Define an IP strategy and manage your IP portfolio and collaborations.
Different Strategies of IP
Protection of commercial interests is the first uses of IP envisaged by business: Intellectual property brings guarantees for the exclusive use of various technical elements such as industrial products, medicines, communication processes, technological products etc.
These guarantees allow prevention and suppression of various kinds of IP misuse such as:
- Copying of protected assets
- Theft or diversion of intellectual property (e.g. theft of trademark)
- Abusive use
With the help of the monopoly related to IP assets (see section “Types of Intellectual Property Protection Rights” for more information), a protective strategy helps to ensure a comfortable place in a market, or to become leader if the subject matter includes determining characters in quality, cost of production or performance.
The purchase of licenses can be necessary to reinforce the strength of its own IP rights: a patent portfolio gives a better protection than a single patent. It is also an excellent mean to obtain rights which may be decisive for the commercial development in fast changing / volatile markets (such as in telecommunications with the sale of licences to operate 3G networks).
Besides being an important tool for providing legal protection for R&D and commercial rights, IP can be a useful information source for SMEs.
For example, patents contain important technical information: A patent document may provide information about an invention that has not been published before. The applicant must give a detailed description of its invention in a clear and complete way with examples of industrial application and often including information about the technological context i.e. other patents in the same field.
It also permits identification of the inventor and the patent owner. A patent classification system facilitates retrieval of patents within a specific technology field (more information on classification system).
Patents and designs will also indicate current innovation trends. The patent literature is therefore an effective tool to avoid parallel developments and R&D efforts in an overcrowded research field.
Patent and trademark filings can give an insight into competitors’ marketing strategies. In other words, IP information is valuable in all aspects of company activity – research, development, manufacturing, commercialisation and overall management.
Patent information sources should be used by organisations in their research and development for any of the processes below:
- Investigating the “prior art” (see section “Types of Intellectual Property Protection Rights” – Patent) of a technology,
- Finding emerging and cutting edge technologies,
- Identifying possible fruitful areas for research,
- Identifying areas where research effort would be wasted because of e.g. duplication, established dominance by other companies etc.,
- Finding possible competitors (see section “Competitor monitoring” above) or partners (see section “Business Development” – Development of collaborations),
- Investigating existing patents for legal purposes e.g. possibilities of infringement,
- Identifying technology transfer/licensing opportunities (in or out). (see section “Commercialisation of IP assets” below).
Intellectual property can help to build offensive strategies in order to support business development:
- IP assets can be a direct source of income through their selling or licensing (see section “Commercialisation of IP assets” below)
- It can be used as a bargaining chip in case of litigation: The prosecuted company may enter into negotiations if it has patents of interest for the plaintiff company. It can lead to a situation of cross-licensing, with the two businesses exchanging licenses on some of their patents.
- IP assets can be an obstacle to competitors’ market access and increase considerably their expenses:
- requiring or forcing them to pay compensation for a license
- requiring them to make a complementary phase of R&D and / or redevelop production processes
- requiring them to modify their routing and/or strategy…
Any business has to keep in mind that these rights may also be granted to their competitors, which themselves may adopt an offensive strategy as well. The use of Intellectual property can be enhanced when used early in the process of commercial development.
The owner of IP rights is not always in a position to exploit the results: Public Research Organisations or SMEs do not have the possibility or the infrastructure required for a large-scale commercialisation. In such cases several possibilities exist such as:
- The creation of a new start-up company to exploit (i.e. manufacture, market) the products and/or services covered by the IP,
- Establishing a joint venture or a co-operative agreement with a suitable existing company,
- Licensing-out the IP rights to an existing company or other entity with the capability to exploit them,
- Selling the IP rights.
In order to decide the best approach to follow, each possibility should be analysed by taking into account:
- The scope and strength of the IP rights (technically and commercially)
- The market conditions (costs, demand, competitors…)
- The financial balance of the business,
- Experience and skills of the staff
What is important to ensure effective IP-commercialisation? Commercialisation of IP rights should be anticipated from very early R&D phases because certain basic factors which are vital in the successful creation of valuable IP have to be set from the start of a project. These include:
- An efficient commercialisation starts with the protection of the innovation. Planning of this is required from the early stages of a project (see section “Types of Intellectual Property Protection Rights”).
- Innovation and technological R&D should not be uncoupled from commercial market realities. A technological development should always be assessed relative to the market or its own commercial assets.
- Successful exploitation of IP will require a competent and responsible person who is in charge of the IP portfolio management (see section “Managing IP” above).
The value of IP rights varies over time. Therefore it is very important to conduct on a regular basis for each IP right an estimation of its importance for a business in order to:
- Make a clear picture of the portfolio in order to identify gaps in the protection and the patents to buy / ask for a license to ensure freedom to operate
- Verify if the IP rights are still important for the business strategy and decide which rights will be dropped or sold.
- Review the dates for the maintenance of the rights which have to be kept
Sometimes a technology is so advanced that it needs to access sources outside of national boundaries. Then, the innovation process is based on collaboration and networking. Use of open-innovation can affect IP rights of a business and it is thereby essential to take care of IP management to manage IP in collaborations to anticipate IP issues.
