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Intellectual Property Strategy

Intellectual Property Strategy

Copyright Date: 2012
Published by: MIT Press
Pages: 192
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  • Book Info
    Intellectual Property Strategy
    Book Description:

    Most managers leave intellectual property issues to the legal department, unaware that an organization's intellectual property can help accomplish a range of management goals, from accessing new markets to improving existing products to generating new revenue streams. In this book, intellectual property expert and Harvard Law School professor John Palfrey offers a short briefing on intellectual property strategy for corporate managers and nonprofit administrators. Palfrey argues for strategies that go beyond the traditional highly restrictive "sword and shield" approach, suggesting that flexibility and creativity are essential to a profitable long-term intellectual property strategy--especially in an era of changing attitudes about media. Intellectual property, writes Palfrey, should be considered a key strategic asset class. Almost every organization has an intellectual property portfolio of some value and therefore the need for an intellectual property strategy. A brand, for example, is an important form of intellectual property, as is any information managed and produced by an organization. Palfrey identifies the essential areas of intellectual property--patent, copyright, trademark, and trade secret--and describes strategic approaches to each in a variety of organizational contexts, based on four basic steps. The most innovative organizations employ multiple intellectual property approaches, depending on the situation, asking hard, context-specific questions. By doing so, they achieve both short- and long-term benefits while positioning themselves for success in the global information economy.

    eISBN: 978-0-262-30289-0
    Subjects: Business, Law

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
    (pp. ix-x)
    Bruce Tidor

    The MIT Press Essential Knowledge series presents short, accessible books on need-to-know subjects in a variety of fields. Written by leading thinkers, Essential Knowledge volumes deliver concise, expert overviews of topics ranging from the cultural and historical to the scientific and technical. In our information age, opinion, rationalization, and superficial descriptions are readily available. Much harder to come by are the principled understanding and foundational knowledge needed to inform our opinions and decisions. This series of beautifully produced, pocket-sized, soft-cover books provides in-depth, authoritative material on topics of current interest in a form accessible to nonexperts. Instead of condensed versions...

    (pp. xi-xiv)
    (pp. xv-xvi)
  6. 1 INTRODUCTION The Self-Limiting Myth of the Sword and the Shield
    (pp. 1-16)

    In conventional wisdom, intellectual property strategy is about the sword and the shield. As a sword, intellectual property can be used to attack a competitor who seeks to exploit some aspect of your intellectual property in a way that violates your rights. As a shield, intellectual property can help you to stave off the attacks of your competitors. That’s still true—but only to an extent. This outdated metaphor, invoking the battlefield, suggests that you should control and exploit your intellectual property to the greatest extent allowed by law in every instance, no matter the context and no matter who...

    (pp. 17-34)

    Intellectual property is not a legal backwater best left by CEOs to their lawyers at a big outside law firm. It is at the core of what drives businesses and many other types of organizations forward. Every institution holds intellectual property of varying degrees of importance to the fulfillment of its mission. It’s what an organization’s community knows in the aggregate and what its people can do. Intellectual property is often a key driver of new business lines. It can also be a driver of revenues, both directly and indirectly, in the form of free cash flow. And it can...

  8. 3 RECOMMENDATION 1 Treat Intellectual Property as a Core Asset Class
    (pp. 35-58)

    Intellectual property is an asset class. You need to treat it that way. When it comes to evaluating the value of your organization’s assets, your intellectual property is just as important as other forms of property. If you run a nonprofit, you still may keep a balance sheet that classifies your assets and liabilities, which may well include your intellectual property. The valuation of intellectual property could matter a great deal in a wide range of circumstances, such as when you go to get an asset-backed loan, seek insurance, sell your company, or buy someone else’s firm from bankruptcy.


  9. 4 RECOMMENDATION 2 Benefit from the Intellectual Property of Others—Legally
    (pp. 59-76)

    The second recommendation is: be open and alert to what your customers, competitors, and others can offer you in terms of intellectual property. One of the big changes in intellectual property is the fast growth of possibilities for building your business in part on the intellectual property of others. The primary way to do so is to license it directly. But there are other ways too. The most promising approach comes from the field of open innovation.

    Sometimes there are limits to what you can license from others. For instance, the intellectual property’s holder might simply refuse your offer to...

  10. 5 RECOMMENDATION 3 Create Freedom of Action through Intellectual Property
    (pp. 77-86)

    The third recommendation is: start with the premise that intellectual property is most valuable insofar as it creates freedom of action for your organization rather than as an offensive weapon against others. In doing so, recognize also the extent to which your brand may be wrapped up in your intellectual property. This is another strong reason why the battlefield metaphor can distract you if you rely on it to the exclusion of other conceptions of intellectual property. And this part of the argument applies equally to any kind of organization, whether a for- or nonprofit one.

    There are many kinds...

  11. 6 RECOMMENDATION 4 Establish a Flexible Intellectual Property Strategy
    (pp. 87-108)

    Now you’ve got a handle on your growing intellectual property portfolio. You’ve gotten each of your key, creative employees to sign well-crafted employment agreements. Your portfolio includes a slew of patents, many copyrighted works, many trade secrets, and a few crucial trademarks and service marks—and there’s more in the pipeline.

    The hardest question of all is what to do with the intellectual property in your portfolio. Here’s where the metaphor of the sword and the shield completely breaks down. Yes, you can use it to protect yourself from others or harm your competitors. But there’s much more to be...

