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5 worst IP mistakes

Thursday March 26, 2009 , 5 min Read

1. Incorrectly estimating that IP does not qualify for protection

If you are in the business of technology, your most valuable assets are perhaps your team, and the Intellectual capital developed by your team. Any material developed by your team during the course of their employment, including product specifications, software, processes, manuals, presentations, logos and content is your proprietary IP, which can be protected as patents, copyrights, trade marks and trade secrets.

Even in the event of critical team members leaving your organization, the IP created by them during the course of employment belongs to you, and if you do not identify, catalog, and protect it, it is lost.

The requirement for an Intellectual asset to qualify for protection, and the scope of the protection that can be obtained is often not estimated best by Intellectual asset creators, who tend to focus on technical issues. A skilled IP strategy consultant who places the business strategy first can identify and obtain a broad and high level of legal protection for often overlooked technically non complex improvements that, however provide a competitive advantage for your company, and are hence worth protecting.

2. Not having an adequate budget for IP

One of the worst mistakes that companies can make related to IP is by viewing IP as a cost, while it is an asset. If IP is not identified and protected early on, as soon as it is generated, it is lost. IP is like part of the family for an organization, and the cost of losing overlooked IP is typically much greater than the investment of identifying and protecting it. IP can be lost by

a. Not identifying IP, or identifying it after it is too late to protect.

b. Incorrectly estimating the value of the IP

c. Incorrectly estimating the scope of protection that can be obtained

d. When critical team members leave the organization, they take their IP with them, unless they were encouraged or given incentives to disclose, document, protect, and assign the IP during the course of their employment as part of the company IP policies.

Not devoting sufficient time and money to IP that belongs to your company is like not devoting sufficient time and money to members of your family. IP that is not protected and utilized is lost.

3. Not taking IP into account (own IP as well as IP of competitors) in business strategies and plans

Every company has a strategy for meeting business objectives such as securing a competitive advantage in the market. The top management is typically occupied with finance, marketing and operations strategies to reach out to a wider market, improve productivity, and cut costs, so that they can compete better in the market and increase sales and profits. Barriers to entry such as distribution of market share, and economies of scale are considered into building a business strategy, but even IP can be a barrier to entry. Entering a new market without awareness of the existence of IP belonging to competitors and a strategy to overcome potential barriers due to IP, can be disastrous. Also, other business models that can generate revenues on their own that are possible only due to IP are often overlooked.

4. Regarding IP as solely a function of the Legal Department or Service Provider

Often, when companies start out, they are busy with developing products or delivering services, marketing and sales. And they do not bother about IP until they reach a certain size, and their further growth is restricted, or their business is threatened due to some legal issue relating to IP.

Then they look to their own internal legal department, or an external legal service provider to start filing for patents, trade marks etc as a defensive strategy and preventive measure. When this happens, the options of the legal service provider are limited by the immediate requirement (which is often to file a patent before a specific bar date) and there is little time to think of a strategy beyond the short term.

Due to time restrictions, the legal service provider (however qualified and skilled) can only do the basic minimum of filing and obtain a patent issued within the stipulated time. However, the value of such a patent, which is drafted and filed without a strategy, is limited even as a defensive tool.

IP is a core function of the management and not the legal department. Decisions relating to IP should not be left as default to the legal department or the legal service providers, who can only do the bare minimum due to time and budget restrictions.

5. Not having a Global IP strategy

Whereas it is usually best for a company to first serve the local market before entering other markets, when it comes to IP protection and commercialization, this may not be true. Currently, the maximum value for IP can be obtained by obtaining IP protection in countries such as the US, European countries and Japan. Whereas Indian law may require a patent to be filed first in India (unless permission to file first elsewhere is applied for and granted by the Indian patent office), International treaties such as the Patent Cooperation Treaty (PCT) make it easy to simultaneously designate multiple countries and buy time to file for patent protection at various countries.

Even if your company is not planning to launch your products or services in other countries, obtaining IP protection in these countries helps you obtain additional revenues by entering into licensing agreements with foreign companies or subsidiaries, and earning royalties.

It is critical to have a global strategy even while filing for an Indian patent or a PCT application, if it is to serve as a priority document for US or European applications. It may not be allowable to amend poorly or narrowly written claims later, and what is patentable subject matter in one country may be not be patentable in another.

Arjun Bala

Chief IP Strategy Consultant

Meta Yage IP Strategy Consulting