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Leveraging Intellectual Property Assets for Business Success

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					Leveraging Intellectual
Property Assets for
Business Success
 Outline

 The challenge of the new business
  environment
 SME competitiveness

 IP and SME competitiveness

 Services provided by the SME
  Division of WIPO
               Old v New Economy
 Industrial economy – focus on physical
  goods. Dependant on natural resources
  (finite)
 New economy – Greater reliance on know-
  how, knowledge, human creativity and
  innovation (infinite)
       1950 knowledge component in manufactured
        goods 20%, 1990s 70%
   In 1998 intangible assets constituted 80% of
    value of Fortune 500 companies.

   “It is estimated that by 2007, as much as
    90% of the value of the world’s top 2000
    enterprises will consist of intellectual
    property”


   Building and Enforcing Intellectual Property Value,An International Guide for the Boardroom
    2003PriceWaterhouseCoopers
New Economy

   Global market place
   More demanding and fickle consumers
   Shorter product cycles
   Working through relationships and networks
   Differentiating products
   Selling an image, concept, idea
   Out sourcing
   Efficient use of resources resulting in lower
    cost
Example

 A pair of jeans bought in a street
  market may cost US$ 10 while the
  same pair of jeans bought in a high
  end boutique will cost US$ 80. The
  difference accounted for in the
  intangible components in the latter.
 It is likely that the same (outsourced)
  manufacturer produced both.
 While a market continues to exist for
  pure physical products (people will
  continue to buy jeans) high profit
  margins cannot be expected.
 High profit margins are possible when
  there is improved efficiency, lower
  costs, appealing and differentiated
  products and services from reputed
  sources.
   Globalization and trade liberalization has
    made it crucial for SMEs to become
    internationally competitive even when
    competing exclusively in domestic markets
   Application of knowledge, creativity and
    innovation key in competitiveness
       Competitiveness of SMEs
   To be competitive SMEs need to constantly
    improve their efficiency, reduce production costs
    and enhance the reputation of their products and
    services by:
      Investing in research and development
      Acquiring new technology
      Improving management practices
      Developing creative and appealing designs
      Effectively marketing their products and
       services
      The IP System


   Provides SMEs exclusivity over the
    exploitation of their innovative products and
    services, creative designs and brands
   Thus creating an appropriate incentive for
    investing in improving their competitiveness
   Ensures a competitive market place, honest
    trade practices and overall national
    development
Intellectual Property Rights
   Innovative products or      Patents or utility models
    processes

   Cultural artistic and       Copyright and related
    literary works               rights

   Creative designs            Industrial design rights

   Distinctive signs           Trademark

   Microchips                  Layout-designs or
                                 integrated circuits.
   Denominations of goods      Geographical indications
    attributable to a
    geographical origin
   Confidential business       Trade secrets
    information
Patents

   Gives the exclusive right to prevent others from
    using the invention for a maximum period of 20
    years
   An invention could be a product or process
    providing a new way of doing something, or a new
    technical solution to a problem
   It may lower cost, create efficiencies, enhance
    performance, add new features etc..
   Through exclusivity an opportunity is provided to
    recoup costs and make a profit
Trademarks

   A sign that distinguishes the goods and
    services of one enterprise from that of
    another
   Right to prevent others from using identical
    or similar marks with respect to goods or
    services that are identical or similar
   Rights obtained through registration (or use)
   Famous marks have greater rights
   Protects consumers
      They can differentiate between similar goods
      Information as to the source (quality,
       reputation, trust)
   Protects the company –
      Enables the company to build up a
       reputation and a loyal clientele and thus a
       market niche (brand)
   Creates an overall competitive environment
    which benefits society as a whole
         Case Study on Trademarks
   An Italian businessman buys unmarked t-shirts
    from manufacturers of generic clothing, attaches
    his trademark (Pickwick®, which pictures a
    rebellious-looking teenager) and begins to sell
    them to retail stores
   Started in a garage in the periphery of Rome
   Today the Pickwick® trademark is perceived by
    Italian teenagers as a synonym of style and quality
   Pickwick® has began to export its products
    across Europe
   Its trademark is its most valuable asset
     Interbrand 2006 Annual Survey
     of the world’s most valuable
     global brands




