It is known widely that R & D is much valued in technological firm which increases value of the firm. Patents are looked upon as an offensive and a defensive asset. Offensively, it aids a technological company to earn licensing royalties and/or seeking an injunction to halt a competitor from shipping a product. Defensively, patent portfolio provides leverage to negotiate for a more favorable settlement. Hence, according to Coombs (1996), it is important for innovation firms to have their patent portfolio in line with their corporate strategies.
For a first-to-market innovation strategy, patents act as an offensive role in the early stage to achieve market monopoly. However, this is not true for a recent example. Creative's core competency in the portable media player industry lies in its innovative capability to create value through innovations. It was reported that Creative was the first to market its first generation of portable media player in 2000. However, Creative neither achieves market monopoly nor dominates the market currently.
After the patent was awarded to Creative in 2005, Creative sought an injunction that stop Apple from selling the iPod. The outcome was that Apple would pay US$100 million licensing royalties to use Creative's "Zen patent" for an MP3 player interface. ...Show more