Companies typically have a system in place for new ideas. These include systems for identification, evaluation, and handling new products and service opportunities. They also typically have a somewhat aligned their R&D and IP portfolio integration with business strategy. And finally they often have a core business that has evolved its business strategy over time but those strategy changes have not been reflected in the R&D and IP portfolio’s selection. As a result, what is created is a broad array of patents and proprietary information, as well as numerous patents that are not well matched to the company’s business needs and direction.
As an example, creating IP was historically an important business process for Procter & Gamble. However, by the early 2000’s P&G held over 27,000 patents but only was using approximately 10% in their own projects, products and services. Because at that time there were rapidly increasing international patent maintenance costs, there was increased pressure to improve decision-making on which intellectual property to maintain. The answer was to make the process simple and sustainable by using “value” maps, “use” maps and three Sigma analysis. These tools solved the problem of poor organizational memory and provided context for decision-making. Another need P&G had the time, because of pressure to improve earnings from all assets, was a way to focus on extracting value from intellectual property that included licensing, donation and other avenues beyond internal commercialization. The solution to this need was to educate all levels of the organization on the lognormal distribution value of intellectual property, and its implications, and then to deploy P&G resources accordingly. Previously P&G had been behaving as if the value of its intellectual property was uniformly and normally distributed. Finally for the 10% of the art that P&G was using, there was a need to improve filing of reissue, continuing patent applications, and continuation in part applications. To do so required upgrading of the intellectual property review process during the R&D stage and gate reviews, and including business input and participation at intellectual property gate reviews.
What is needed to improve a Corporation’s productivity and integration of intellectual property management with business management are processes that: (1) ultimately dispose of intellectual property, (2) utilize business processes which will permit extraction maximizing the value from intellectual property as well as (3) permitting the R&D function to operate as a center of excellence within the corporate structure. Business model options are several. First is dividing up the employees and intellectual capital assets of the corporation among the business units of the company, second, create a profit / loss unit within the company, or third create a stand-alone business wholly or partially owned by the parent company.
To make the best choice, some basic concepts need to be well understood by the business, R&D, and intellectual property teams. These include the IP management hierarchy, how patents are organized from the “use” perspective, and how patents are viewed from the “value” they create. The patent portfolio must also be viewed vis-a-vis those held by the business competition in three main areas. These include the patent portfolio health, the patent portfolio velocity direction, and the technology or innovation organization as a center of excellence.