When thinking of intellectual property as a class of assets it is sometimes helpful to distinguish it from the many other types of assets a business employs. In a working paper Peter Weill and his colleagues defined for basic business model archetypes shown in the “Business Model Archetypes” figure.
Although their goal was to figure out which types of businesses shown in the “Business Model Archetypes” figure generated the highest shareholder return, we will use the same model to define how most R&D organizations utilize intellectual property assets. In particular in the third column under intangible assets we see four business models. In large corporations all four business models are present, but there are some organizations that participate in only one area. At the top of the column we see that inventors create the assets. Organizations that are pure plays in this space are universities and research institutes. In the second box, IP Traders use assets to form partnerships to speed R&D. This practice in particular reflects access to external technology or open innovation as used in large R&D organizations. Next in the list are Intellectual Landlords or companies holding large patent estates. They use these assets to protect or expand an advantaged sustainable business position for the products or services they directly sell. Last in this list are IP brokers that monetize the patents directly without making the product or service the list are IP Brokers. The broker process is utilized by large companies wishing to expand into foreign countries through licensing arrangements, or by patent trolls who directly sell patents (sometimes through the use of a lawsuit).
Moving from the business models associated with intellectual property, it is important as well to define what we mean by the term intellectual property. The “Summary of IP Elements” figure is a good summary of where information is gathered, organized and what type of intellectual property protects that information. Since we are focused on innovation management the focus of this chapter on intellectual property strategy will primarily dwell on patents, software copyrights and trade secrets. We do this because patents and other legal protections are the dominant means by which in inventors employ and capture returns. While there are industries in which patents do play a major role, and scattered examples of important patents in any industry, the general effectiveness of patents varies substantially across industries. It should be noted that all of the elements listed in the “Summary of IP Elements” figure are typically proprietary or confidential to the company and deserving of some level of corporate due diligence to protect leakage to the public.