KUALA LUMPUR, May 4 — In our previous article, we looked at what it takes to drive the knowledge-driven economy from a helicopter view.  

In today’s article we will be focusing on how businesses can leverage on their intellectual property (IP) in transforming their business model. 

More often than not, businesses spend significant time or money on their creation without thoroughly evaluating it for commercial potential, including considering all of its advantages and disadvantages. 

In order to leverage on your technology, you need to know yourself. When I mention “know yourself”, I am referring to your business model. It is pivotal to have a clear understanding of your business model and identify the strengths and weaknesses of your business concept. 

There are a few key ingredients that businesses need to know when developing a strong business concept and value propositions which will open doors to greater commercial opportunities such as licensing, franchising, alliance and collaborations or even divestments and spin-offs. 

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

  • Define what your company expects to gain from the management of its IP
  • Determine the specific roles IP can play in support of your company’s business
  • Select and pursue a basic IP strategy to meet these objectives

Assembling a team with a good composition of technical, legal, marketing and key management personnel would be a good starting point to develop a well-considered business expansion plan. 

In many organisations, the R&D, strategy, and legal functions are poorly integrated. Consequently, firms miss out on opportunities to create and exploit the value of intellectual property. 

Functional silos are one reason arising from the lack of integration. More importantly, the lack of a common framework and even language that would allow engineers, lawyers, and business executives to manage IP assets better is a common problem. 

At this stage, the team needs to identify their organisation objectives and align it with their intellectual property strategy. Once this has been crafted, the next step is the formation of a good IP strategy. 

The IP strategy will be the crux of the business model that will drive organisation to the desired monetisation avenue. 

The formation of an IP strategy will start off with what is to be protected within the said technology, product or services. It is very important to know your technology/product/services by dissecting the strengths and weaknesses for your creation. 

Once this is identified, you need to identify the countries for your business concept and market information gathering such as market size, market share and market readiness. 

This will help to develop appropriate tactics to penetrate the market. Did you know that a technology or product may consist of more than one type of IP protection? 

A thorough study needs to be made in order to have the best IP protection for your creation as this will be a good strategy when you tackle competition. 

The next element that is very crucial is the cost structure of the technology, product or services and its business legality for the various markets identified. 

This factor is often overlooked due to the lack of market screening and customer acceptance. Price analysis should be conducted to develop a sound cost structure which is feasible to be adopted in various stages of the business cycle. 

Once this has been achieved, businesses should strategise their exploitation models which could comprise one or more of the following models:

  • Outright sale
  • Donation/publication
  • License
  • Joint venture or alliance
  • Reduce competitive threat
  • Incorporation into existing business
  • Create a new business

The common trend that I notice in the Malaysian business landscape is that businesses tend to use their IP for defensive purposes only. 

Their goals are to protect their own innovations, to ensure that they don’t infringe the IP of others, and to obtain more IP. 

The costs in filing fees, enforcement and other legal expenses can be high. Another common approach is cost-control level where companies at this level still have a defensive approach, but now focus on finding ways to obtain protection while simultaneously minimising the costs of creating and maintaining their IP. 

Many innovative companies fall into the integrated or visionary level. At integrated level, the company’s business units have grasped the power of using IP for a range of business roles. 

The IP is used for business and becomes integrated across all of the company’s business activity. An interesting example is the Procter & Gamble Company (P&G) that revolutionised the at-home market when it introduced Crest Whitestrips, offering consumers a cheaper method to whiten their teeth. 

P&G patented the strips, an adhesive material that guaranteed the whitening agent would remain in contact with the teeth for an extended period of time. 

The cleverly designed patenting strategy made it close to impossible to invent around P&G’s product. Because the new product complimented the Crest brand more generally, P&G gained market share broadly across its oral care products. 

At the visionary level of IP management sophistication, companies take a long-term view of the company’s role in business and in its industry. 

They seek to use the company’s IP to create more strategic value. Visionary companies have IP portfolios that cover not only current products, but technologies that anticipate where the market will be in the future. 

As for Google, it has become so huge and powerful where it has changed the paradigm of sharing information. 

Once you have decided on your IP strategy and the ownership, allocate your resources and execute it. There is a life cycle to every intellectual property right and technology. 

The management of IP is all about handling innovation with the procedures and processes that are required to turn that innovation into valuable rights.  

An organisation without a clear IP direction is similar to a blind man without his cane. 

* Biruntha Mooruthi is Vice President and Head of IPR Services of PlaTCOM Ventures Sdn Bhd, the national technology commercialisation platform of Malaysia—a wholly-owned subsidiary company of Agensi Inovasi Malaysia (AIM) formed in collabouration with SME Corp Malaysia.