Editor’s Note: This article is part two of a series entitled “Building an IP Aligned Enterprise: A Guide for Corporate and Technology Leaders” in which we will examine the three essential components of IP alignment and how they interconnect within a technology enterprise.

Exploring the 3 Essential Components of IP Alignment in Technology Enterprises

Technology enterprise leaders intuitively understand that innovation is essential to their growth, and that intellectual property strategy and protection is core to that innovation.

However, creating and protecting individual innovations is only one step on the larger journey to IP alignment. 

As we discussed in the last article (What is IP Alignment and Why Does It Matter to Your Technology Enterprise), the strategic value of IP alignment lies in its ability to bring together typically disparate functions such as executive leadership, product management, research & development and legal around a unified model for pursuing, protecting and leveraging intellectual property as a core element in the business strategy. 

With that distinction clear, let’s examine the three essential components of IP alignment and how they interconnect within a technology enterprise: IP awareness, IP protection, and IP counseling.

 

IP Awareness

In order to build an IP-aligned technology enterprise, we must first create a culture of IP awareness. In the early days of many startups, this appears to be straightforward as the backgrounds and experiences of early innovators would often lend themselves naturally to an interest in and understanding of IP.

And yet, it is also true that without making IP awareness a conscious and planned element in our IP alignment strategy, chances are that awareness will become inconsistent and unreliable as the enterprise grows. Two reasons for this tendency are (a) the distinct professional roles involved in IP alignment, and (b) the time gaps between stages in the IP process. 

The challenge of distinct roles becomes more acute as the company grows. Whereas the founding team members of a startup might consist of an engineer with experience in the patenting process and a CFO who has previously managed an IP portfolio, the makeup of the team will undoubtedly change dramatically over time.

At the same time, maintaining IP awareness requires not only knowledge but time spent on IP activities. For example, a researcher may spend 90% or more of her or his time on bench work. As a result, R&D professionals typically experience large time gaps between IP activities, and these intervals of IP focus are not frequent enough or embedded enough into each participant’s professional routine to make them reliable pathways to IP alignment.

First and foremost, IP awareness must be made a focus of any technology enterprise.  Continuing education on identifying, capturing, and protecting the organization’s intellectual property assets, as well as regular reinforcement of the company’s innovation and commercialization goals, is critical for all stakeholders in the innovation process – corporate leadership, R&D teams, legal, and marketing and product development managers.

Establishing clear processes, protocols, and incentives as part of an overall inventorship program can also be helpful in establishing IP awareness among your enterprise’s R&D and product development teams. Providing inventors with a clear framework as to when and how to submit inventions for patenting as well as both rewarding and recognizing those contributions, will have a net positive impact on ensuring the protection of commercially viable research findings and strengthening the company’s overall IP position in the market. All of this should be the purview of a standing innovation committee, comprised of representatives and decision-makers from various innovation-related function that not only serves to support and encourage IP awareness across the team, but whose primary purpose is to work continuously toward the goal of IP alignment throughout the enterprise and both develop and execute on the company’s overall innovation strategy.

Finally, we must keep in mind that IP awareness sets the foundation for future strategies and planning processes to incorporate and integrate IP alignment. For example, a new product development process needs to have specific, defined IP milestones as well as IP responsibilities for each of the key stakeholders in IP alignment: executive leadership, research & development, product management and in-house counsel.

 

IP Protection

Protecting your intellectual property is a comprehensive process that includes both legal and non-legal components. When we think of IP protection, we typically consider patents, trademarks, trade secrets, copyrights, and even design rights. And yes, these are all core elements in IP protection. However, the key is in how we look at and integrate them.

Take Apple for example. When Apple identifies an area of innovation it seeks to pursue, the company develops and executes an integrated strategy for IP protection to not only patent the technical advances involved, but also protect the product designs, the brands, and even the language and creative elements that go into product marketing and packaging (https://www.ktmine.com/exploring-intellectual-property-at-apple-a-study-of-strategy-and-patterns/).

Since Apple leadership views these holistically, they are planned and executed in an integrated, aligned manner. As a result, competitors are hard-pressed to find opportunities to take market share from Apple without running afoul of the company’s well-established IP protections. 

While many companies may also seek IP protection across a product’s technical, design, and brand elements, Apple’s approach is holistic, integrated, and aligned, supported not only by the company’s business strategy, but also by the very structure of its organizational chart (https://hbr.org/2020/11/how-apple-is-organized-for-innovation). As a result, competitors are hard-pressed to find opportunities to take market share from Apple without running afoul of the company’s well-quartered IP protection strategy.

