A Business Leader’s Guide to IP: Part 5 – Protecting and Growing Your Market Share
Editor’s Note: This article is part five of a seven-part series titled “A Business Leader’s Guide to IP”, in which we will focus on the strategies, opportunities, and impact you can achieve by integrating IP as a core element of your overall business and innovation strategy. As each article is published, we will update links here:
- A Business Leader’s Guide to IP: Part 1 – Understanding Your Potential Risks
- A Business Leader’s Guide to IP: Part 2 – Sound Strategies to Mitigate Your Risks
- A Business Leader’s Guide to IP: Part 3 – Combating Theft of Your IP Assets
- A Business Leader’s Guide to IP: Part 4 – Shore Up Your Market Position
- A Business Leader’s Guide to IP: Part 5 – Protecting and Growing Your Market Share [this article]
A Business Leader’s Guide to IP:
Part 5 – Protecting and Growing Your Market Share
Building, protecting and expanding your company’s market position is a critical cornerstone of enterprise strategy. This may be achieved through any variety of means including organic growth, targeted acquisitions, licensing and more.
At the end of the day, though, the key is to integrate the tools in your strategy toolbox together in order to achieve the strongest possible results over time. Your IP plays a truly central role in identifying the best methods for managing and expanding your market share, and understanding how best to utilize your IP assets strategically is essential.
IP strategy’s purpose and process
The purpose of an effective corporate IP strategy is to achieve three core objectives. They are (a) creating a structured model for how the enterprise will grow, build market share and deter competitive encroachment; (b) identify and categorize enterprise IP assets; and (c) inform strategic decisions at the executive level with information and data that is IP-aligned and informed.
With that in mind, the development process for IP strategy focuses on integrating and road mapping the roles of corporate leadership; product and service architecture; market reach and geography; competitive landscape considerations; licensing and distribution opportunities; and risk assessment (particularly in areas such as encroachment exposure and litigation risk). By integrating these strategic elements, the company is effectively prepared to consider all IP elements associated with its products and services effectively and in alignment with business strategy goals and priorities.
The role of whitespace analysis and competitive intelligence
Whitespace analysis is the disciplined process of examining the patent landscape in a given field to identify what innovations are protected and what gaps exist in the environment due to a lack of patenting activity or the opportunity to develop new innovations in directions not yet explored. It is a process that brings together three disciplines: market research, competitive intelligence and legal expertise.
The key advantage that whitespace analysis brings is its ability to help companies examine one area of the marketplace by using intellectual property information and legal activity as a ‘heat map’ of current innovations and likely developments. In this way, the company performing the whitespace analysis can seek to identify both areas of competitive risk; areas of new opportunity; and areas in which the firm could potentially develop a ‘Blue Ocean’ solution that recombines existing market elements while adding new innovations.
The competitive intelligence aspect of whitespace analysis is a core step in the process. Competitive intelligence, or CI, is gathering information, analyzing it, and most importantly, acting on it to your strategic advantage. It is a decision-support system that can serve to minimize risk or act as an early warning system. Information is gathered from primary and secondary sources and utilizes both people and published information.
Examples of information which may be examined during the competitive intelligence phase include details on a competitor’s branding, positioning, target market focus, messaging, core technologies, recent product launches, pricing models, customer satisfaction and retention considerations, patent and trademark filings, and product/service mix.
Collectively, these points of information — along with the legal and strategic assessments — can provide companies with an evolving portrait of gaps that can be exploited in the marketplace as well as underdeveloped areas of potential innovation to consider.
Identifying and protecting key technologies with patents
Another important factor in protecting and growing market share is taking the critical steps necessary to ensure that the company does not needlessly lose any of the market positions it has worked so hard to gain previously. When considering the role that patents can play in protecting market share, it’s important to understand how different types of patents may be leveraged. The two primary patent types are design patents and utility patents.
A design patent applies to the invention of a unique ornamental design for a product that will be manufactured. An example would be the design patent for a unique design of a piece of computer hardware (for example, the iconic shape of the Apple Mac Pro’s cylindrical case). The design patent applies exclusively to the ornamental design but not to the functional or structural elements or features of the product.
