IP Strategy Must Be Tightly Linked to Business Strategy

In most technology companies today, market value resides primarily in IP assets and other intangibles. As a winning business strategy is the key to business success, and as IP assets are the most vital technology company assets, business strategy and IP strategy clearly must be joined in one integrated plan.

How can a company develop a viable marketing plan without knowing what protection it has for its forthcoming and existing products and features? A competitor’s patent may lurk in the path of your product evolution and could shatter your forecasts.

Other IP Strategy Issues

1. Do you have the IP strength to keep from getting blitzed by a more heavily resourced challenger?
2. Are your name and brands secure in all the markets that you intend to penetrate?
3. Do you have a strategic use for every IP dollar you spend? Or, like many, do you just pay and pray that your IP investment will bear fruit some day?
4. Do you periodically review and prune your IP holdings , as you would shed excess machinery or real estate, to keep costs down and inventory awareness levels up?
5. Do you know your ROI in brand promotion, patents, and software?
6. Is your innovation strategy effective to generate the numbers and quality of new products and/or services that you need to attain or maintain desired levels of profitability?
7. Are you fully cognizant of all relevant IP-related market information concerning your competitors and customers?

Identify Your Business Goals

IP strategy starts with an understanding of the business strategy, as IP strategy must support the business strategy.

1. If your business strategy is to maximize margins, then surely an element of the IP strategy must be to protect those margin-boosting processes and features (or services) which favorably differentiate your products from those of competitors.

2. If your business strategy centers on penetrating a new market, then perhaps IP assets presently possessed or quickly acquirable could be used to leverage distribution rights from a dominant player in the targeted market.

3. If your business strategy is to extract a cash return on significant past R&D investments, then a likely IP strategy is to audit your portfolio of existing IP assets and to establish a licensing program to monetize them.

4. Is your business strategy to build an online business on the backs of key business method patents like Jay Walker has done so successfully at Priceline.com? Then an IP strategy must be to aggressively protect every feature of your business method as Mr. Walker has done.

5. Is your business strategy to develop a unique and extraordinarily efficient factory or business process? Then perhaps the IP strategy of choice is to lock up that process with patents. The unprecedented success of Dell Computer can be attributed to Dell’s unique “build to order” system which it has protected with dozens of issued and pending patent properties.

6. Is your business plan intended to garner financial support from investors by maximizing the number of patent properties? Then perhaps a wise IP strategy would be to employ the highly successful methodology practiced by a small company in Vermont. This company developed and now employs the novel techniques used by IBM to generate more than $1 billion annually in licensing revenues.

   Using these techniques, this firm has proven that it is able to explode out of the heads of client technical staffs dozens, sometimes hundreds, of patentable concepts. These concepts are then converted on an expedited basis into patent applications. The entire process is accomplished in a few months.

There are few business challenges which cannot be successfully attacked by the prudent application of IP assets. No other corporate asset has the versatility and power of IP assets. They can be used in hundreds of different ways, limited only by the creativity of the involved decision makers.

A Basic IP Asset Strategy

While there can never be a one-size-fits-all IP strategy, the following model is fundamental for many companies:

1. Identify your business goals. As discussed in a previous section, this is square one for every IP strategy, and assumes full market intelligence.

2. Determine in an ideal world how IP assets could help achieve the business goals. This step requires an intimate knowledge of IP assets and the myriad of ways they may be employed to further business solutions.

3. Audit the IP assets you now have. You can’t manage what you don’t know. As you would periodically conduct an inventory of goods in stock, your stock of IP assets must be audited periodically to know what you possess.

4. Determine the gaps which must be filled. The IP needs determined in step 2 are compared with the IP assets currently possessed in the portfolio, as determined by the audit.

5. Determine the most effective way to fill the gaps. If a shortfall exists, a make/buy assessment must be made to determine whether the needed assets are best acquired by:
   • Internal Development
   • Outsourced Development
   • Purchase of the Assets
   • Purchase of a Company Possessing the Assets
   • In-licensing — which usually offers the best ROI.

6. Execute. Execute the business strategy using the acquired IP assets in the manner intended.