Therefore it is important to elaborate explicit agreements with partners to decide throughout the innovation process how to share ownership and exploitation rights of resulting IP.Confidentiality agreement
The first document to sign is a confidentiality agreement (non-disclosure agreement). This document must be sign before the start of any work in the collaboration and will ensure exchanged information is kept secret.Memorandum of understanding
When general outlines of the collaboration starts to be drawn, it is time to establish a memorandum of understanding. It is a document used as a pre-contract to describe the convergence of will between the parties.Cooperation agreement
Then, when all terms are agreed and just before starting collaboration, the cooperation or consortium agreement can be signed. In this document are set all issues related to work organization, liability, and intellectual property. The questions related to IP that must be discussed and anticipated are:
- What about existing IP rights (background IP) owned before but required for collaboration?
- What about new IP rights (foreground IP) deriving from the common work? (Who owns? Who can exploit?)
- What about IP produced outside the collaboration but during contractual period (sideground IP)?
Afterward, once IP rights are protected, it is possible to sign technology transfer agreement (sale or licenses – see section “Intellectual Property Licensing” above).
To anticipate IP issues and get maximum benefits in a collaboration plan, it is necessary to contact a professional who is qualified to elaborate the best contracts according to the collaboration and the role you play in it.
Know-how, goodwill, customer and supplier relationships, product pricing, marketing strategies, company finances, manufacturing processes etc are all precious trade secrets that have to be kept by the business. Therefore, it is essential for companies to take measures to guaranty an overall confidentiality.
Indeed, stolen business assets can cause serious economic damages, such as:
- costs and time of litigation
- lost secrets may be embarrassing (negative publicity)
- loss of faith of investors
So precaution is the best protection!
Simple and common sense methods are efficient: locking doors, using passwords, placing appropriate confidentiality blocks on documents, adopting clean desk policies and employee badge policies.
But the best method to keep secrets is to implement contractual protections with every internal (employees) and external (partners, investors) collaborators involved in projects.
Thus, if third parties (partners, investors, etc.) can have access to confidential information (especially concerning intellectual property), a non-disclosure agreement (NDA) must be signed before any discussion, to protect it from unwanted divulgation, transmission or use.
If tangible research material has to be transferred between a company and an external partner, a material transfer agreement must be used. It defines the rights of the provider and the recipient on the transferred material, especially concerning the fate of the material at the end of the contract (destruction, return to the provider, etc.). This can avoid an unwanted use and divulgation of the research material information.
But the first level of protection concerns the employees. It is essential to implement a contractual protection at the beginning, during and after employment. Indeed, in addition to raising awareness among employees to protect confidential data from inadvertent or conscious disclosure, contractual protection enables the legal prevention of harmful behavior. This protection can include non-competition, non-solicitation and non-raiding agreements (which must be limited in time and space), or non-disclosure agreements.
Restrictive covenants (contractual agreements) must protect the company sufficiently while affecting the employee as little as possible. In order to do this, restrictive covenants have to be adapted based on the employee’s access to relevant information and the potential consequences of a confidential breach on the business.
In case of such obligation breach, a contractual protection will legally allow to take measures accordingly (injunction, damages, termination of employment, etc.). But restrictive covenants are subject to legal restrictions that may differ from country to country, and that can make the contract void. It is essential to inquire about the local law.
Intellectual Property Licensing
In order to exploit the financial potential of an innovation, people often think of direct exploitation of IP rights by their owners or by means of a joint venture. But for many reasons it is not always possible. An alternative is the licensing approach. Relevant factors to consider are:
- Is there a need of immediate cash flow by the company
- Is further development of the protected technology required before reaching the market
- If the technology is outside the firm’s core line of business or interest area: for example, the product is not suitable for export due to unit volume, regulatory differences or lack of expertise in foreign markets.
As licences play a great role particularly in the operations of high-tech companies, it is important for corporate decision-makers to understand the basics of licensing and the strategies implemented through license agreements:
- There is a great need of time and effort before initiating collaboration or a licensing agreement. It is important that a very extensive and careful search is carried out to identify a suitable license partner. The IP owner must be sure that the partner has the expertise, resources and commitment to exploit the particular product or service. One may start with an option arrangement whereby the potential licensee is given an opportunity to investigate the market and satisfy the IP owner that a fruitful partnership could ensue.
- Collaborative R&D and licensing offer the prospect of resource and information sharing and the fast conversion of an innovation into high quality products. Furthermore, it can offer the ability to share skills and technologies and to access markets which would otherwise be inaccessible.
- Licensing as a component of a technology transfer arrangement is attractive where the venture is viewed in the context of a long-term relationship between the parties involved.
It must be remembered that licensing is a two-way process and can involve any type of IP rights. Terms and conditions for licensing agreements are usually negotiated on a case-by-case basis. Various types of licences are used. Some common considerations apply to all types, while other issues arise only in particular types of licences. You must seek advice from your legal representative on what should or should not be included in your own agreement document.