In contrast, a utility patent applies to the discovery, invention or improvement of a machine, a process, a material or a product. Since the patent applies to any of these aspects of ‘utility’, it could be applied to the process by which Apple manufactured the Mac Pro; the nature and functional structure of the Mac Pro itself; and any other unique chemicals or coating processes used to create the device. And as a matter of fact, Apple did actually apply for all of these kinds of patents (design patents as well as utility patents applied to processes, materials, functions and products) to protect its position.
This approach has the added advantage of pursuing protection for multiple layers of utility, further distancing the company from the competitive threats of other firms in its market segment. Multiple layers essentially interlock the innovations in a series of utility patents so that they ‘connect the dots’ and collectively protect all facets of an innovation.
In the Apple example, the finished product itself can’t exist with the unique heat sink that makes its functioning possible. The heat sink, in turn, relies on material science innovations which themselves rely upon a unique manufacturing process. This interlocking model enables the company to maximize the protective value of its patent strategy.
When to consider a freedom-to-operate analysis
The process of planning and launching new products is perhaps the most tangible forward step a company makes as it seeks to expand its market share. That’s why one essential step worth considering is performing a Freedom to Operate (FTO) analysis, also sometimes known as a right to use opinion or a product clearance.
FTO analysis examines the areas in which patents held by other parties may be reasonably considered as potentially infringed by your new product. In this sense, it combines risk assessment and design guidance by enabling the company to shape the development and direction of new products in ways that seek to minimize the risk of future litigation. It also enables a company to identify areas in which licensing may be necessary or even applicable on the path to new product entry.
Forming a solid foreign filing strategy
As you prepare to introduce new products or enter new markets, another key consideration will be the nature of your foreign filing strategy. Intellectual property laws are not identical from country to country, nor are court opinions and precedents. Also, important to examine is the wide variation in costs and timelines that shift from one country to another.
A foreign filing strategy seeks to align three elements. The first element is the company’s actual global market potential and current/future footprint. The second element is the company’s time-to-market considerations and product launch timelines. And the third element is the risk/benefit analysis specific to each nation in which protection is likely to be pursued.
Some factors to consider as these elements are reviewed include the firm’s overall IP strategy; infringement risks and safeguards in each market; budgetary limitations; time pressures; and methods that can be employed to ensure that patent applications are effectively applicable across the range of jurisdictions being considered.
Asserting rights and protecting intellectual property
When all other steps are taken, a company focused on protecting its market share must be prepared to assert its IP rights effectively. Without consistent assertion, competitors may conclude that your IP strategy is less about actual protection than it is about the appearance thereof. To avoid being taken for a mere ‘paper tiger’ in the competitive marketplace, firms must positively assert their patent and trademark rights, especially since in many cases a lack of assertion can ultimately weaken future protections.
In the United States, patents and trademarks are issued by the U.S. Patent & Trademark Office (USPTO) but the responsibility to protect them is legally assigned to the patent or trademark holder. As a result, a patent or trademark must be maintained as a protected asset by the company itself, in areas such as licensing and infringement.
Licensing opportunities provide the owner with an avenue to enable third parties to utilitize the IP asset under certain financial and legal conditions .
Infringement situations arise when the patent or trademark owner believes their IP asset has been infringed by an unauthorized user. In U.S. civil courts, the burden of proof rests with the plaintiff so research, evidence gathering and an effective strategy for demonstrating infringement through expert witnesses and other sources is essential.
Sometimes, these two forms of assertion work in concert. For example, if a company is made aware that it has infringed another’s patent and accepts that finding, the owner of the patent may force the infringer to enter into a patent license agreement. This is referred to as “stick” licensing. By the same token, a strong history of licensing agreements entered into voluntarily can also provide evidence that bolsters one’s case when pursuing civil action against an infringer.
As we can see, a market development strategy involves a full range of considerations for innovation enterprises and is best pursued when IP alignment is a central component in a company’s growth strategy. From market entry to competitive analysis and from product design to foreign expansion, every aspect of corporate growth is impacted by this process. Taking a proactive and comprehensive view of IP as a core component in building market share can position companies to take advantage of the best and most sustainable opportunities available in a rapidly changing marketplace.
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.