In the first article of this series we talked about the value that intangible assets represent to a business. On average, over 80% of a company’s value can be attributed to these assets which include formal intellectual property (IP) rights such as patents and trade marks as well as things like brand, reputation, processes, confidential information, customer relationships and know-how.
A business’ intellectual property is regarded as a primary source of fuel for generating long-term value. Too often, however, the development of IP strategy is treated as an afterthought. This can lead to costly mistakes.
The reason for this is that a business’ intellectual assets often represent the primary source of fuel for generating long-term value. It follows therefore, that there are considerable benefits to understanding what role intellectual property plays in your business strategy and how you can leverage it to achieve your objectives and desired outcomes. In simple terms, this calls for the development of an IP strategy (a topic we deal with in more detail in this article).
Too often however, IP strategy is treated as an afterthought - as something that is managed separately or is created in response to an external threat from third party IP or a lost opportunity. This heightens the risk of making costly mistakes that could have a material impact on your ability to commercialise your IP, or to compete effectively in future.
To avoid falling into this trap here are our top tips for how to get your IP strategy right from the outset.
An integrated approach is best
Firstly, integrate and embed intellectual property thinking into your overarching business strategy from the start. The more tightly aligned, the better.
Early identification is essential
Secondly, identify as early as possible what intellectual property is owned or generated in your organisation and where and how it fits with your ability to sustain or grow your business. You will most likely discover it’s a range of things.
You can avoid costly mistakes by getting a few things right from the start:
- Embed IP thinking into your overarching strategy
- Identify as early as possible, what IP you own or generate, and record it
- Recognise that different IP rights can play different roles in your business
- Appreciate that IP is an asset and needs to be managed as such
Maybe it’s know-how in a manufacturing process or a piece of technology that addresses a customer pain point you’ve identified. Perhaps it’s the shape of a product or its packaging that helps it stand apart in the market – Hershey’s kisses, Kit Kat chocolate and Pringles are all good examples. It could be a unique formulation, for example a pharmaceutical or nutraceutical, or a recipe that few others can reproduce, as is the case with Coca-Cola. Maybe it’s a method or way of doing something that transforms how your customers transact with you, such as Amazon’s ‘one-click’ shopping cart.
Whatever it is, the key is to identify and capture your intellectual property in a timely and systematic way. Identify and record who in your business created something and when they did so; retain drawings, plans and prototypes; obtain assignments from staff if necessary, but you’ll need to be able to prove ownership.
Don’t wait until you get to market to think about securing formal intellectual property rights for a new technology, for example - it will be too late. When it comes to certain types of IP rights such as patents, issues of timing, disclosure and confidentiality can mean the difference between securing those rights or not.
Different IP rights, different uses
Thirdly, recognise that intellectual property rights come in many forms, each of which can provide a different competitive advantage or commercialisation opportunity. Rarely does a successful business rely upon just one form of IP protection. It’s typically a combination of rights that create the value. What that configuration looks like and when and how to implement it is determined by having a great IP strategy in place.
View and manage your IP as an asset
Lastly, treat your intellectual property as what it is – an asset. By definition, assets have the capacity to accrue financial or other benefits in future, and yet many businesses regard things like brand outlay or R&D as expenses rather than an investment in assets that have the potential to provide a return.
Shifting to an asset mentality will help shape and align key strategic decisions around the activities that are vital sources of value creation in your business. Managed well, your intellectual property can then become a powerful tool for attracting more customers, improving margins, increasing productivity or competing more effectively in the market.
Be aware however that having an IP strategy and executing it well is not a sure-fire path to success. The most successful businesses integrate an effective IP strategy alongside a validated value proposition, excellent operations, customer service and marketing.
Ceri Wells is a founding partner of national intellectual property law experts James & Wells. He has been involved in patent drafting, litigation, trade mark ownership, unfair competition and copyright matters for around 30 years and specialises in working with start-up companies, venture capitalists and seed-funding organisations to encourage and commercialise NZ innovation. For more info visit www.jaws.co.nz or email Ceri at email@example.com
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