leveraging intellectual property assets for business success tamara nanayakkara counsellor small and...
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Leveraging Intellectual Property Assets for Business SuccessTamara NanayakkaraCounsellorSmall and Medium Sized Enterprises DivisionWorld Intellectual Property Organization
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 processes
Cultural artistic and literary works
Creative designs
Distinctive signs
Microchips
Denominations of goods attributable to a geographical origin
Confidential business information
Patents or utility models
Copyright and related rights
Industrial design rights
Trademark
Layout-designs or integrated circuits.
Geographical indications
Trade secrets
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 secretTheir identities are unknown
They cannot travel together
They oversee the production
Trade Secrets or Patents
No registration (costs/time factor)
Unlimited duration No disclosure Wider information Difficult to enforce No protection
against independent discovery or RE
Registration required (cost/time factor)
Limited duration Disclosure required Limited to claims Easier to enforce Exclusive rights
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 playerprotected by patent
Brand on CD playerprotected by trademark
Design of CD player protected by industrial design
Music played on CD playerprotected 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 Lower risk of failure Recognisable image On going support Easier to obtain financing Benefit from franchisors
R&D
Why not enter into a Franchise
All IPR owned by the Franchisor
Payment of fees Obliged to follow the
business model 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
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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