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Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
Intellectual property Strategy
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Intellectual property Strategy

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Intellectual property Strategy - the role of intellectual property in strategy evolution - an early draft of a potential book

Intellectual property Strategy - the role of intellectual property in strategy evolution - an early draft of a potential book

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  • 1. Chapter Intellectual Property StrategyIntroduction: The New Front of Business StrategyMost people know the legal artefacts of intellectual property, patents, trademarks, registereddesigns and copyright, but have little idea about what constitutes intellectual property withina firm and it’s value as a tool of strategy. Intellectual property is a wide concept, much morethan a method to develop monopolistic right of use, it includes the very nature of ideas thatthe business has built its foundation upon, the purpose of products and services, theprocesses that create them, the way they are disseminated into the marketplace and theways that this is done. Intellectual property is at the heart of the firm’s competitive ability toexist and will decide it’s position of competitive advantage in the future. Intellectual propertyis the core of the firm’s ability to sustain and survive.International intellectual property activity is undergoing steady growth and there are anumber of new trends emerging. Examining the growth of patent applications can providesome indication of the importance of intellectual property to product development andstrategy in the business world. Firstly, the overall aggregate growth of patent filings hasaveraged a 4.75% per annum over the last two decades according to the World InternationalIntellectual Property Organisation (WIPO), from 884,400 filings per annum in 1985 to1,599,000 filings per annum in 20041. Figure 9.1. shows aggregate international level ofpatent filings by year, up to 2004. Figure 9.1. Worldwide Patent Filings Non-Resident Filed Applications 1600000 Resident Filed Applications Patent Applications Filed 1400000 1200000 1000000 800000 600000 400000 200000 0 1987 1989 1991 1992 1993 1994 1996 1998 2000 2002 2003 1985 1986 1988 1990 1995 1997 1999 2001 2004 Source: WIPO Statistics
  • 2. The figures show that most of the increase in patent filing activity is by non-residents filing inother jurisdictions, which is increasing at the rate of 7.4% per annum. The significance of thisis that it is an indicator of the spread of firm internationalisation in their expansion strategies.Figure 9.2. shows from which countries the majority of patent filing activity is coming from,where the top 5 countries, Japan, USA, Republic of Korea, China and the European Union arereceiving 75% of all patent filings undertaken worldwide. This roughly equates with therelative importance of these markets to the World economy, except for the Republic of Korea,which as a single market is relatively small in World importance. Figure 9.2. Twenty Largest Patent Filing Countries 2004 Poland Italy Argentina Singapore Hong Kong (SAR) Norw ay Mexico France India Brazil United Kingdom Russian Federation Australia Canada Germ any European Patent Office China Korea, Rep. USA Japan 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 Number of Patent Filings Resident Patent File Applications Source: WIPO Statistics Non-Resident Patent File ApplicationsAs a rough indicator of the level of innovation within particular countries is a comparison ofthe number of resident patents filed per Million population in each country. Japan and theRepublic of Korea have the highest rates of resident patent applications per Millionpopulation. The World average is 148 per Million population for those countries wherestatistics are available. Figure 9.3. shows a country ranking compared to the World average,highlighted by an arrow.Focusing on the Asia-Pacific region Figure 9.4. shows the number of resident internationalpatent in the region in 2006. International patent filings are more relevant than domesticpatent filings as the international filings figures are a better indicator of the countriesinternational influence in the global business arena. Countries like Japan, Republic of Korea,China and Australia are far in front of the rest of the Asia-Pacific region. In the Asiangrouping India had 627 international patent filings during 2006 and Singapore 402. Bothcountries have invested in R&D very heavily, with India expected to become an industrialgiant in the near future and Singapore publicly emulating the Korean Research model incluster development, in large investments like the biotechnology Biopolis2. Althoughaggregate filings are low in the rest of the Asian region, Malaysia stands out with somerelative success with its National Policies on projects such as the Multimedia Super Corridor(MSC) in generating new patent filings, notwithstanding the criticisms levelled at suchprojects by media and industry commentators3. The Asian region, all would agree, still has along way to go, however issues like innovation and research and developmentcommercialisation are on the top of policy agendas in these countries at this time4.
