The Utilization of Intellectual Property Rights in SMEs   Kazuo HATTORI Director for Patent Information Policy Planning an...
Intellectual Property Strategy for SMEs and Venture Companies
Section 1   Significance of Intellectual Property Activities in SMEs and Venture-funded Start-ups -Various Merits -
What is intellectual property? 06/27 THU 11:29 Utility model Antenna storage structure Smart design Brand name LCD technol...
Merits  of intellectual property activities in business <ul><li>Preventing infringement by other companies and protecting ...
Advantages  of IP in  SMEs and Venture Companies <ul><li>Top management making speedy decisions and directly linking intel...
Risks  of  disregarding intellectual property <ul><li>A company’s technology that had been considered  not special technol...
Section 2   Common Misunderstandings and Preconceptions among SMEs and Venture Companies  -Truth and Falsehood Concerning ...
Misunderstanding 1 Only high-level technology such as “revolutionary inventions” can be patented  . Hint It would be a was...
Misunderstanding 2   File applications for all inventions . Unnecessary annual fees would be a severe strain on business o...
Misunderstanding 3   Acquisition of intellectual property rights and dealing with infringement involves a vast  amount of ...
Section 3   Concept and Patterns of Intellectual Property Strategy  -Business Strategy for Increasing Added Value -
Definition of a  Company’s Intellectual Property Strategy   <ul><li>A company’s intellectual property strategy is a strate...
Models of the Intellectual Property Strategies of SMEs and Venture Companies
An Overview of Intellectual Property Strategies of SMEs and Venture Companies Creation Conducting R&D in collaboration wit...
Strategy 1: Joint Development Strategy   Conducting R&D in collaboration with another company or university   <ul><li>Wher...
Strategy 2: Independent Development Strategy   C onducting independent R&D so as to protect proprietary technology and kno...
Strategy 3: Monopolization Strategy Gaining a large market share by acquiring intellectual property rights   <ul><li>Where...
Strategy 4: Know-how Strategy Concealing the proprietary technology   <ul><li>Where the technique is not easily discoverab...
Strategy 5: License/transfer Strategy Gaining profits by licensing or transferring the company’s intellectual property rig...
Strategy 6: License Acquisition Strategy Using another company’s intellectual property right and conducting commercializat...
Intellectual property strategy is not necessarily a choice between two alternatives but can involve multiple decisions. <u...
Strategies for Types of Rights
Design Strategy: Protection of Design Rights   Developing and protecting original designs   <ul><li>Possibility of commerc...
Brand Strategy: Protection of Trademark Rights Supplementing name recognition through branding   <ul><li>Does the name pre...
Coordination between Intellectual Property Strategy and Management Strategy   Intellectual Property Strategy R&D Strategy ...
Creating  Intellectual Property
Section 1   Promoting R&D together with the Awareness of  Creating  Intellectual Property   -Clarifying and Using Core Tec...
Challenge: Human resources and budgets for R&D are lacking.   <ul><li>Possible Solution: </li></ul><ul><li>Educating engin...
Challenge:  R&D is not conducted with an awareness of the company’s intellectual property.   <ul><li>Possible Solution: </...
Section 2   Development of Internal System   - Developing System within SMEs and Venture Companies for Supporting their In...
Challenge:  The company cannot create a corporate structure conducive to managing intellectual property affairs. <ul><li>P...
Challenge:  Staff lack intellectual property-related knowledge and know-how.   <ul><li>Possible Solution: </li></ul><ul><l...
Challenge:  There are no  incentives  for R&D staff to create inventions.   <ul><li>Possible Solutions: </li></ul><ul><li>...
Utilization of Intellectual Property
Section 1   Formulation of Licensing Strategy   Techniques for Generating Revenue from Intellectual Property
What strategy should be taken when a company wants other companies to use its patents or when a company wants to use other...
What are the merits and risks of a licensing strategy?   <ul><li>When granting or transferring (sub-licensing) a license, ...
Where can a company find technology seeds that it lacks?   <ul><li>Searching for technology seeds through a university’s c...
How should licensing negotiation be conducted?  <ul><li>Conducting preliminary investigations of a prospective licensing p...
Ten Intellectual Property Rules for SMEs and Venture Companies
1. The company manager should have be     intellectual property minded and lead the creation and implementation of intelle...
4. Measures should be taken to reduce IP-related costs to the greatest extent possible. 5. SMEs and venture companies shou...
7. If a company cannot work on intellectual property independently, it should collaborate with other institutions and indi...
