Harry Grinnell (Dow & Eastman Chemical) stated that “first and foremost IP is a business tool, and it must be treated as such and integrated into the business if it is to be properly used” .
As a business tool intellectual property strategy varies in its use over the product adoption lifecycle as shown in the “IP Strategies and IP Asset Utilization over Time” figure. At a very high level, IP strategies during the development phase of new products and businesses differ from those strategies in the growth and mature phases. In the development phase the strategy overall is to create and acquire IP assets. In the growth phase the IP strategy shifts to making sure the assets are protecting global markets in various regions of the world. In the maturing phase of a product or business the objective is to prune the assets to just those that are still delivering business value.
This viewpoint makes the process look linear. However, as noted by Mark Blaxill and Ralph Eckardt, intellectual property strategies, like all strategies, work in cycles. Company and IP strengths are built, which then hit their limits and ultimately become weaknesses. In the “Phases of the Strategy Cycle” figure the main generalized IP Strategies of control, collaborate, and simplify are shown. Most companies start with building a valuable position and then work to control it by acquiring and managing IP. This strength is interrupted over time by talent losses in accordance with Joy’s law which says that “no matter who you are, most of the smartest people work for someone else”. This change means that the IP strategy of controlling an advantaged business position moves to using IP assets to collaborate with others to create an advantaged network position. From the “Business and IP Management Hierarchy Pyramid” standpoint, the strategy moves from being focused on the lowest levels of “acquisition and freedom to operate” to the highest level of “open innovation and standards work” .
Nothing remains static however so at this point Coase’s Theorem comes into play. This says that where there are competitive markets with no transactions costs, an efficient set of inputs and outputs to and from production-optimal distribution are selected, regardless of how (IP) property rights are divided. As a business undergoes this transformation, the intellectual property strategy again starts to shift to one of optimizing the simplest and most productive set of IP assets to sustain an advantaged business position. This typically means pruning the patent portfolio and building advantaged positions through trademark and copyrighted branding.
As time moves on a company matures and the Innovator’s Dilemma sets in. The Innovator’s Dilemma is the decision that businesses must make between catering to their customers’ current needs, or adopting new innovations and technologies which will answer their future needs. This rebuilding of the whole industry based on disruptive innovations starts the cycle anew. In this case the IP portfolio needs pruning of the assets no longer relevant, and building and acquiring the ones protecting the advantaged disruptive position.
This chapter looks at intellectual property and how integrated intellectual property strategic plans can build and sustain company performance throughout the various phases of the IP Strategy Cycle. As the cycle continues IP strategy planning efforts need constant updating.