- An Effective Intellectual Property Strategy is Vital to Companies Large and Small
- March 24, 2006 | Author: John V. Harmeyer
- Law Firm: Dinsmore & Shohl LLP - Cincinnati Office
Virtually every company, regardless of size, can benefit from developing a comprehensive, proactive strategy for protecting their intellectual property assets. Too often, such protection becomes an afterthought, and when protection is sought, it can be too little too late.
Trademark protection of the names, slogans, and other symbols used by the company will typically be the cornerstone of an intellectual property strategy. The Coca Cola trademark alone, for example, has been said to be worth over $50 billion. Use of a particular name in commerce can give rise to some common law trademark protection in region of use. However, it is best to engage a trademark attorney to assist in choosing the most protectable trademarks, and then to register the mark federally, to provide nationwide rights to the mark on the type of goods or services at issue. Protection of corporate identity and goodwill are especially important if the products or services of the business are not readily subject to patent protection, or if the company is engaged in areas where barriers to entry into the market are low.
In addition, proper copyright protection of literary works, documentation, software, and the other works of authorship should be a component of the IP strategy. Although copyrights protect the expression of such works, copyrights cannot protect ideas generally. However, copyrights still provide some protection against outright copying.
In addition, the company should implement a security program to protect from misappropriation of the company's processes, data, customer lists, business plans, and other confidential information. Such information that is not protected by proper steps to maintain its confidentiality (or that is not possible to keep confidential) will not be entitled to trade secret status and can then generally be used by competitors at will.
For companies that create unique products or services, a patent program is a major component of an IP protection strategy. For many companies, the primary patent objective is protecting the differentiating features of the company's core products or methods from encroachment by others and erosion of market share. Patents may have significant value regardless of whether the company desires to spend the time and money required in enforcing them. In particular, due to the patents, competitors often will refrain from copying certain features of the patent holder's product, and some would-be competitors may decide to avoid entering the market due to the patents. These intangible benefits of the patent portfolio are invaluable, yet difficult for the company to quantify, or even know about. In determining whether it is worth the time and cost in pursuing a patent to obtain this objective, the company should consider the following factors: a) whether the invention will be commercialized by the company, and how long in the future that commercialization will take place; b) the useful commercial life of the invention (it often takes 2-3 years to obtain a patent); c) whether the invention is in an area strategic to the company's revenue and growth; d) whether keeping competitors from using the new feature will make their product inferior or keep them out of that market entirely; e) whether significant time and cost have been invested to develop the product; f) the difficulty others would have in designing a noninfringing alternative and whether the invention and its advantages will eventually be essential; and g) whether the invention can be kept as a trade secret. While the company may not know at the outset if the product will be successful, waiting to find out before filing a patent application can be fatal, as there are strict requirements on when a patent application must be filed if protection is to be pursued. Moreover, it should be noted that without some patent protection, or some ability to keep features secret, competitors may copy the product or process at will.
A company may also include other patent objectives in its strategy. The company may use these in combination with the above objective, and these additional objectives may warrant filing for a patent on an invention that does not necessarily meet the above criteria. For some companies, one of these additional objectives is to pursue patents on inventions that will have great interest to the industry and can be used as a stream of licensing revenue. IBM, for example, regularly obtains over $1Billion in patent licensing revenue annually. Factors to consider in deciding which inventions to protect in pursuing this objective can include: h) the size of the market to which the invention relates; i) how much interest other companies would have in the invention and obtaining its advantages; j) whether the invention relates to a consumable item or high profit product; k) the difficulty in detecting if someone is infringing; l) the probable scope of patent protection based what has been known before; and m) the predicted significance of the advantages of practicing invention (e.g., saves money, time, material, provides convenience, increases usefulness). It should be noted that it is not necessary to actually be utilizing a particular inventive feature to obtain a patent; it is only necessary that the invention can be described in enough detail to allow someone skilled in the art to make and use the invention. Accordingly, in pursuing this objective, as well as with the objectives below, the patents pursued may be outside of the actual product line of the company.
A defensive patent strategy is also often of interest to many companies, particularly large companies or those with litigious competitors. The objective here is to build an extensive patent portfolio for defensive reasons in the event others try to assert their patents against the company. With a strong patent portfolio acting as a shield, others are less likely to argue the company infringes their IP for fear that the company may retaliate with one of their own patents. The value of these patents are difficult to quantify, as the company will likely never know when it was not sued due to its portfolio. In determining whether to include a defensive strategy, the company should consider whether competitors are filing for patents frequently in technical areas relating to the company's product lines and whether the company is frequently a target of patent infringement allegations. The types of inventions and ideas that are the focus of attention under a defensive strategy are those that would be of interest to competitors and companies that are most aggressive in wielding their patents. Factors h-m listed above would be applicable here as well in making decisions on what to patent.
Both large and small companies may have an additional patent objective of gaining recognition through patents. This recognition can make the company more attractive to prospective partners, investors, customers, and employees, and provide evidence to these parties that the company is serious about protecting its investments in its products and R&D. The ability to advertise a product as patented or patent pending can also sometimes provide a marketing advantage (as well as provide a deterrent to copying). For small startup companies, a base IP portfolio can be important to raising capital, and attracting potential investors and purchasers. Even if the invention will not be commercialized by the company or may not have the highest predicted market value, the company may still want to pursue a patent to pursue this objective, as the goal here is to obtain recognition and a patent presence.
One further objective for obtaining patents is to permit faster and easier expansion into new markets. Patenting the inventions arising from a company's initial R&D efforts in new technical areas not only protects those efforts, but also likely means that the current players in the market will be less aggressive if the company does eventually enter that market. Patents obtained in these new areas can also be very useful in building strategic partnerships, and reducing development costs and time to market via cross licensing, technology sharing, and joint developments. The types of patents pursued to obtain this objective are those that cover inventions originating from the company's R&D in potential new product lines.
A comprehensive IP program should therefore include protection of trademarks, trade secrets, and copyrights. For many companies the program will also include filing patent applications in order to pursue one or more of the objectives discussed above.