    (pp. 109-124)

    While this book has been written for the senior managers of any type of organization, most of the examples come from the business context. Businesses have tended to think more about their intellectual property than nonprofits have in the past. It’s a mistake for most nonprofits to ignore intellectual property strategy. This chapter takes up some of the special circumstances that relate to nonprofits that may not apply in the context of business organizations. The primary difference is that the intellectual property strategies of openness may help nonprofits achieve aspects of their mission such as the broad dissemination of knowledge...

    (pp. 125-142)

    The fast pace of change is one of the main characteristics of the intellectual property field. The single most important thing you can do as a CEO or senior manager is to ensure that your strategy is dynamic and forward-looking. Now that you have your asset class established with intellectual property, you are prepared to take advantage of changes in the field of intellectual property that will affect your industry.

    A key to finding the right balance that you need to strike in your intellectual property strategy—and determining how your organization can benefit from intellectual property—is to look...

  14. 9 AFTERWORD What the Author Really Thinks
    (pp. 143-146)

    Throughout this book, I’ve made an argument that is entirely practical. I think that it is right for organizations, whether non-or for-profit ones, to explore a range of intellectual property strategies because I believe it will help your organization achieve its own goals. I maintain that it’s more often the case that open strategies are the right idea for the long term and that full exclusion strategies will work over time only in certain circumstances. At no point in this book have I sought to convince you based on my views of what is best for society at large. My...

    (pp. 147-150)
  16. NOTES
    (pp. 151-158)
    (pp. 159-164)
    (pp. 165-166)
  19. INDEX
    (pp. 167-172)
  20. Case Studies

      (pp. CS-3-CS-10)

      Intellectual property accounts for about 40 percent of the net asset value of all corporations in the United States.¹ One method of extracting value from these assets is by entering the licensing market for trademarks and copyrights, which involves a hundred billion dollars globally per year. The potential of this market is not limited to traditional firms and for-profit enterprises. Companies specializing in collegiate-sports licensing have been helping colleges and universities maximize revenue through licensing deals. Given that they are institutions that specialize in the creation and cultivation of knowledge and expression, universities and colleges should naturally be attuned to...

      (pp. CS-11-CS-18)

      The rise of generic pharmaceuticals has resulted in large price reductions as well as numerous opportunities for large and small drug companies. Now, provisions in the new comprehensive health care law combined with a wave of patent expirations on major biologics are opening the door to companies interested in pursuing generic versions of brand-name biologics, known as follow-on biologics or biosimilars. Perhaps the best example is the case of Merck’s investment in and creation of a follow-on biologics unit, Merck BioVentures.

      Most drugs fall into two categories: small and large molecules.¹ Common pharmaceuticals such as Tylenol and Lipitor are small...

      (pp. CS-19-CS-24)

      Whether you call it crowdsourcing, open innovation, or the wisdom of crowds, the collaborative approach to innovation is becoming a force.¹ Businesses, individual inventors, and government bodies are increasingly employing the tactic. After having set aside any sense of paranoia about protecting their intellectual property rights, these leaders are turning to customers, competitors, and even the public at large for inspiration in solving a host of technological as well as design problems.

      Sometimes firms with a problem turn directly to the crowd for help in finding a solution. For example, Rob McEwen, chief executive of U.S. Gold, asked the public...

      (pp. CS-25-CS-32)

      Given that intellectual property accounts for about 40 percent of the net asset value of all corporations in the United States, for-profit entities have frequently had to contend with issues related to it.¹ Still, nonprofits with a connection to knowledge and ideas, such as museums, can also benefit tremendously from seriously considering their approach to intellectual property. These institutions are akin to the media companies, software firms, and biotechnology entities that have such strong interests in intellectual property in the for-profit context. Though it may seem counterintuitive, an open intellectual property strategy may be more beneficial for museums than for...

      (pp. CS-33-CS-40)

      The stories of Apple and RIM provide examples of the benefits of a smart intellectual property strategy as well as the litigious nature of the smartphone industry. An increasingly crowded smartphone market is also raising the attractiveness of the patent-licensing business model employed by firms like Qualcomm and InterDigital.

      In 2007, Apple, Inc. entered the competitive mobile phone market with the launch of its iPhone.¹ Apple’s CEO Steve Jobs predicted that the iPhone would “change everything” in the same way that the iPod did after its release in 2001. Once again, Jobs was more right than wrong.² The iPhone was...

      (pp. CS-41-CS-48)

      Each year, the world produces about seven million tons of coffee.¹ Together, we drink five hundred billion cups of coffee annually.² The profit potential from this massive coffee trade are obvious. The money to be gained (or lost) as a result of the intellectual property strategies employed by the multinational coffee purchasers and the coffee-producing countries that supply them is less obvious. This case study examines the dispute over the right to use the term “Sidamo” in describing coffee products between the government of Ethiopia and the coffee giant Starbucks.

      Starbucks opened its first shop in Pike Place Market in...

      (pp. CS-49-CS-58)

      The patenting of university research can be big business. In 2007, technology-licensing revenues generated by the top-ten universities alone accounted for nearly $1.5 billion.¹ This impressive revenue was built on a strong foundation of university-based research and development. The National Science Board reported that US academic institutions spent $48 billion on research and development in 2006, accounting for 33 percent of the total research nationally.² As the licensing-revenue numbers indicate, this laboratory research can resonate powerfully in our everyday lives. Large corporations like Google, Cirrus Logic, and Genentech have all based their products on university-licensed intellectual property.³

      The Cohen-Boyer patents...

      (pp. CS-59-CS-71)