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The Utilization of Intellectual Property Rights in SMEs

  1. 1. The Utilization of Intellectual Property Rights in SMEs Kazuo HATTORI Director for Patent Information Policy Planning and Coordination Patent Information Division Japan Patent Office September 8, 2006
  2. 2. Intellectual Property Strategy for SMEs and Venture Companies
  3. 3. Section 1 Significance of Intellectual Property Activities in SMEs and Venture-funded Start-ups -Various Merits -
  4. 4. What is intellectual property? 06/27 THU 11:29 Utility model Antenna storage structure Smart design Brand name LCD technology Trademark Patent Design
  5. 5. Merits of intellectual property activities in business <ul><li>Preventing infringement by other companies and protecting proprietary technology </li></ul><ul><li>Increasing profits through licensing </li></ul><ul><li>Increasing customer confidence in proprietary technology and establishing a brand </li></ul><ul><li>Boosting employee motivation </li></ul>
  6. 6. Advantages of IP in SMEs and Venture Companies <ul><li>Top management making speedy decisions and directly linking intellectual property strategy with management strategy </li></ul><ul><li>Securing a share in niche markets by using intellectual property </li></ul>
  7. 7. Risks of disregarding intellectual property <ul><li>A company’s technology that had been considered not special technology and therefore left unpatented became patented by a competitor! </li></ul><ul><li>Ideas and know-how can be leaked through marketing and transactions! </li></ul><ul><li>A company suddenly received from a competitor a warning or a claim for damages regarding intellectual property infringement! </li></ul>
  8. 8. Section 2 Common Misunderstandings and Preconceptions among SMEs and Venture Companies -Truth and Falsehood Concerning Intellectual Property -
  9. 9. Misunderstanding 1 Only high-level technology such as “revolutionary inventions” can be patented . Hint It would be a waste to junk a razor blade.
  10. 10. Misunderstanding 2 File applications for all inventions . Unnecessary annual fees would be a severe strain on business operations. Careful selection File applications. Keep as know-how.
  11. 11. Misunderstanding 3 Acquisition of intellectual property rights and dealing with infringement involves a vast amount of money, time, and labor . Sales of a product License (income from IP ) Cost of IP
  12. 12. Section 3 Concept and Patterns of Intellectual Property Strategy -Business Strategy for Increasing Added Value -
  13. 13. Definition of a Company’s Intellectual Property Strategy <ul><li>A company’s intellectual property strategy is a strategy for increasing a company’s added value and for securing profits by creating, protecting, and using intellectual property while considering the company’s management resources and external business environment. </li></ul><ul><li>It is a strategy that regards intellectual property as a means for building business and not one that regards the mere acquisition of intellectual property rights for research results as the final goal . </li></ul>
  14. 14. Models of the Intellectual Property Strategies of SMEs and Venture Companies
  15. 15. An Overview of Intellectual Property Strategies of SMEs and Venture Companies Creation Conducting R&D in collaboration with another company or university or independently Joint development strategy Independent development strategy Protection Acquiring intellectual property or concealing technology as know-how Monopolization strategy Know-how strategy Utilization License IPR to other companies or using another company’s IPR License/transfer strategy License acquisition strategy
  16. 16. Strategy 1: Joint Development Strategy Conducting R&D in collaboration with another company or university <ul><li>Where a company cannot conduct commercialization independently due to a lack of management resources such as technological capabilities </li></ul><ul><li>Where a company can provide an attractive and unique core competence (unique technology or skills for providing customers with products or services that cannot be imitated by other companies) to the partner company </li></ul>
  17. 17. Strategy 2: Independent Development Strategy C onducting independent R&D so as to protect proprietary technology and know-how <ul><li>Where a company wants to keep their proprietary technology and know-how secret from other companies or universities </li></ul>
  18. 18. Strategy 3: Monopolization Strategy Gaining a large market share by acquiring intellectual property rights <ul><li>Where the company’s technology is difficult to conceal and there is a risk of it being easily found out and imitated by other companies </li></ul><ul><li>Where the technical level of the company is the same as that of its competitors in the relevant field </li></ul><ul><li>Where it is difficult to claim the prior user’s right </li></ul>
  19. 19. Strategy 4: Know-how Strategy Concealing the proprietary technology <ul><li>Where the technique is not easily discoverable by other companies, such as technology related to a manufacturing process </li></ul><ul><li>Where a strict confidentiality system within the company is in place </li></ul>
  20. 20. Strategy 5: License/transfer Strategy Gaining profits by licensing or transferring the company’s intellectual property rights to other companies <ul><li>Where the company lacks production and sales abilities and finds it difficult to conduct commercialization independently </li></ul><ul><li>Where the company intends to expand the market for its proprietary technology by having other companies use it as well </li></ul>
  21. 21. Strategy 6: License Acquisition Strategy Using another company’s intellectual property right and conducting commercialization independently <ul><li>Where the company finds it easier to conduct commercialization by obtaining a license from another company </li></ul><ul><li>Where a problem cannot be solved by the IP right (i.e., technology) held by the company </li></ul>
  22. 22. Intellectual property strategy is not necessarily a choice between two alternatives but can involve multiple decisions. <ul><li>It is necessary to effectively combine strategies across the intellectual creation cycle. </li></ul><ul><li>A company is required to formulate multiple intellectual property strategies and to carefully determine whether to take a monopolization strategy or a know-how strategy depending on the technical field or business area. </li></ul>
