Again, excerpting from KPMG “The Value Of Ideas, A Business Process Considerations Guidebook”, the benefit of an intellectual property plan is that it allows a company to plan its intellectual property management activities, establish goals for the performance of those activities, and evaluate how well those goals are being met by the intellectual property management system. Successful accomplishment of these management goals will ensure that a maximum value is being derived from a company’s intellectual property portfolio.
Additional benefits of an intellectual property strategy are excerpted from the Delphion Industry Insight Series: Greater Value Through Intellectual Asset Management. In this white paper the authors focused on the benefits of licensing out unused corporate patents. They also mentioned lost opportunities by way of blocked business operations, infringement damages, forfeited rights, uncollected fees from royalties, and legal liability of corporate officers that may fail to responsibly manage patents is a valuable property of the business.
From a timing standpoint, they also looked at the benefits that were Immediate, Medium-Term, and Long-Term. Starting with Immediate Savings, simply identifying patents of little or no business value and abandoning them saves their maintenance costs.
Medium-Term benefits of a good intellectual property strategy include addressing the issues of licensing to everybody, including competitors, to maximize value. This strategy was masterfully executed by IBM. Licensing to a competitor results in a cost structure saving, since a competitor will be paying the license fee on every product sold. The authors also believe that tying a competitor to the firm’s technology reduces the competitor’s incentive to work around the technology, and the possibility of even superseding it with an innovation of its own. Licensing within one’s industry may enable a firm to establish its own technology as a standard, a potentially advantageous situation. Finally, medium-term use of patents includes structuring joint ventures and alliances. Companies contributing patents in exchange for a valuable interest in a venture has high leverage.
The Longer-Term benefits of an intellectual property strategy come from the creation of better and stronger patents. Managers who know how a product will be used in practice can help draft patents that are more readily enforceable. Business managers who have a stake in maximizing the value of their operations will be motivated to work with the firm’s attorneys to make patents strong. To be fully exploited patents should be utilized from the moment they are granted and planning to do so should start well before they are granted. This will be highlighted in the Strategic Patenting section below. Planning should include not only searches for uses inside the company’s own industry, but also outside it in completely different applications. In the 1990’s virtually all of Texas instruments $550 million annual royalty income came from patented technology not use in their own business. The strategic IP plan also improves competitive intelligence and strategic business vision by allowing senior management to create a business strategy playing on the strengths and weaknesses of competitors, taking into account new directions they may be investing in.