Coca-Cola: 67   Microsoft : 57   IBM: 56 b US$.
Industrial Designs

 The ornamental or aesthetic aspects
  of a product, that which distinguishes
  that product from the competition and
  makes the product appealing to a
  consumer
 Right to prevent others from using
  identical or similar designs
            Design Rights

   Adds value to the product by making it more
    appealing to consumers.
   Some products (e.g. furniture) are primarily sold
    on the basis of their appearance
   Enables customization of products to specific
    markets
Geographical Indications

   Goods that have a certain quality or
    reputation due to the geographical region it
    comes from
   Generally pertaining to agricultural products
   Examples: Bordeaux wine, Ceylon tea,
    Gruyere cheese, Swiss chocolates,
    Champagne, Colombian coffee
   Protects local industries, preserves
    traditional ways of producing and builds
    regional reputation and image.
   Used by SMEs to jointly commercialize
    products
   Provides SMEs the opportunity to make their
    products recognized by consumers,
    distributed by the main distributors and sold
    by the main retailers
   Provides consumers certain quality
    guarantee
Copyright
   Copyright law grants authors, composers,and
    other creators legal protection for their creations
    usually referred to as “works.”
   It protects books, music, films magazines,
    paintings, photographs, sculptures, architecture,
    computer programs, etc
   It gives an author or creator certain rights for a
    limited period of time.
   They are economic rights which enable the author
    to control the economic use of his work and
    moral rights, which protect an author’s reputation
    and integrity.
Trade Secret

 You may, either because it is not
  patentable or because you prefer to
  do so, keep certain business
  information secret
 If you have taken reasonable steps to
  keep such information secret and it
  has commercial value by virtue of
  being secret you may have trade
  secret protection
Example – Coca Cola

 Said to be the best kept secret
 Formula kept in a bank vault
       Can only be opened by a resolution of
        the company Board of Directors
   Only two people know the secret
    Their identities are unknown
    They cannot travel together
    They oversee the production
Trade Secrets or Patents

   No registration           Registration
    (costs/time factor)        required (cost/time
   Unlimited duration         factor)
   No disclosure             Limited duration
   Wider information         Disclosure required
   Difficult to enforce      Limited to claims
   No protection             Easier to enforce
    against                   Exclusive rights
    independent
    discovery or RE
                 One product many IPR


   Patent for the fountain pen
    that could store ink
   Utility Model for the grip and
    pippette for injection of ink
   Industrial Design: smart
    design with the grip in the
    shape of an arrow
   Trademark: provided on the
    product and the packaging to
    distinguish it from other pens
Source: Japanese Patent Office
   Invention of CD player
    protected by patent
   Brand on CD player
    protected by trademark
   Design of CD player
    protected by industrial
    design
   Music played on CD player
    protected by copyright
Intangible to Tangible

 By providing such protection the IP
  system gives the owner of those
  intangibles a right of exclusivity, the
  right to prevent others from using
  them.
 Bringing intangible rights closer to
  tangible property
IP Policy

 Beyond exclusivity – IP rights are not
  only about exclusivity and the right to
  prevent others from using and
  exploiting them
 They are assets as important or even
  more important than its physical
  assets (buildings, machinery)
 Like any asset they must be
  maintained, managed, exploited and
  enforced.
        IP Audit

 Identify the IP assets of a company
 Have rights been acquired for them

 Are they been maintained

 Are they exploited optimally

 Is there any redundant IP

 Is there any infringement of third party rights
Exploiting IP Assets

 Sale or License
 Joint ventures and strategic alliances

 Business format franchising

 Merchandising

 Better bargaining position in licensing-
  in
 Defensive patenting, publication

 Collateral for finance
The inventor licensed the system to Coca-Cola at 1/10
of a penny per can. During the period of validity of
the patent the inventor obtained 148,000 UK pounds a
day on royalties
Franchise

   A specialized license where the
    franchisee is allowed by the franchisor
    in return for a fee to use a particular
    business model and is licensed a
    bundle of IP rights (TM, service
    marks, patents, trade secrets,
    copyrighted works…) and supported
    by training, technical support and
    mentoring
Why enter into a Franchise     Why not enter into a
 Lower risk of failure
                                 Franchise
                                All IPR owned by the
 Recognisable image
                                 Franchisor
 On going support
                                Payment of fees
 Easier to obtain financing    Obliged to follow the
 Benefit from franchisors       business model
  R&D                           Innovations may be
                                 assigned back to the
                                 Franchisor
                                Depend on the success
                                 of the Franchisor
Merchandising

   The licensing of trademarks, designs,
    artworks as well as fictional
    characters (protected by these rights)
    and real personalities are broadly
    referred to as merchandising
Why merchandise?

