IP & Business: Intellectual Property, Innovation and New Product Development

Technological innovation is one of the principal determinants of business success. Enterprises stand to reap greater benefits from innovation if they consider the full range of intellectual property (IP) issues in new product development. Effective use of the tools of the IP system reduces risk and facilitates the process of taking innovative technology to the market place, while at the same time enhancing the competitiveness of technology-based enterprises.

In order to explain the role of the tools of the IP system, this article explores technological innovation as an interactive process made up of a number of distinct stages, beginning with the formulation of a novel idea/concept, followed by research and development (R&D), ending in the launch of a new or improved product in the marketplace. It will highlight the practical IP issues relevant to each stage.

Invention or innovation?

Innovation concerns the commercialization of new ideas, while invention is not necessarily directly associated with commercialization.¹ Invention is the generation of a new idea aimed at solving a specific technical problem. Innovation can be seen as a process of interaction and feedback during the various stages of product development. Not all inventions are commercialized, so it is clear that not all inventions result in innovation. Many new ideas are born but "most die a lonely death, never seeing the light of commercial success."²

As is the case with inventions, so trade secrets, utility models/petty patents and patents are relevant for protecting, managing, exploiting and leveraging innovations. Economic studies have revealed that patents are the preferred IP right sought for the protection of technological innovations. This seems to reflect the use of the terms ‘innovation’ and ‘invention’ as synonyms. For example, the number of patents owned by an enterprise is often used as one of the main indicators for determining its innovation intensity, and patents are used as a measure of output of innovation. While such an approach is useful, it does not look at the role of the IP system as a whole in facilitating the successful introduction of innovative products in the marketplace.

The idea stage

From the moment an enterprise has a potentially innovative idea, it is imperative that the idea or concept be treated as a secret. That is to say that the information surrounding the creation of the idea must be protected carefully as a trade secret. Not all commercially viable ideas can or will be patented, hence the importance of treating ideas as trade secrets, particularly at the inception stage.

For an idea that may result in a patentable invention, the final choice between either the trade secret route or the patent route for protection should be seen as a strategic business decision to be taken at a later stage of development when all the requirements of patentability are met. The choice depends on the nature of the invention, its business potential, the competition, how easy it is to reproduce and the ability of competitors to reverse engineer it from the final product. Whatever the ultimate decision, the idea must initially be protected as a trade secret in order to preserve the option of patenting at a later stage. Even after patenting, a part of the idea may remain an associated trade secret.

Technical drawings, which are often made in the idea stage, should also be treated as trade secrets. They may in addition be protected by copyright. It is important for the drawings to...