In addition to patents, trademarks and copyrights, IP protection also encompasses trade secrets. Whereas the other components noted here are publicly declared in order for protection to be legally afforded, trade secrets are IP rights held on confidential information which may be owned, licensed, or sold. 

IP alignment plays an incredibly valuable role here because it provides a framework for understanding and deciding which IP elements to protect via public declarations and filings, vs. which to protect via trade secret declaration and internal policing. This also demonstrates why IP alignment goes beyond the legal function in the enterprise.

Yes, trade secret protection includes the drafting, use, and management of legal agreements (nondisclosures, noncompetes, etc.) but it also encompasses information technology, human resource management, product strategy, physical plant considerations, and marketing planning.

 

IP Counseling

Following on our review and exploration of IP awareness and protection and their role in our vision and strategy for IP alignment, we can now examine the elements under IP counseling. IP counseling is our framework for addressing each of the analysis and advisory aspects of IP strategy, so that we can organize and assimilate them into our innovation framework and processes. These include:

Strategic Planning – Ensuring that core business strategy development processes (including annual planning, quarterly business reviews, new product development, and more) incorporate and specifically discuss IP goals, objectives, and targets from a holistic perspective in each area of the enterprise.

Ownership Rights – The process of establishing, defining, and managing ownership rights involves multiple disciplines. Depending upon an employee’s or contractor’s working relationship with the company, current or prior employment contracts, licensing arrangements, and use or reliance on other licensed innovations, ownership rights can be complex to determine and challenging to properly protect. 

The process of doing so must involve all parties at the IP alignment table including executive management, legal, product management, R&D, and more. As noted in our previous discussion about trade secrets, the strategy for ownership rights is likely to also involve HR and IT leadership.

Contract Management – One of the key items that establishes ownership rights is the existing web of contracts currently in place between the enterprise and its related parties. This includes contracts involving owners, employees, consultants, and contractors but also those with channel partners, technology partners, licensing partners, and even customers. 

One highly regarded technology firm in the mortgage servicing sector discovered far too late that its innovations were not entirely its own. In preparing one of its home-grown software solutions to be directly marketed, the company discovered that key IP elements were not owned by the firm, but were rather sliced up between some components the company did own and other essential components that fell under work-for-hire provisions on specific contracts or otherwise were the property of other parties. As a result, the company was never able to leverage its innovation to market gain, nor was the innovation ever scaled by anyone else since it was buried in a web of overlapping and competing interests, with weak contract management at the center.

Landscaping, Competitive Analysis, and IP Opinions – IP landscaping is a perfect example of a resource that is best utilized at many different stages of the IP alignment process. Innovative technology companies often use IP landscaping to achieve a broad, strategic view of the patents, state of the art, and competitive activity in a particular technical arena or market segment. Two key landscaping opportunities arise — one in in early-stage development with a focus on research and development and risk identification; and the other for strategic evaluation of your firm’s competitive position and attendant legal risks associated with that position. Analysis of the competitive landscape can help to refine both your innovation and patent strategy allowing your enterprise to both stay ahead of and defend against your competitors’ innovations.

Valuation & Monetization – In order to maximize the impact of IP alignment, our strategy must include a process for identifying and assessing the value of IP assets. One of the challenges with IP valuation is that the potential value of an intangible IP asset often varies significantly depending upon its intended or potential applications. Whereas a tangible asset’s value is typically determined on the basis of comparison with other similar assets, the valuation of IP can be determined or revisited based upon a much wider range of factors. Understanding these factors is also what enables us to identify the appropriate opportunities to monetize an IP asset.

For example, when JetBlue Airways invested in the development of the airline industry’s first satellite-based real-time television-to-the-seat service through an R&D joint venture that could have led to billions in licensing opportunities, JetBlue instead elected to keep it as a wholly-owned and brand-exclusive differentiator for its airline for many years before ultimately licensing the technology to other carriers. This demonstrates how the application of an IP asset can have a radical impact upon its value and role in monetization, since JetBlue clearly felt that the cash value of licensing was still worth sacrificing in order to have a multi-year captive competitive advantage for its airline operations.

As we can see, achieving IP alignment is indeed a journey, and understanding the three essential components in IP alignment will provide you with a powerful framework from which to prepare and execute your IP alignment program. The result will be sharper business strategies; better competitive models; stronger IP opportunities; and more powerful pathways to new revenue and growth.

The next article in this series will explore the seven signs that your technology enterprise lacks an IP aligned strategy and what you can do to develop one. Further articles in the series will discuss key steps you can take to implement an IP aligned strategy as well as monitor, analyze and enhance it for competitive advantage over time.

Thomas DeFelice

Image credits: Photo by Mindandi on Freepik.

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.