   For the licensor
       Extend into new products
       Increases exposure, strengthens image
        (could also damage)
       Revenue
       Relatively risk free
   For the licensee
       Increase appeal of its products
       Relatively low cost way of gaining market
        share
               SMEs and IP
• Enterprises worldwide largely under-utilize the
  intellectual property system due to
   – Perceived lack of relevance of the IP system
   – Perceived high costs and complexity of IP system
   – Limited awareness of the IP system and its
     usefulness
   – Lack of qualified human resources to use the IP
     system
        What Can Support
      Institutions do to Assist
• Awareness-raising and Training Activities
• Technological Information Services
• Financial Assistance
• Customised Advisory Services
• Assistance on IP Exploitation and
  Commercialisation
• Diagnosis of the IP needs of the enterprise
  (IP Audit)
                 WIPO SMEs Division


     • Promote greater use of the IP system by SMEs and
     enable them to make more effective use of their IP
     assets
     • Strengthen the capacity of governments to
     develop strategies, policies and programs to meet
     the IP needs of SMEs
     • Improve the capacity of SME support institutions,
     to provide IP-related services to SMEs


38
               Demystify
•   Studies
•   Guides
•   Events and missions
•   Web site and newsletter
•   Multimedia products
                    Studies
• Studies on national policies on SME
  development and the role of IP
  – completed or under way in Argentina, Bhutan,
    Mongolia, Nepal, Philippines, Sri Lanka, Tanzania,
    Sierra Leone, Romania, Chile, Colombia, Costa Rica,
    El Salvador, Honduras and Paraguay, Egypt, Morocco,
    Lebanon
   IP for Business Series
• Making a Mark
  (Trademarks)
• Looking Good
  (Designs)
• Inventing the
  Future
• (Patents)
• Creative
  Expression
  (Copyright)
               More guides
• WIPO/ITC Guides on:
  – Marketing of Crafts and Visual Arts; Role
    of Intellectual Property; A practical guide
  – Secrets of Intellectual Property: Guide for
    Small and Medium Sized Exporters
  – Exchanging Value: Negotiating Technology
    Licensing Agreements - A Training Manual
                  Events
• Special programs, seminar and workshops
  organized by the SMEs Division in Geneva
  in partnership with selected associations and
  organizations
• Contributing to programs organized by
  other divisions within WIPO and external
  organizations
         www.wipo.int/sme/en
• The Website of the SMEs Division is in six UN
  languages (English, French, Spanish, Arabic,
  Russian and Chinese)
• More than 200,000 pages viewed every month in
  2007
• Contents include sections such as IP for Business,
  IP and E-Commerce, Activities, Best Practices,
  Case Studies, articles and publications
   WIPO “Best Practices”
• WIPO collects information on policies,
  programs and strategies that aim to
  encourage a wider and more efficient use of
  the IP system by SMEs
• Objectives:
  – Identify experiences that have had a real impact in
    making the IP system more accessible to SMEs
  – Identify replicable mechanisms that may be
    adapted to the institutional and economic context
    of other countries
  – Encourage exchange of experiences
             Newsletter
• Monthly e-newsletter in the 6 UN
  languages (Free)
• Content includes articles, updates with
  information, links and documents
• Launched in August 2001
• Total number of subscribers: >25,000
           IP Panorama
• WIPO, KIPO and KIPA have recently
  released an e-learning product
  consisting of ten modules on different
  aspects of intellectual property from a
  business perspective entitled, “IP
  PANORAMA”.
                  Conclusion
• New (knowledge) Economy rewards those
  enterprises that are creative, innovative and
  understand the importance of the market for ideas
• The IP system provides the formal framework for
  protecting their knowledge, creativity & innovation
• To maximize the potential provided the IP system
  one has to think beyond exclusive rights to IP
  assets
• IP offices, Chambers and other support institutions
  have an important role to assist