Strategic Use of IP for Business in Knowledge-driven Economy Dr. Guriqbal Singh Jaiya Director Small and Medium-Sized Enterprises Division World Intellectual Property Organization May 2009, Seoul

Spotlight is on knowledge in todays economy Knowledge, Weightless, Information, Digital or Service Economy Factors of production: Land, Labor, Capital, Intangibles (Knowledge) Knowledge as useful Information (or Service) Information as a Public Good Information as Property

Market-oriented Economy Playing Field: Unfair competition; free riding National Legal Systems: Diversity (bilateral/regional/ international treaties or agreements) Adding Value : Meeting or exceeding market needs or expectations Market research: Consumers needs, competing products or substitutes, gaps Technological innovation as an element of marketing

C ustomer E xpectation D ilemma Time Performance Expectations Continuous Improvement Performance Gap

Tangible and Intangible Assets Intangibles differ from tangibles in two ways that change the rules of the game, (if not the game itself): –Value in context –Multiple simultaneous value streams

Tangibility Spectrum Tangible Dominant Intangible Dominant Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines Investment Management Consulting Teaching Fast-food Outlets Fast-food Outlets

The challenge Performance Time Selling products Selling (parts of) interconnected systems

Strategic Entrepreneurship and Innovation Entrepreneurship is concerned with: –The discovery of profitable opportunities –The exploitation of profitable opportunities Firms that encourage entrepreneurship are: –Risk takers –Committed to innovation –Proactive in creating opportunities rather than waiting to respond to opportunities created by others

Pre-IPO Expansion Start-Up Seed Idea / Concept Time $ Bright Idea Experimental Research Business Plan Proof of Concept Legal Entity Founders = Mgt Team Minimal Revenue Slow Growth Support Functions Administration Marketing Revenue Growth High Growth Head Count Multiple Cycles Viable Market acceptance Heading to IPO or M&A The Process/Steps of Innovation Understanding the Process of Innovation

Expansion Start-Up Seed Idea / Concept Time $ Business Plan Prototype/ POC Project Management Business Premises Project Management Management Training Corporate and Secretarial Financial Training PR and Marketing Networking Business Development Recruitment Business Development A & P Market Access International support and Mkt. Access Diversification strategies and support Recruitment Training and Incentives The Needs of Each Stage IP Management Needed in all stages

Understanding the business/role of IP Manufacturing Patent Distribution SalesBrand Understand the value chain of the business and industry Understand how profits are generated –primary product –spare parts and related products –service and maintenance What are the important features of the IP? How does it add value to the business? What are the important features of the industry other than IP? –other important intangible and tangible assets in the value chain –competitive structure of the industry –customer characteristics and purchasing criteria –substitute products or services

Suppliers Established Leader Complimentors Customers Other Competitors Disruptive Technologies Converging Technologies You IP Environment

IP Deployment Continuum IP risk balance favors target Goal: Design Freedom ConcernsOpportunityMAD Balanced IP risk Goal: Confirm MAD IP risk balance favors You Goal: Identify value generation opportunities | | | | | | | | | | |

Aligning Capabilities Vision Vision Strategies Strategies InnovationStrategiesInnovationStrategies Value Creation Value Creation Value Extraction IP Objectives/Roles: Strategic Framework Cash Value Positioning Value Where does Intellectual Property fit into this?

An Aspect of Good Management People Management – because IP is generated by people and used by people Knowledge Management – because a lot of knowledge is informal and may or may not crystallise as recognisable category of IP IT Strategic Planning – because a lot of IP is IT-related; some of the more complex IP issues arise in IT context Contract Management – because IP is often created (or improved) in context of a contract (eg, supply contract or joint venture relationship) Asset Management – because IP is an asset, albeit intangible; it has a value Risk Management – because there are risks to an organisation flowing from its actions, or failure to act, in relation to IP (including risk of lost opportunity)

Introduction to IP Management 1 Legal Technical Business Export Financial Relationships Accounting Tax Insurance Security Automation Personnel

Introduction to IP Management 2 Trademarks (Brands) Geographical Indications Industrial Designs Patents and Utility Models Copyright and Related Rights Trade Secrets New Varieties of Plants Unfair Competition

Example No. 1 Bringing it All Together Example No. 1 Decades ago, Coca-Cola decided to keep its soft drink formula a secret The formula is only know to a few people within the company Kept in the vault of a bank in Atlanta Those who know the secret formula have signed non-disclosure agreements It is rumored that they are not allowed to travel together If it had patented its formula, the whole world would be making Coca-Cola

Example No. 2 Bringing it All Together Example No. 2 Patent for stud and tube coupling system (the way bricks hold together) But: Today the patents have long expired and the company tries hard to keep out competitors by using designs, trademarks and copyright

Example No. 3 Bringing it All Together Example No. 3 Patent for the fountain pen that could store ink Utility Model for the grip and pipette for injection of ink Industrial Design: smart design with the grip in the shape of an arrow Trademark: provided on the product and the packaging to distinguish it from other pens Source: Japanese Patent Office

® Registered Trade Mark TM Unregistered Registered Design Copyright: Labels & Artwork Patents: Several dozen! Example No. 4 Bringing it All Together Example No. 4

Basic Message 1 IP adds value at every stage of the value chain from creative/innovative idea to putting a new, better, and cheaper, product/service on the market: Literary / artistic creation Invention FinancingProduct Design Commercialization Marketing Licensing Exporting Patents / Utility Models/Trade secrets Copyright/Related Rights Patents / Utility models Industrial Designs/ Trademarks/GIs Trademarks/ GIs Ind. Designs/Patents/Copyright All IP Rights

Basic Message 2 IP Strategy should be an integral part of the overall business strategy of an Enterprise The IP strategy of an Enterprise is influenced by its creative/innovative capacity, financial resources, field of technology, competitive environment, etc. BUT: Ignoring the IP system altogether is in itself an IP strategy, which may eventually prove very costly or even fatal

Website of SMEs division

IP for Business Series Published Making a Mark (Trademarks) Looking Good (Designs) Inventing the Future (Patents) Creative Expression (Copyrights)

Basic ModulesAdvanced Modules 1. Importance of IP for SMEs 2. Trademarks and Industrial Designs 3. Invention and Patent 4. Trade Secrets 5. Copyright and Related Rights 6. Patent Information 7. Technology Licensing in a Strategic Partnership 8. IP in the Digital Economy 9. IP and International Trade 10. IP Audit developed by KIPO, KIPA and WIPO

Guriqbal Singh Jaiya WIPO SMEs Web-Site IP for Business Series in Publications IP Panorama in Multimedia E-NEWSLETTER