As any other industry, the Intellectual Property Management (IPM) industry is going through a lifecycle.
Intellectual Property Management
Stage 1 (emergence): IPM is done in-house for large companies or externally (law firms) for smaller ones. IP is often controlled by the legal function as a cost centre. Over time, this industry design prevailed.
Stage 2 (growth): company portfolios have grown since 1960's. WIPO estimates 2.35m patent filings made worldwide in 2012 (+9.2% on 2011, which is the highest rate recorded in 18 years). Companies see IPM as any business process and seek cost efficiency, often with short-term myopia.
The traditional design became insufficient to meet the new demands. Specialist firms have emerged for: providing IPM systems; paying IP renewal fees; streamlining prosecution; and giving in-house IP training. Regarding the latter, companies need in-house IP training to help extract more value from their IP and thereby get higher returns from their investments in R&D and marketing (brands). A 2006 survey among 8,000 patent users proved in-house IP training is one of the key needs for companies to improve IPM (Gasnier 2008).
Stage 3 (new breed of IP service providers): companies now recognize the untapped potential of their IP (up to 80% of the company value among 500 S&P firms); they seek to turn IP into a profit centre. But most of them face the "Patenting Paradox": patenting has steadily increased since 1980's while the ability of companies to create value remains rather limited (Gasnier 2008).
New types of IP firms emerge to fill this gap: the strategic IP consultancy, IP brokers and patent trolls (main activity being acquiring and exploiting IP). This is not simply a competitive play; it is changing the way the IPM industry operates and the way buyers consume IP services in terms of service using innovative tools, in-depth research and advanced simulation techniques. Expectedly, competition will become more intensive since the growth in the patent filings will continue to rise.
Stage 4 (macroeconomic disruption): the IP industry has been dominated by USA, Europe and Japan (8% annual growth). But since 2011, China has broken this global order with 24% annual growth yet mainly with local filings. Expectedly, this unprecedented growth is a potential for traditional IP providers to grow in the short-term by meeting (latent) IP needs of Chinese companies facing the same needs of cost efficiency (Stage 2) and extracting value (Stage3). This growth is also a threat for the formerly IP-intensive economies since Chinese firms, financially healthy, may start to expand beyond their local markets and act upon their massive IP portfolios e.g. via lawsuits.
How companies can get prepared to this industry change
Patentopolis BV, believe in a market space by elevating the IPM industry at the level of general consultancy industry (e.g. strategy planning) to make IPM a sustainable function in a more balanced order within the future IP global activity. However, the IP function faces another paradox: while IP is an expert area with long-term impact on the company value, it is challenging to raise and maintain the IP issue at the agenda of general management. At the same time, general managers seek to:
- Gain higher profits through IP licensing royalties and damages from IP infringement law suits; and
- Lower long-term IP risks to gain market leadership, avoid law suits, and strengthen their goodwill especially for shareholders and investors.
At the end, when it comes to IP strategy, there is no unified practice, tools and framework such as those seen in other management areas. IP remains an expert area lacking full integration.
Based on 5+ years of continuous contacts with companies and other actors of the IPM industry, as well as research with the sponsorship of the European Patent Organization, Patentopolis have developed and commercialized a unique suite of tools and methodologies to better link IP with the business, to design IP plans aligned with long-term goals, and to successfully implement such plans.
Patentopolis tools meet the following needs of in-house IP Managers and whoever responsible for the budget of IP Strategy in companies.
- Changing the company's approach as to IPM:
- From operational to long-term.
- From ad hoc and opportunistic to strategic.
- From IP being an isolated function to a more integrated, aligned and holistic approach.
- Gaining an overview, basic knowledge and practicalities on IP strategy.
- Learning new tools and how to apply them to the company:
- For higher integration of IP and business strategy.
- For drafting, communicating and implementing IP plans and roadmap.
- Tools being applicable and customizable to any type of company and industry.
Attend our highly practical seminar on Strategic IP Planning, organised in conjunction with Management Forum, 27-29 January 2015 in London.
Article by Dr. Arnaud Gasnier, Patentopolis BV
About Patentopolis BV: We are not an IP law firm, although our consultants have IP experience of 20+ years on average. We are not an IP advisory firm, despite our experience with IP strategy.
Established in 2009, Patentopolis BV provides validated toolkits and methodologies, trains companies to learn and apply them, and gives opportunity to use them internally. We help all types of clients think strategically and draw their own plans. Implementation is in the hands of our clients' IP firms.