Innovative Service Provider IP Acquisition - Report Example

Managing Intellectual Property TOPIC TWO: Innovative service provider IP acquisition and management strategy Intellectual property rights offer an opportunity for a newly developed and useful concept to be protected through the owner or generator of the concept or idea being granted exclusive rights (Fisher & Gee, 2013:157). This is useful for ensuring that the innovator of such an idea is able to enjoy the fruits of the efforts applied in developing the new concept or idea, which results in the production of goods or services that satisfy the existing societal needs. The acquisition of intellectual property rights may take different forms, based on the nature of the novel idea or concept that has been developed, as well as the preference of the innovator seeking the licensing of the IP rights. Therefore, an IP strategy refers to the process applicable in taking advantage of an innovation through acquiring license for exclusive rights that allows obtaining fair compensation for the innovative efforts (Wild, 2011:12). Thus, the development and acquisition of an appropriate IP strategy will give innovators the greater ability to control the product or service lifecycle development. This in turn ensures that the product or service arising from the innovation is availed to the market in accordance with the innovators preference, for the sake of controlling the possible competition. However, while an IP strategy is very vital for determining the extent to which the innovator will benefit from the innovative idea or concept leading to the production of goods or services, it is very important to ensure that the IP acquisition strategy is both affordable and sustainable (Fisher & Gee, 2013:172). (i) IP acquisition strategy for the Innovative service provider The intellectual property rights acquisition strategy for the innovative service can take a variety of forms. The choice for the IP acquisition ranges from patenting to trade secret licensing and trademark registration. Nevertheless, the most effective strategy through which the innovative service IP rights can be acquired is through patenting. Patenting entails obtaining license from the government, which prevents others from using or selling the innovative service (Anton & Yao, 2004:7). This intellectual property acquisition strategy can be suitable for the innovative service, owing to the fact that it will grant the exclusive rights to develop and sell the services to the target customers, without the being interfered by the competitors. Thus, the potential competitors are hindered by the patent rights from using the same service for financial gains, or from copying the same service and otherwise developing it for financial gains (Burk & Lemley, 2002:1164). Additionally, the acquisition of intellectual property rights through patenting is advantageous for the innovative service provider, owing to the fact that it allows the innovator to increase the value of the business. Patents serve as intangible assets held by a business enterprises, which can then be converted into financial assets whenever a need arises (Anton & Yao, 2004:12). For example, an individual holding a patent for an innovative service or product can apply a loan from banks using the patent license as the collateral for loan. A patent license is considered an intangible asset for a business, owing to the fact that it prevents potential competitors from developing or using the same service to generate financial gains. Consequently, the innovator of the innovative service becomes an exclusive rights holder for developing the services into a commercialized product (Gallini, 1984:936). This way, the patent in itself becomes an asset for the business, since the overall business value is based on the protection from the potential competitors that is offered by the patent. Thus, even though the innovative service may only be issued at a small scale and to a few customers, it is still worth much more than a service offering to many customers, but which is not protected from competition. A further benefit associated with patenting as the intellectual property acquisition strategy for the innovative service provider is its flexibility and potential for expanding the financial gains of the innovator. The patented service, product or process might require huge capital investment to make the product fully commercialized, thus hindering the innovator from being in a position to commercialize the product. When such a challenge arises, the service innovator can extend the patent through extending the patent by licensing it to one or more partners for a certain percentage of the patent value (Chesbrough, 2007:47). This way, the innovator can then be able to apply the finances obtained to commercialize the product. Alternatively, the patent holder can partner with other interested partners in commercializing the service. This way, patenting becomes a very useful strategy for intellectual property rights acquisition for the innovative service. This is because; first, it allows for the opportunity to generate the necessary finances for commercializing the service. Secondly, patenting is a very creative IP acquisition strategy, since it also provides for an opportunity to share the possible risks associated with the servicelp with other partners (Burk & Lemley, 2002:1167). Further, the application of patenting as the IP acquisition strategy is advantageous for the innovative service provider, owing to the fact that this strategy does not only offer an opportunity to curve a large market share, but also increase its profit margin. Patenting is one of the IP acquisition strategies that leads to the development of monopolies within an economy, since it shields the innovative product, service or process from any similar competition (Gallini, 1992:53). The effect of this protection is that the innovator of the service can be able to offer the service at a price higher than the average prices offered for substitute products in the market, since there is no fear of losing customers to the possible competitors. Additionally, instead of offering the product at a price that is higher than the average market prices, the innovator of the service has the choice of offering the service at a low price than the existing average prices of the substitutes in the market, and thus mange to acquire large customer share in the market, which in turn translates into higher profitability for the business (Walsh, 2002:1341). In this respect, the adoption of patenting as the IP acquisition strategy for the innovative service is an effective strategy, since it is