  • 3. Figure 9.3. Number of Resient Patent Filings per Million Population 2004 M exic o 5 India 7 Turkey 7 Thailand 11 B razil 21 A rgentina 28 B eligium 50 C hina 51 C zec h R epublic 61 P o land 62 S pain 67 Hungary 75 Ukraine 86 B elarus 108 Italy 111 C anada 125 Netherlands 134 S ingapo re 147 Wo rld A verage 148 World Average R us s ian 160 S witzerland 217 Is rael 227 F ranc e 236 A us tria 275 S weden 308 UK 320 No rway 335 D enmark 347 F inland 385 New Z ealand 402 A us tralia 479 G ermany 587 US A 645 Ko rea, R ep. 2189 2884 J apan 0 500 1000 1500 2000 2500 3000 Number of Resident Patent Filings/Million Population 2004 Source: WIPO Statistics Figure 9.4. International Patents Filed by Residents in Asia-Pacific Region 2006 Vietnam 9 12 Thailand Singapore 402 15 Philippines New Zealand 316 54 Malaysia 5935 Republic Korea 4 Dem. Rep Korea 26906 Japan India 627 6 Indonesia 3910 China 1 Brunei Darussalam 2139 Australia 0 5000 10000 15000 20000 25000 30000 Number of International Patents Filed by Residents Source: WIPO StatisticesAn important measure of productivity and efficiency in research, development and potentialcommercialisation (as the figures don’t tell us how many patents are actuallycommercialised), is the rate of patent filings per USD Million spent on R&D. Figure 9.5. showsthe number of resident patents filed per USD Million spent on National R&D.
  • 4. Figure 9.5. Resident Patent Filings per USD 1.0 Million R&D Expenditure 0.08 Belgium 0.14 Turkey 0.21 Mexico 0.23 Israel 0.23 Canada 0.23 India 0.26 Netherlands 0.27 Spain 0.28 Czech Republic 0.29 Sw eden 0.29 Sw itzerland 0.3 Brazil 0.37 Italy 0.41 France 0.41 Finland 0.43 Austria 0.46 Denm ark 0.51 Thailand 0.54 Hungary 0.56 Norw ay 0.61 Argentina 0.62 UK 0.71 USA 0.78 China 0.81 World Average 0.92 Germ any 0.99 Poland 1.13 Australia 1.18 Singapore 1.46 Russian 1.5 Ukraine 1.67 New Zealand 3.15 Belarus 3.49 Japan 4.6 Korea, Rep. 0 1 2 3 4 5 Number of Resident Patent Filings per USD 1 Million R&D Expenditure Source: WIPO StatisticsBoth the Republic of Korea and Japan have very high rates of patent applications per USDMillion spent on research and development expenditure. Again as is the case of patent filingsper Million population, most countries above the world average are industrialised andemerging countries. It is almost impossible to generalise the reasons for the ranking positionof each country as each country has their own unique research and development models andcultural approaches to the development of intellectual property, which proves successful tothem. Ironically, some countries like Singapore that emulated some of the European andfaired better. Other countries like the Russian Federation, Ukraine and Belarus have come outof the Communist block and manage to produce above average intellectual property outputsrelative to the research dollars put in. Japan has its own well known model of nexus betweengovernment, research institutions, universities, financial institutions and business5, whichproduces high outputs. Other commentators would disagree about the success of the modeland claim high patent application is an integral part of Japanese business strategy6.Turning to the technology categories where patent applications are filed provides someindication about the nature of the World’s industry mix and where money is being spent onresearch and development. Figure 9.6. shows the major categories of technology wherepatent applications are filed. An important additional piece of information is the rate ofgrowth in terms of patent applications to provide some indication of the activity within eachcategory. Semiconductors, information technology, pharmaceuticals and cosmetics are thelargest groups of growth. Surprisingly, biotechnology over the last five years has displayednegative growth from 9,001 applications filed in 2002 down to 6,952 applications filed in2006. As these figures are based on the accepted international patent classifications, it ispossible that biotechnology patents tend to be filed under their potential applications, i.e.,pharmaceuticals and cosmetics, etc. Conversely, this could indicate a trend towardmaintaining proprietary knowledge within the firms choosing to develop new intellectualproperty and maintain maximum secrecy about processes from their competitors.
