Take Inventory
Goal: Make IP work for your business
Creating an IP portfolio takes time and involves moving through a number of defined stages, says Ron Epstein, CEO of IP consultancy and brokerage iPotential. Most companies have barely even started to organize their intellectual capital. To move beyond that passive stage, you need to get a better sense of what IP you already hold and how to make it serve your business objectives.
Think as broadly as possible. Should you treat a unique manufacturing process as a trade secret or a patentable process that could present an obstacle to competitors or earn you licensing revenue? Can you assess the value of your brand identity? Have your geniuses in inventory management figured out a way to shorten delivery times that needs protection? Every company is different, so make sure you’re not overlooking something important as you gather your brain trust to take a crack at the following questions:
- What IP do we already hold?
- How much of it is already protected?
- Which specific pieces of IP offer strategic value to the company?
- What additional IP would be necessary to carry out our strategy?
Make sure every piece of IP you inventory provides clear value to the company’s strategic goals, as otherwise it isn’t worth protecting. That said, value can mean a variety of things. Does a piece of IP — typically a patent, trade secret, or trademark — prevent a competitor from copying your products or from taking on your identity? Can you tie up a rival by patenting IP you currently don’t need but that is critical to the competitor, and so block its efforts to get into your markets? Do you have so much IP socked away that you could use it as a bargaining chip if you’re sued for infringement? (You’d be surprised at how many IP lawsuits get settled this way.) Could you license or donate unused IP to see some sort of return? Take time to consider all the possibilities.
Big Idea
Types of IP Protection
Since IP generally isn’t tangible, it’s inherently easy to copy — unless, that is, you’ve taken the legal steps necessary to protect it. Here’s how:
Patent: Built a better mousetrap? A patent will help ensure you’re not immediately competing against cheap knock-offs. You have to disclose the details of your invention, but then you usually get 20 years to use it exclusively. Patent filings are expensive, though. A single patent with international coverage can run $100,000 during its lifespan.
Trademark: Trademarks cover company names, slogans, logos, and other mechanisms normally associated with corporate identity and branding. Initial filing in a single country like the U.S. will probably run well under $2,000, though you’ll need to pay more over time to keep the trademark in force.
Copyright: Written material, video, audio, images, and many designs are considered to have inherent copyright, making this method one of the greatest bargains in IP protection. In the U.S., a copyright holder has to register a copyright in order to maintain a strong defense; the cost is generally around $45. Practices vary around the world.
Trade Secret: This is how Coca-Cola protects its formula. Most countries allow companies to sue if someone steals their trade secrets, assuming that a firm has made the effort to keep its information out of the public eye. The big wins here: trade secrets never expire and you never have to disclose them, unlike a patent.
Remember that the key to protection is early action. If you don’t file, register, or take other proper legal steps early enough, you could find yourself walking away empty-handed, since patent and trademark authorities are often sticky about their deadlines. Pay attention.
Create Your Process
Goal: Catch IP as you create it
Once you’ve got your inventory, you need figure out how to manage all that existing IP, plus all the innovations your employees are continually coming up with. Stephen Fox of Foley & Lardner, who used to head up the legal IP operation at Hewlett-Packard, advises companies not to spend “endless hours” trying to develop a perfect scheme right out of the box. Instead, he suggests starting with a relatively simple system that you can tinker with over time.
Here are the three basic activities your setup needs to cover:
- Get innovations from the innovators.
- Protect the valuable stuff to build your arsenal.
- Make it work for you in any number of ways — perhaps by inconveniencing your foes or using IP to expand into new markets, much the way Harley Davidson licensed its logo for use on shirts and jackets.
The first part involves capturing ongoing innovation and figuring out whether it has any strategic value. To do so, you’ll need to work both from the bottom up, with your innovators, and top down from an administrative level to focus efforts on areas strategic to the company. All this should happen as early as possible as new gadgets and practices are developing.
Someone also has to mind the store, because it’s a major mistake to leave IP decisions in the hands of engineers and patent attorneys. Such folks “tend to be very technology focused, sometimes to the exclusion of the commercial benefit of the technology to the company,” says Morrison & Foerster partner Alex Chartove. The result, often as not, is an IP portfolio too heavily focused on nifty technology ideas that may be of little use to the company.
The other mistake executives make is to put too little emphasis on IP early in its lifecycle and before infringement happens, says Carlo Van den Bosch, an IP attorney at Sheppard Mullin. Once someone has stepped on your IP rights, “it’s very difficult for attorneys to scramble and get protection into place.” And of course, when lawyers start scrambling, the bills start mounting.