not only relatively cheap to acquire a patent for an innovative idea or concept, but the patent also becomes beneficial in the long run. (ii) IP management strategy Patenting as an IP acquisition strategy is beneficial for a business, since it offers the business an opportunity for exclusive rights to the product, service or process (Davis, 2008:14). Nevertheless, even with the exclusivity granted by the patenting strategy, there are numerous threats to the exclusiveness of the service innovator to apply the exclusive rights, for example the reverse technology law, which allows for the competitors to undo the innovation patented through reversing the original process, and coming up with an alternative one (Katz & Shapiro, 1985:507). Thus, the management of the patent IP strategy requires several management actions be taken to safeguard the benefits of this IP strategy. Acting early Time is of essence when it comes to patenting, considering the fact that it is not necessarily the party that innovates early, but rather the party that files the patent early, that is licensed for exclusivity (Palfrey, 2011:98). This simply means that even if a party had come up with an innovative concept or idea earlier but failed to take the necessary measures to obtain the patent licensing early enough, a subsequent innovator who files the patent can effectively gain the exclusive rights. Consequently, it becomes very important that the innovative service provider should act immediately by patenting the innovative service procedures and processes, to ensure that no one else is able to take advantage of this innovative service. This way, the essential characteristic of exclusivity that is associated with patenting as an IP acquisition strategy is achieved. One of the most significant challenges associated with managing patent as an intellectual property rights acquisition strategy is the timing (Katz & Shapiro, 1985:512). Timing becomes a major challenge for addressing patenting, owing to the fact that the duration between when an innovative idea, concept or know-how is developed and the time when the fully developed product or service arising from the innovation is generated can be long. Therefore, there is always the challenge of balancing the risks of failing to patent the innovative idea or concept early enough, and the risk of patenting an idea or concept that eventually fails to produce a commercialized product or service that can generate financial gains for the innovator (Anton & Yao, 2004:9). The basic and fundamental requirement of patenting laws is the evocation of the stringency of the “non-obviousness” clause of the patent protection laws, requiring that the innovative idea, concept or know-how must not only be the first of its kind in the world, but also that it must be useful for serving either the existing or predicted needs of the society (Richards, 2007:8). Thus, the innovator requires to be sure that the idea or concept that is to be patented is feasible in the development of a product or service that can be commercialized for satisfying the existing or preconceived needs of the society that might arise in the future. This therefore requires that the innovator has to produce at least a prototype of the product or a pre-design of the service, and then test it in the market to see whether it will fulfill the target needs. The risk with this requirement is that another similar innovative concept or idea might be patented and licensed for exclusivity in the course of developing the prototype or the service pre-design, resulting in the loss of the exclusivity of the innovation (Richards, 2007:21). Thus, it would be very essential that the innovative service provider acts early enough to fulfill the patenting requirements and obtain the patenting license, not only to protect the innovative service, but also to the IP in the new locations. Anticipating and planning for sustainment and competition Patent is an IP rights acquisition strategy that is faced by the limitation of lifespan expiry (Fisher & Gee, 2013:177). The patenting for an original and innovative idea can be licensed for a period of twenty-years, after which the competitors can start using the licensed product or service for financial gains. This being the case, it is necessary to plan for the sustainability of the innovative service beyond the patent lifespan limit, while also planning for its competitiveness even after the patent expires (Wild, 2011:12). Therefore, it is very essential to incorporate further sustainability measures. The value adding sustainability measures to the innovative service may entail necessary modification of the innovative service through procedures that can add value including further system integrations, modifications to create interoperability and unique need satisfaction alignment (Davis, 2008:27). Through such modifications of the innovative service, the patent can still remain relevant, sustainable and competitive in the market, even after the initial patenting lifespan has already expired. Sensing and blocking potential white or grey spaces The innovation of a unique service can be one thing that benefits a business. However, the potential of other related innovations taking up the market established by the original innovation through substitute services is a real threat (Palfrey, 2011:99). Therefore, it is in the best interest of the innovative service provider to keep on identifying and blocking the possible white and grey spaces that the innovation could have left, which have the potential of attracting alternative services that satisfy the unmet needs by the original innovative service. This can only be accomplished through ensuring that the innovative service provider does not sleep after patenting and commercializing the service, but rather continues to invent ways of improving the service and denying potential competitor an entry point into the already curved service market niche (Gallini, 1992:55). Aligning the patent to future long-term relationships The lifespan of a patent is short, while the need to continue reaping its benefits is infinite. Thus, it is essential to ensure that the patent is formulated in a manner that is open and negotiable (Chesbrough, 2007:56). This would be essential to ensure that the innovative service provider can extend the patent by recruiting more partners into the patent rights, who are in turn capable of adding more business value to the innovative service. This may include future partnerships with existing competitors, to ensure that the service would continue to be relevant even after the patent expires. 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