  • 5. Figure 9.6. Major Categories of International Patent Applications 2006 Consumer Goods & Civil Engineering, Building, Mining Other Transport Equipment 2% 1% Electrical devices & 3% 5% electrical engineering Mechanical Components 6% 3% Machine Tools, Engines, Audio-Visual Thermal Process 4% 5% Telecommunications Materials Processing, 8% Textiles & Paper 3% Information Technology 8% Industrial Processes, Handling & Printing Semiconductors 7% 3% Agriculture and Food Processing Optics 2% 2% Pharmaceuticals & Cosmetics Analysis & Medical Biotechnology Organic, 8% Technology 4% Material & Surface Macromolecular & 13% Technology Chemical Engineering Polymer Chemistry Source: WIPO Statistics 5% 2% 7%Further, short technology lifecycles in the biotechnology arena due to exponential growth indiscoveries may also discourage patent applications. Figure 9.7. Main Areas of Patent Filing Growth 2006 28% 30% 22% 25% 21% 17% 16% 20% 15% 13% 11% 13% 13% 13% 12% 12% 11% 15% 11% Percentage Growth (%) 8% 9% 8% 8% 10% 5% 0% -5% -5% Optics Organic, Biotechnology Mechanical Audio-Visual Chemical Industrial Civil Engineering, Information Agriculture and Food Machine Tools, Transport Electrical devices & Semiconductors Analysis & Medical Materials Pharmaceuticals & Consumer Goods & Telecommunications Material & Surface Source: WIPO Statistics
  • 6. Growth figures in Figure 9.7. can be misleading in areas of agriculture and food whereagricultural food and processing machinery patent applications is stagnant and actuallyshowed a 3% decline in applications between 2005 and 2006. However agricultureapplications and food technology is consistently increasing at a rate of 17% per annum,showing the focus of the industry over the last half decade. Within the analytical instrumentscategory, laboratory instruments are showing around 7% growth per annum, but imagingtechnology in the medical field is showing 15% growth and is becoming the largest area ofcategory development. Within the organic, macromolecular chemistry and polymer category,fine chemicals are showing almost no growth, while polymers are growing at 19% perannum.Who are the people and organisations filing patents? This varies according to the technologyarea and country. For example in the area of pharmaceuticals and cosmetics most applicantsare the companies involved in the industry. Very few patent applications would come fromindividual inventors, research institutions or universities. However very generally across allcategories and countries large corporations would be responsible for approximately 25% ofall applications, followed by medium to large companies making another 30% of allapplications. Universities and research institutes would be responsible for 15% ofapplications, small to medium companies specialising in an industry another 15% ofapplications and individual inventors filing the balance 15% of patent applications. At thispoint it is worth mentioning that only a very small percentage of patents filed are actuallycommercialised and also a large number of patents filed are also allowed to lapse before theyare examined and approved by the patents office. Sometimes this is done for a reason, whichbe discussed later in this chapter.Before moving on into a more detailed discussion of intellectual property strategy it is worthsummarising the trends the statistics shown are indicating; • The aggregate growth in patent filings has generally been in line with world economic growth however some technology sectors like semiconductors, information technology and pharmaceuticals are showing much higher than world economic growth. This indicates that some emerging industries are taking on much more importance in the world economy than before and most of them are technologically relatively new fields of research and development and it will be sometime before they become mature industries. • There is growing internationalisation of patent filing in jurisdictions outside applicant resident countries especially through the Patent Cooperation Treaty (PCT) system indicating that patent applicants view the potential for their inventions on a multi- market or global basis, rather than their own domestic markets. This indicates a much more global orientation towards markets and business in the last few decades is being taken. • There is a rapid growth in patent applications from the East Asian region which indicates the emergence and growing importance of the region in global business and innovation. • Some countries perform better per-capita and per amount of R&D funds spent than other countries indicating that different countries have developed different levels of innovation and research efficiency, and • Finally, intellectual property is an important part of corporate strategy.A number of other issues regarding intellectual property are also putting great influence uponbusiness strategy. Today, market leadership within an industry can be short lived if acompany does not continue to invest in new technology. The Disktronics factory in MelbourneAustralia during the 1980s was the only factory in the Southern Hemisphere that couldproduce compact discs. The company had a USD 10 Million investment in the technology onlyto find within a few years that compact discs reproduction technology could be undertakenwith equipment at a fraction of the cost with personal computers having the same ability to
  • 7. burn disks by the 1990’s. Likewise, the telegram industry has almost faded out around theworld with the advent of a number of alternative communication technologies. The continuedemergence of new technology is one of the primary drivers of new opportunity whereexploitation leads to the creation of new markets and even new industries. This infers theneed by business to spend large resources on research and development to convert newtechnology advances into new products.Rapid technology advances increases the risk of investing in new technology as there is apotential that the technology may become superseded before the investment can berecovered. This places the long term survival of the firm into question in today’s businessenvironment, where large investments have been made in specific technologies andstrategies. The replacement of existing technologies is happening so fast that 40% of theFortune 500 companies that existed in 1975 do not exist today7. Now, on average newproducts launched in the last five years make up 33% of most successful companies profits8.In some industries, mobile phones, televisions, white goods and automobiles, etc this figureis 100%. The cost of new technology is a powerful driver for firms to expand productdistribution over a large number of international markets to recover investment costs quicker.New technologies are thus a push factor for the globalisation of companies due to the needto obtain greater economies of scale, hence the need to protect technology through theinternational intellectual property system is a very important corporate issue.Rapid technology advances not only increase risk as discussed above but have created asituation where a single firm cannot keep up with all advances in the industry. This hasprovided new opportunities for small specialised firms to develop specific technologies as wesee in the information technology and biotechnology industries. New forms of strategicalliances are being created with a number of companies involved with universities andresearch institutions where the benefits of the new technology development is being sharedamong a number of organisations and individuals. Consequently the role of intellectualproperty is becoming valuable as a means of division and means of exchange as aninstrument in commercial transactions based on licensing agreements. Intellectual propertyhas become a tradable item of packaged technology in patents, trademarks and copyright toenable other companies to benefit from them. Intellectual property in the informationtechnology industry is now a product in its own right, forming part of a whole product sold tothe consumer. Intellectual property is a source of revenue and a market strategy for itsdevelopers. On your PC you will most likely have the trademarks and products of Microsoft,Adobe and Norton. This has led to the development of intellectual property portfolios where acollection of patents, trademarks and copyright is held for the purpose of gaining revenuethrough licensing.This trend has given rise to a new industry of legal enforcement where individuals andcompanies, termed as ‘patent trolls’ seek out patent infringers for the purpose of enforcingpatent rights and seeking damages or licence fees9. The expansion of intellectual propertyrights is being used by corporations to gain competitive advantage through monopolisingcertain pieces of science, technology and even everyday language for their exclusive use. Inthe opinion of Michael Perelman intellectual property rights have gone far beyond protectionfor useful inventions and copyrights for music and literature10. A number of absurdities haveoccurred in the US patent system have occurred where overzealous companies and attorneyshave attempted to enforce rights far beyond the original intentions of intellectual propertylegislation and create right monopolies on everyday words and phrases. For example, theAmerican Society of Composers, Authors and Publishers (ASCAP) tried to sue the Americangirl scouts for signing ‘Row, Row, Row Your Boat’ around campfires until there was a publicbacklash11. The American National Basketball Association (NBA) launched a suit againstAmerica Online (AOL) over the publishing of game scores and statistics on its website12. Aperson managed to patent the correct way to lift a box13. Ralph Lauren won a case in theappeals court in 2000 against US Polo Association for using the word ‘Polo’ as its magazinename14. The Australian Institute of Management (AIM) was asked to change the name of a20 year old training course called ‘Effective Negotiation Skills’ on their website because a US