  23. 23. Strategies for Types of Rights
  24. 24. Design Strategy: Protection of Design Rights Developing and protecting original designs <ul><li>Possibility of commercialization </li></ul><ul><li>Period of use of the design </li></ul><ul><li>Predicted sales of the product </li></ul><ul><li>Future trends and the influence on future product line-up </li></ul>
  25. 25. Brand Strategy: Protection of Trademark Rights Supplementing name recognition through branding <ul><li>Does the name precisely express the functions and characteristics of the product? </li></ul><ul><li>Does the name indicate superiority over other companies’ competitive products? </li></ul><ul><li>Is the name pleasant sounding, easy to pronounce, and appealing? </li></ul><ul><li>Is the name easy to understand and easy for consumers to remember? </li></ul><ul><li>Can the name stand long years of use? </li></ul><ul><li>Is the name free of any bad meanings or impressions? </li></ul><ul><li>Can a trademark right be acquired for the name (i.e., Does the name have a distinctive feature)? </li></ul><ul><li>Does the name violate the Unfair Competition Prevention Act? </li></ul>
  26. 26. Coordination between Intellectual Property Strategy and Management Strategy Intellectual Property Strategy R&D Strategy Personnel Strategy Business Strategy Marketing Strategy
  27. 27. Creating Intellectual Property
  28. 28. Section 1 Promoting R&D together with the Awareness of Creating Intellectual Property -Clarifying and Using Core Technology -
  29. 29. Challenge: Human resources and budgets for R&D are lacking. <ul><li>Possible Solution: </li></ul><ul><li>Educating engineers as well as collaborating with or acquiring former staff of business acquaintances who have good knowledge of technology and intellectual property </li></ul>
  30. 30. Challenge: R&D is not conducted with an awareness of the company’s intellectual property. <ul><li>Possible Solution: </li></ul><ul><li>Identifying the company’s core technology and selecting and concentrating the areas of R&D </li></ul><ul><li>Discovering inventions through meetings of engineers and intellectual property staff and through daily information gathering </li></ul>
  31. 31. Section 2 Development of Internal System - Developing System within SMEs and Venture Companies for Supporting their Intellectual Property Activities -
  32. 32. Challenge: The company cannot create a corporate structure conducive to managing intellectual property affairs. <ul><li>Possible Solution: </li></ul><ul><li>Placing staff and organizations in charge of intellectual property affairs, even if the staff hold additional posts </li></ul>
  33. 33. Challenge: Staff lack intellectual property-related knowledge and know-how. <ul><li>Possible Solution: </li></ul><ul><li>In addition to intellectual property education through on-the-job training, also conducting off-site training, including dispatching staff to various seminars attended by experts and so on </li></ul>
  34. 34. Challenge: There are no incentives for R&D staff to create inventions. <ul><li>Possible Solutions: </li></ul><ul><li>Improving the rules regarding employees’ inventions and increasing the motivation of R&D staff to invent </li></ul><ul><li>Motivating inventors by commending notable inventions </li></ul>
  35. 35. Utilization of Intellectual Property
  36. 36. Section 1 Formulation of Licensing Strategy Techniques for Generating Revenue from Intellectual Property
  37. 37. What strategy should be taken when a company wants other companies to use its patents or when a company wants to use other companies’ patents? <ul><li>Knowing types of licensing strategies </li></ul><ul><li>(i) Exclusive license </li></ul><ul><li>(ii) Non-exclusive license </li></ul><ul><li>(iii) Cross-license </li></ul><ul><li>(iv) Partial license </li></ul><ul><li>(v) Licensing-in </li></ul><ul><li>(vi) Know-how license </li></ul>
  38. 38. What are the merits and risks of a licensing strategy? <ul><li>When granting or transferring (sub-licensing) a license, there is the risk of increasing competition in the market, and there is the benefit of being able to generate stable profits. </li></ul><ul><li>When receiving a license from another company, there are risks including the payment of royalties and the restrictions on the use of the IP right in business operations. </li></ul>
  39. 39. Where can a company find technology seeds that it lacks? <ul><li>Searching for technology seeds through a university’s consultation service </li></ul><ul><li>Using various databases and patent licensing-related events </li></ul>
  40. 40. How should licensing negotiation be conducted? <ul><li>Conducting preliminary investigations of a prospective licensing partner </li></ul><ul><li>Considering the licensing fee before engaging in negotiation </li></ul><ul><li>Conducting a licensing agreement that meets the needs of both parties </li></ul><ul><li>Carefully concluding a licensing agreement </li></ul><ul><li>Consulting a licensing expert </li></ul>
  41. 41. Ten Intellectual Property Rules for SMEs and Venture Companies
  42. 42. 1. The company manager should have be    intellectual property minded and lead the creation and implementation of intellectual property strategy. 2. All staff should be intellectual property minded. 3. Reasonable investment in intellectual property activities should be a part of management strategy.
  43. 43. 4. Measures should be taken to reduce IP-related costs to the greatest extent possible. 5. SMEs and venture companies should optimize their flexibility and speed in their intellectual property strategies. 6. A company should find a competent IP consultant.
  44. 44. 7. If a company cannot work on intellectual property independently, it should collaborate with other institutions and individuals. 8. Agreements should be concluded carefully. 9. A company should use the Regional Intellectual Property Strategic Program Promotion Network. 10. A company should make autonomous efforts to gather IP-related information.
  45. 45. Thank you!
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