IP and Business: Managing IP as a Set of Business Assets

• Author: Patrick Sullivan/Suzanne Harrison

It is now generally accepted in the business community that intellectual property (IP) is a set of business assets as well as legal ones. As business assets, however, they have no significant value by themselves. This is a fundamental property of intangibles, such as IP. They become valuable only in the context of the business. That is to say, when their roles in supporting the corporate business strategy are made explicit, and/or when they are processed through the organization's other business assets (such as manufacturing or distribution) to produce a protected product or service that is attractive to customers. In order to be able to manage IP effectively as business assets, it is necessary to understand what a patent, or trademark, or registered design, actually does for the business.

Consider, for example, the case of one large US company which in the early 1990's was basing the promotions of its R&D staff, in part, on the number of patents each person was awarded. This not uncommon practice came to a halt when the company looked at how many of those patents had subsequently been commercialized. They were surprised to find that the number was very small. The company rapidly changed its criteria for investing in a patent to include a description of the value that the prospective patented innovation would provide for the business. Now some fifteen years later, the company can identify for each patent in its portfolio the value that it provides, and to which business unit(s).

So how does a company set about focusing the business dimension of its IP management? Although a full answer to this question requires some complex analysis, a good starting point is to think in terms of this simple three-step process:

1. Define what your company expects to gain from the management of its IP;

2. Determine the specific roles IP can play in support of your company's business;

3. Select and pursue a basic IP strategy to meet these objectives.

Let us look in more detail at these three steps.

What does your company expect from its IP management?

In their book, Edison in the Boardroom: How Leading Companies Realize Value from Their Intellectual Assets, Julie Davis and Suzanne Harrison identify five levels of sophistication in the way that companies approach the management of their IP. This hierarchy, shown...