  • 8. training group Karras had a US trademark over the terms ‘Effective Negotiating’ , ‘AdvancedEffective Negotiating’ and ‘Effective Sales Negotiating’15 People have been able to gainpatents for colours and specific numbers16 and the courts have even dismissed a claim from apatient whose doctor without the patient’s knowledge patented genetic material from hisbody17.A little more than a decade ago searching patent databases involved the physical travelling topatent offices and searching microfilm or employing a patent attorney to undertake thesearch for a fee. Over the last decade most patent offices have begun to provide onlineaccess to their databases. At first many of these databases were restricted and notparticularly user friendly, however these search systems are being overhauled and updated tomake access and search protocols very easy. Just recently Google launched its patent searchproduct on its website which provides search access for full texts of US patents online.The now easy access to intellectual property databases online provides much quickerdissemination of science and technology around the world. Certainly this trend is of benefit toscientists and inventors of developing countries in the Asian region as information that oncetook many months to obtain is now online. There is likely to be effects from the ease ofaccess of intellectual property information online. Firstly, there will be a speed up of theprocess of inventing around patents where inventions such as new chemical compounds areeither reengineered along a different route to ‘go around’ or break the existing patent, thusleading to shorter protection times for existing inventors. Secondly there is likely to be anincrease in challenges to existing patents based on prior knowledge by other inventors.The General Intellectual Property Structure: What is What in IPTraditionally companies have been managed in terms of their physical assets and still to agreat degree companies in the South-East Asian region are operated within this paradigm.Businesses tend to be thought of in terms of the buildings, production facilities, retail andwholesale outlets and networks they control, items that can basically be purchased, ownedand controlled and disposed of with relative ease. Businesses use these assets to implementtheir strategies and fulfil their functions to exert influence over the marketplace. Competitorsare fairly easily able to emulate market leaders in assets and basic marketing strategies thatwould potentially appear to be the most successful path. The whole management, financialand accounting procedure within corporate organisations is based on the utilisation,consumption, movement and acquisition of these physical items. However when examiningthe values of businesses in the region, one finds that their market values far exceed their nettangible asset values (total assets minus total liabilities). The difference in the market and nettangible asset value is the value of the firm’s intellectual property. Table 9.1. below showsthe various values for some major firms in the South-East Asian Region.Table 9.1. Net Tangible, Market and Intangible Values for Some Listed Companies in the South-East Asian Region Company Country Net Tangible Intangible Market Value Asset Value Asset ValueThe shift from the industrial to the knowledge paradigm, even in traditional manufacturingindustries has a number of consequences for business strategy and the intellectual propertystructure is a major influence upon the way firms need to develop, implement and exercisetheir strategy options. Companies have focused on guarding their physical assets which isrelatively simple are the objects are tangible and can be locked up and secured. However
  • 9. history has shown when top management moves from one firm to another there can be direconsequences for the former company. One of the most dramatic examples of this was themove of Lee Iacocca in 1979 to Chrysler taking a number of top Ford marketing executiveswith him. Ford lost a substantial amount of its market know-how and eventually market shareto Chrysler. This showed corporate America that know-how is one of the most importantforms of intellectual property a company can posses and led to the development ofmanagement contracts with secrecy, confidential information and exclusivesity clauses toprevent former managers utilising their know how in the same industry after they leavecompany service. Usually large payout provisions exist to secure these rights for the companyover their employees.To fully understand the importance of intellectual property and its true value to the strategyof a firm, one has to appreciate its embedded ness within the core of the company’s missionand objectives and that intellectual property itself highlights the company’s competencies thatit uses in its core strategies. To view intellectual property otherwise would miss the veryconcepts of creating barriers to entry for potential competitors, creating competitiveadvantage over competitors and understanding the relative nature of the concept. Intellectualproperty is also at the heart of winning customers ‘hearts and minds’, gaining trust andreputation in the market place and making a strong emotional connection with customers,which is at the heart of any company’s core mission. Figure 9.8. shows the integrationbetween a firms core mission and intellectual property.Figure 9.8. Integration between a Firm’s Core Mission and Intellectual Property 1. Recognition 2. DesirabilityTo develop public recognition and carry over To enable companies to delivery good certain desired values to consumers products with superior performance to competitors, new features, extended product life, etc, so that products are competitive and desirable. Trademarks and certain Copyright Patents, Registered Designs and Information Proprietary Knowledge 3. Form 4. Emotional Connection To develop recognisable literary and visual To maximise financial returns for productionforms that add value and assist in creating an undertaken by the company, add to product inherent desirability to the form of differentiation and develop an emotional communication between company and connection with consumers. consumer. Copyrights and Trademarks Brands and TrademarksAdapted from Otto A. Stamm 200018If intellectual property is viewed as a box of tools that can be combined in a particular way tofulfil marketing and protection objectives, then intellectual property strategy can beharnessed to benefit the firm greatly. Thus using intellectual property in this way is the bestway to safeguard and protect a company’s products and position in the market place.Intellectual property tools will have different values in different industries, but the generalarray of tools useful to a firm, which can be utilised in different mixes to achieve an overallbusiness strategy is shown in figure 9.9.The three prime influences on the firm are the advent of new technologies, product life cyclesand competition. The firm must be able to apply gathered knowledge to create its source ofproprietary knowledge to form the core and basis of its general business strategies to applyto the market place against existing competitors, who will be undertaking their own cycle ofstrategy development and implementation. The success of the firm’s strategy involvespackaging its intellectual property into the correct mix of strategies and protections todevelop differentiation and relative competitive advantage over its competitors. Skills andknowledge creatively applied to developing a general business strategy to maintain a
  • 10. sustained competitive advantage, which utilises recognition symbols, customer relationships,emotional connections with consumers, correct product forms that are desirable, manifestedin patents, designs, proprietary knowledge, trademarks and copyright, supported by variousemployee agreements. Figure 9.9. The General Tools of Intellectual Property in Business Strategy Influence of New Product Development Technology - Invention (new to the world) - New to company product Competitors - New Style, variant or benefits Patent, Registered Design, Proprietary Influence of Knowledge (secrecy and Product non-disclosure Lifecycle agreements) Process Development (manufacturing) Patent, Proprietary Knowledge (secrecy and non-disclosure The Market agreements) The General Business Market Strategy Place Strategy Market parameters (mix) Values Channels Expectations Knowledge Emotions Image & Story (target) Knowledge, Creativity, Recognition Branding, Trademarks, Potential Copyright Emotional ConnectionsSome parts of intellectual property are easier to copy and emulate by others. This is whycontinual improvement, change and new product development are the best methods ofprotection and maintaining a relative competitive advantage over competitors. Failure toimprove, change and develop new products will render companies in slow technologyemerging industries as a seller of generic products, like in the pharmaceutical, householdcleaning, cosmetics and agricultural chemical industries. In the case of fast emergingtechnology industries companies will become completely irreverent to the market which itselfmay quickly cease to exist, as is the case in mobile telephones, personal computers andelectronic media storage. Figure 9.10. shows the IP/market scenarios with competitiveadvantage in slow and fast technology emerging industries.Figure 9.10. a. shows the scenario of a slow emerging technology market where changes intechnology as well as being steady, tend to be incremental. In the early years, patents arerelied upon for protection, but through time as more companies develop new ways toproduce the same product, relative competitive advantage can only be improved through anew technology development. Once a new product based on the new technology is launchedinto the market and consumers except that technology, the existing market based on the oldtechnology continues, but as more companies enter the market, it becomes difficult todifferentiate between different products and the market begins resembling a commoditymarket. Price discounting will become the primary strategy to maintain market share. Asfurther advances in technology continue to change product form, other methods ofintellectual property protection like registered designs to protect the form and brandingbecome more important protection than patents. The situation in the scenario of fastemerging technology markets, shown in Figure 9.10. b. is usually a market protected bypatents through the complete evolution of the market as new emerging technology changesthe basic technology behind the basic product form. As the new technology is proven to be
  • 11. more efficient and cost effective to consumers, the market for the old product will eventuallydie out. Figure 9.10. IP/market scenarios with competitive advantage in slow and fast technology emerging industries a. Slow Emerging Technology Market Air Fresheners Branding Primary Used IP Protection Relative Competitive Advantage Registered Designs Liquid Air Fresheners Patents Car Air fresheners Failure to advance IP and convert into new products results in competition in a price sensitive market where Gel Air Fresheners brands don’t attract consumer recognition 1960s 1970s 1990s Time b. Fast Emerging Technology Market Electronic Media Storage Primary Used IP Protection Relative Competitive Advantage Patents Pen Drives Compact Rapid decline of media Disks use after introduction of new media until product ceases to be used anymore, Companies must cease operations or switch Floppy Disks to new technology 1960s 1970s 1990s TimeTo the firm, the most important aspects of the intellectual property mix are thosecomponents that assist the product to sell. There is little point developing a new product thathas good protection, if it does not sell well in the market. It is rarely a patented technologythat sells the product. More likely, it will be the perception of it the company portrays toconsumers. When Nike developed the encapsulated gas membrane within the sole of the
  • 12. shoe, it was introduced as “Nike Air’, conjuring an image of the product’s desirability throughconsumer emotions and aspirations, identifying with the emotional rewards in sport andleisure with the slogan ‘just do it’. Although the technology of the shoe may have beenbrilliant, it was the intellectual property of branding, trademarks and copyright that developedthe real value for the company. As was seen, some parts of the concept was quicklyemulated by others, but not the complete winning intellectual property mix, so Nike’s wasable to maintain a relative competitive advantage over its competitors. The images ofMercedes Benz, Harley Davidson, Apple, Listerine, Coca Cola, Marlboro and Calvin Kleinconjure up emotional responses in consumers about image rather than technical interest forthe actual product artefacts themselves.So far the discussion has tried to show how widely intellectual property is used in businessand the role it plays in market dynamics. The concept of intellectual property strategy goesfar beyond legalistic definitions and institutions, and used as part of the overall firm strategy,although it may not have been recognised as such. Intellectual property strategy is a craftlike other strategy formation and lies at the very heart of companies’ value.The intention of the intellectual property legal framework is to provide moral, economic andlegal rights to creators in their creations and to the rights of the public in accessing thosecreations and to promote creativity and dissemination and application of those results, toencourage fair trade, which would contribute to social and economic development19. Howevermany commentators are strongly critical of the system
  • 13. 1 WIPO Patent Report: Statistics on Worldwide Patent Activities, World Intellectual Property Association, 2006 Edition,http://www.wipo.int/freepublications/en/patents/931/wipo_pub_931.pdf (accessed 15th March 2007)2 Agency for Science, Technology and Research, Biopolis: A World Class Research Complex, http://www.a-star.edu.sg/astar/biopolis/index.do (accessed 20 December 2005).3 Chee, Y.H., Malaysia’s New Dream: Biovalley, Online Asia Times,http://www.atimes.com/atimes/Southeast_Asia/EL24Ae01.html (accessed 15 December 2005)4 Ninth Malaysia Plan 2006-2010, The Economic Planning Unit, Prime Minister’s Department, May 2006.5 Ouchi, W., G., (1984), The M-Form Society, Reading, Mass., Addison-Wesley.6 Arai, H., (1999), The Japanese Experience in Wealth Creation. Geneva, World Intellectual Property Organisation.7 Griffin, A., (1997), The Drivers of NPD Success: The PDMA Report, Chicago, Product Development & ManagementAssociation.8 Foster, R., N., (2000), ‘Managing Technological Innovation for the Next 25 Years’, Research-Technology Management,43, 1., Jan/Feb., P. 20.9 Paltorak, A., On ‘Patent Trolls’ and Injunctive Relief, www.ipfrontline.com (accessed 16th May 2006).10 Perelman, M., (2001), Steal the Idea: Intellectual Property and the Corporate Confiscation of Creativity, Palgrave.11 Elisabeth Bumiller,(1996), “ASCAP Tries to Levy Campfire Royalties from Girl Scouts and Regrets It,” New York Times,17 December.12 Annon., (1996), “America Online Faces Lawsuit by NBA Over Data on Games,” Wall Street Journal, 29 August.13 Walsh, M., (1996), “Patently Ridiculous, Some Say; People Dunk Basketballs. People Lift Boxes. Should the PatentOffice Protect Their ‘Inventions’?” Legal Times, 19 August, S32.14 Shulman, S., (2001), “PB&J Patent Punch-Up,” Technology Review 104, May.15 James, D., (2000), “Trademarks: Latest Word on the Internet: It’s Legal Chaos,” Business Review Weekly (Australia), 4February.16 Garfinkel, S., (1995), “A Prime Legal Patent: Legal Rights to a Number Upset Programmers and Lawyers,” ScientificAmerican, 273, July, P. 30.17 Boyle, J.,(1996), Shamans, Software, and Spleens, Cambridge, Mass., Harvard University Press, pp. 21–24.18 Stamm, O., A., (1993), ‘Intellectual Property Rights and Competitive Strategy: A Multinational Pharmaceutical Firm’, inWallerstein, M., B., Mogee, M., A., and Scheon, R., A., (Editors), Global Dimensions of Intellectual Rights in Science andTechnology, Washington D.C., Office of International Affairs Research Council, The National Academy of Sciences, P.221.19 WIPO, undated, Understanding Intellectual Property, Geneva, World Intellectual Property Organisation, Publication895(E), P. 4., (accessed at www.wipo.int/publications, 24 February 2007)

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