One important point: You’ll also have to consider strict legal deadlines in some cases. For example, publicly disclosing an invention starts a one-year clock on filing a U.S. patent application, after which the window slams shut. Americans must also register copyright within 90 days of first publication to ensure that their legal options aren’t circumscribed in case of infringement.
Checklist
Methods to Capture IP
Incentives: Few things attract employee attention as thoroughly as rewards. This works best for patents, because the value of the IP is high enough to warrant paying out bonuses. But don't limit your thinking. For example, how much would it be worth to a Disney to get another Mickey Mouse?
Workshops: Formal protection of IP is a foreign concept to most people, so don’t expect them to absorb it by osmosis. Offer training to innovative personnel to explain some of the factors that make IP valuable and the signs that someone might have created something of value to the company. Do this periodically as the competitive landscape changes.
Templates: Don’t make people re-create the wheel. Provide fill-in templates for employees to disclose new developments to management. That improves the odds that you’ll vacuum up all the information you need — at least in theory.
Helping Hands: Smart companies such as 3M regularly send their IP lawyers to work among their innovators. For example, lawyers will have second offices in labs and spend a day a week there. Such arrangements make it much easier for attorneys to hear about new developments. And if cranky scientists don’t want to fill out IP paperwork, the lawyers can sit down with them and walk them through it. Far better to spend a bit of time than to lose a lot of value.
Consider the Bigger Picture
Goal: Plan strategically by looking at your IP in context
To make IP really effective, you eventually have to look well beyond your own office park. Experts recommend studying the IP map of an industry, which illustrates how different markets and products intersect with the IP holdings of major competitors in those areas. Protected IP acts like a fence that blocks off one or more avenues. By looking at the lay of the land, you’ll more easily see which market or product segments are free and clear in an IP sense, and where you might find strategic paths through other intellectual-property thickets in order to reach your goals.
By doing so, companies can get a sense of where they can deploy IP to push rivals out of a market and when they’ll have to settle for a narrower but still important advantage, says Susan Pan, a partner with IP law firm Sughrue Mion.
Depending on your industry, finding an absolutely clear path may be impossible. Various aspects of a cell phone, for instance, may be covered by literally thousands of patents. In that case, it’s time to cut deals with the companies holding IP that stands in your way — another good reason to have a formidable IP portfolio you can deploy in negotiations. Competitors will be more open to licensing or cross-licensing discussions when they know they’re vulnerable on other fronts, and that your portfolio could help shore up their defenses.
The immediate impulse of most companies is to directly protect their intellectual property. But sometimes the indirect approach can strengthen an IP portfolio. Here are some areas that can provide additional protection:
- Associated Processes: If you have a patent on a given invention, you might be able to protect a process that’s key to manufacturing a gadget or that could enable an important supply chain. Boston chef Jasper White couldn’t keep other restaurants from offering lobster, but at his Summer Shack he patented a method of cooking them for New England clambakes of up to a hundred people.
- Enhancements: Nothing stands still for long. As companies further develop IP, they can protect intermediary versions or enhancements, much as Apple refines devices such as the iPhone and gets additional patent protection.
- Extensions: Similar to enhancements, extensions move intellectual property into new areas. A new use might provide a new area of protection. For example, you might add a new product line to a trademark registration, or modify the story line and dialogue of a movie and turn it into a script for a Broadway play.
- Strategy Blockade: As you watch competitors and their activities, you can often get a sense of where they are going. Calculate the path they need to take and tie up some of their steps so that they can’t move freely.
Hot Tip
IP Is Important to Investors
Because so much of corporate value is tied up in intellectual property these days, many companies need IP portfolios for simple survival. “How we protected our applications and deliverables today comes up in almost every discussion with an investor,” says David Gulian, CEO of InfoLogix, Inc.
In early stage companies, getting the proper protection can be expensive, so you have to choose your actions carefully. “We try to prioritize what’s key to the business and identify which of those assets that they’ve been developing that they really need to protect first,” says Bill Vobach, a partner with IP law firm Townsend and Townsend and Crew.
You might, for instance, put off registering trademarks or copyrights and invest in patenting key technologies, then revisit the other areas when you’re closer to launch. Although that isn’t always the case: A media company, for instance, will generally emphasize copyrights and trademarks over patents.
More on BNET:
