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While the topic of patents is often considered one for specialists, all senior executives, especially those responsible for a business unit, should be aware of the basics of building a valuable patent portfolio, using patent databases for competitive intelligence, monetizing IP and handling IP threats.
IP is one of the most important assets of an innovative or innovation-based company. It is important to develop efficient IP protection strategies from the very early stages of the company to avoid missing opportunities and wasting significant money.
The World Intellectual Property Organization definition of IP states, “Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.” IP protection comes in a variety of forms in most countries including utility patents, design patents, trademarks, copyrights, trade secrets, IC topographies and digital rights.
Solid IP protection not only prevents competitors from copying innovative features but also assists in increasing company value and makes the company more attractive to investors, as it clearly concretises the innovation. Generally, early stages and growing companies build an IP portfolio for defensive purpose. IP protection helps on the marketing front as well, highlighting where the innovation lies in the company. When large companies are looking for solutions to broaden their offerings, they often look at patent databases and find small targets to acquire.
Cost is the key deterrent to IP protection. The time to obtain an enforceable patent is on average 3-4 years, unless acceleration programs are used. If not planned properly, costs can grow rapidly. In the meantime, an application is open to the public (ie. competitors) within 18 months of the filing, which may affect a startup’s time-to-market advantage, therefore it is critical to assess whether an idea is best protected using a patent application or as a trade secret.
Protecting IP may be very time consuming for key employees if managed internally. As well, patents are expensive to enforce, which is why, for small companies, the initial strategy is generally defensive rather than offensive.
A good IP strategy is key to the success of a company with innovative products and services. A pragmatic strategy needs to be devised and implemented from the inception of the company and regularly updated to follow its evolution. A good strategy involves not only reactive elements, but also several important proactive actions that I will discuss in future blog posts.