organising a portfolio to extract value and advanced screening criteria to include IP with an indirect value to the company.

Fourth Level – Integrated

These companies take a more strategic approach beyond defence, costs and profits. They realise that IP can position them broadly in their marketplace and provide tactical positioning. More than just a tactical tool and source of direct revenue, these companies see greater opportunities for their IP as an integrated business asset that can be used as a negotiating tool, as a way of positioning their company strategically and as a way of affecting stock price. Corporate and IP strategies become aligned and IP is used to assist all areas of the business to achieve goals.

Fifth Level – Visionary
Visionary companies have fully integrated their IP and business strategies and created a broad range of strategic and tactical IP. Level five companies look outside the company and towards the future. They use their intellectual assets to assure their growth in future markets. These companies encourage disruptive technologies, positioning themselves as definers of the technological future of their industry. IAM is fully embedded into the corporate culture of the company.

How You Can Use this Hierarchy

These levels are extremely useful in defining a road map for where you would like to be in terms of IAM. Of course, these are very broad outlines of the structure of companies at each level and a commercially astute patent attorney can help you to use it to streamline your activities and move you up the model. Remember that very few companies have reached beyond the first few levels, but with a clearer definition of what can be achieved, the sky is the limit!

The information contained in this article is not exhaustive and should not be relied on in place of legal advice. Karen Sinclair is a registered patent attorney and a Principal at Watermark Patent & Trade Mark Attorneys. She specialises in assisting Australian companies to successfully commercialise research on an international scale, and in IP management. For more information, contact 03 9819 1664 or [email protected]

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