IP Strategy (Post 1-What Exactly is IP?)

by Andrew Watson on 15 August 2011

What is an IP Strategy?

In this series of posts we wanted to give the ipVA perspective of what is an effective IP strategy?

To back up these posts we are going to post a white paper on the ipVA main site at the end of the series. This explains in fuller terms the ipVA viewpoint of key questions in this area, including one fundamental that we really should begin with—what exactly or even roughly is IP?

A community apart

In and of itself the IP community cannot seem to agree on this quite simple question. Some call IP terms that seem sensible when understood but by being proprietary, lack universal appeal and therefore adoption. Suffice to say, Intellectual Assets (IA), IP assets, intellectual capital (IC) and other such terms are designed to mean some or a part of the mix. But this small community does itself a disservice by failing to adopt a common definition.  

The compelling Craig Opperman (yes he does look like my older brother) has, to my mind, given the best explanation of why this is the case in one of my favourite expressions. I’m not sure whether this emanates from Craig’s native South Africa but this does seem to fit:

“If all you have is a hammer, all your problems look like nails”.  

So when your patent attorney says he is an IP strategist, he probably isn’t. He may be a very good patent attorney, maybe even a patent strategist if you’re really lucky, but that doesn’t mean he is an IP strategist. Surely that’s obvious isn’t it? Equally your IP lawyer (sorry USA, in Europe we have split professions between patent attorneys and commercial lawyers) are likely to be very good, if not excellent, at contractual IP law but won’t cover patents, at least not in Europe. Do I need to go on—trade mark attorneys cover trade mark filings and maybe trade mark strategy (but not somewhat confusingly brand strategy, though brand strategists will pretend to be able to manage trade mark strategies), knowledge management experts cover…I’ll stop should I? You get the general idea.

The true definition-in our bold but humble view

In ipVA we have gone as wide as we dared in defining IP. To us, IP is a colloquial term that means all of the business assets that are not tangible. Below I’ll explain why without I hope giving away too much of our own IP in the process. Why we adopted this came from looking at over 200 companies from our project experience. We came to realise that without the widest perspective, very important bits were missed out of the equation and from the responsibilities of what needs to be managed by a smartly managed IP company with a Chief IP Officer or Head of IP. At least if we pitch into a company on a project to build an IP strategy, the average CEO or fund client will put us into a box believing that we want to manage one of three things, Intellectual Property, Insolvency Practitioners or Internet Protocol. Ask for a meeting to help him/her to manage the business Intangible Assets or IC and I’ll guarantee from experience that the meeting, if obtained, will be very short.

In our perspective therefore IP means all of a business’ intangibles. To repeat it means all of a business’ intangibles.

I can’t remember where I was when I heard Jon Dudas, at that time Under Secretary of Commerce for IP and Director of the USPTO (and somewhat similar in looks to a pre body building Arnie) come out with this belter:

“IP represents 75% of the value of the S&P500”.

At the time having heard Ocean Tomo spin that self-serving line for a couple of years I thought to myself, that can’t be right can it? And after reflection I thought it might be better expressed so:

“Of the total value of the S&P 500, and indeed of any company or index nowadays, most of the value is represented by assets which are not tangible”.

A bit less sexy and reduced marketing spin (well this was I’m sure an Ocean Tomo event and those boys knew how to serve up very good champagne) but more accurate I’m sure.

The wider definition of IP

585 words into this post I hope that you’re still with me. All of the above is meant to explain that IP really means all of a business intangibles.

Which then begs the question of what are intangibles.  Now that is a good question. In our view, there are three parts to intangibles:

  • Humans—individually and collectively. These things are the creative spirit in a company.
  • Intellectual assets—the five formal IPRs which in and of themselves allow choice as to what to protect and how, formally, sometimes by registration and sometimes only by agreeing with each other not to tell somebody something.
  • Relationships—the external manifestation of intellectual assets, in the form of corporate and consumer relationships both individually and in groups.

You’ll have to wait for the white paper to see the detail. This has taken us several years to perfect so it doesn’t come free of charge.

Why is this important as a distinction, and why you should avoid the hammer-only sellers?

On a strategy assignment in 2010, the head of R&D of a client which has been a major patent filer asked an excellent question, posing this scenario—I quote:

“I’d like to run a scenario where the business has no patents—what difference would it make?”

That question took a good 24 hours to think through. It is a very good question isn’t it? After all, patents done well take an awful lot of management and people time and effort, and no small amount of cost. And, the smartphone and other inter-galactic wars aside, do they really make that much difference?

The answer we came out with was something along these lines:

“ intangibles are a soupy mix of a lot of fuzzy assets*, all of which together make up a measure of competitive advantage or sustainability. At some point in the future someone may be able to formulate the relative value of each category for each company, but for now removing one probably important ingredient has an unknown impact on the overall taste of the soup. Better express it the other way round, if patent processes and patents are perfected, are there ways in which these  can be used to add to competitive advantage?”

*soupy mix and fuzzy assets are words and word combinations all of my own, I did sense Rob squirming at the hearing of them but, language difference aside, I think they convey the right message.

So beware your average hammer seller. He may well only have one tool whereas your machine may need someone with many more tools to build you a perfect IP machine. Somewhat cynically, watch in particular for the patent hammer seller—this is a very honourable profession but by definition the patent hammer seller only makes money if you file patents, and then take those patents to remote geographies. You may need one of these, and very good ones are hard to come by, but our advice is to be well informed yourself. Know what you want and what you need, as with all professional advisers, including IP strategists like us.

But I digress. Can’t help myself. I could and do regularly bore poor housewives at dinner parties about this.

To finish therefore on question 1, let’s summarise:

  • IP is best treated as a colloquial term,
  • In its true definition, it should be viewed as meaning all of a business’ intangible assets,
  • All of these assets can be managed, and should be managed, indeed they are secretly managed by all of the best companies,
  • If managed for competitive advantage, that is heading towards the direction of strategy.
  • For which you will need an advanced hammer supplier, preferably with a multi-tooled toolbox.
  • And these I’ll assure you are in very short supply worldwide.

And the quicker the business world moves to understanding this, the better for all of us.

In part 2 we will move on to defining the second question—what is strategy and what are the components of IP strategy and tactics that should be considered in your strategy discussion.



{ 1 comment… read it below or add one }

David Lee 05.30.12 at 10:21 pm

The origin of the hammer/nail quoate appears to be Maslow, popularly phrased as “if all you have is a hammer, everything looks like a nail” from Abraham Maslow’s The Psychology of Science, 1966.

Leave a Comment

You can use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>