IP-Management

Introduction

Intellectual property has become a crucial factor and driving force in the knowledge-based economy. Due to digitization, Industry 4.0, artificial intelligence and the digital transformation of business eco-systems, the economic development and competitiveness of companies depends more and more on the generation and exploitation of their knowledge. Intellectual property can convert investment in competitive advantages into economic benefits. Thus, IP-based appropriation strategies form the basis of creating value and beneficial competitive positions for companies to achieve sustainable success with business models and innovation activities.

Through industry case studies directly from successful businesses of the European industry, the IP-Management education at CEIPI highlights best practice examples. As only the combination of economic, legal, and technological knowledge and skill fosters the competitive edge of companies in a knowledge-based economy, our IP-Management education uses a holistic approach to provide optimized strategies, which essentially contribute to the creation of value in a company. All programs combine legal, economic, and management sciences, and include lectures from leading scholars in the field of IP Law and Management. The ultimate objective of the course is to qualify experienced IP professionals as practically skilled IP managers, with sound knowledge on value creation in the knowledge-based economy.

 

IP Strategy Development

The core idea of an IP strategy is to align in with the overall business strategy, so that only those IP are filed, which are worth filing. For that the idea of business models must be understood. A business model describes how a company creates values ​​for customers and provides them for customers. A value is the ability of a good to serve the needs. A business model describes the logical connection, the way in which value creation is carried out in order to generate a benefit for the customers.

This logical interaction is dominated by two different business perspectives: On the one hand, there is the question of how the costs of value creation and provision arise, i.e. which costs go hand in hand with the production of a customer benefit offer. On the other hand, there is also the question of what possible returns can be generated from customer satisfaction. This is the skimming off of customers’ willingness to pay.

These two fundamental questions characterize the two sides of a business model: the resource perspective and the market perspective. The resource side focuses on the creation of values ​​through a value creation architecture and through the use of key resources in processes with the help of core competencies. The cost effect in the business model is defined by the resource side.

The market side is characterized by the market access and the market position of the company and its services as well as the differentiation and unique position compared to the competition. The earnings side of the business model is described on the market side.

Innovative business models have always gone hand in hand with technological developments and changes in market needs. Some well-known examples: Dell has revolutionized the supply chain of custom personal computers. Lego has digitized the system toys and the design of kits. Gillette has made the cheap hand razor and expensive retrofit blades business popular. Xerox has developed the pay-per-use business model to make its expensive photocopiers attractive to the market. Intel has placed computer processors at the center of its business, coming from memory chips, and has entered into a synergetic collaboration with IBM.

The strategic models used to describe the use and expected impact of IP on the resource side and the market side are fundamentally different.

On the resource side, the strategic goal is to design through the use of IP VRIN resources. VRIN is an acronym and stands for the first letters of the properties valuable, rare, imperfectly imitable and non-substitutable. On the resource side, it is important to identify the resources that are valuable for value creation and to make them rare through the use of IP, i.e. they cannot be copied and ideally not even substituted.

Examples of such IP-protected resources are Apple’s design skills, Lego’s brand strength and production precision, DELL’s logistics skills and Intel’s process security.

On the market side, the strategic goal is to influence market forces through the use of IP. A distinction is made between six market forces:

  • Competition within the industry
  • The negotiating power of suppliers
  • The bargaining power of customers
  • New companies entering the industry
  • Substitutive offers
  • Complementary service offers.

An example of complementary offerings are peripheral devices for computers, such as a printer, a monitor and a mouse or a photo camera in a mobile radio device.

Typical IP-based measures to influence these market forces include building brand strength and brand loyalty, for example through superior, exclusive and IP-protected customer benefits, so-called unique selling propositions (USPs), technology standards, interfaces, compatibility and interoperability. From the case studies from various branches with SMEs, these logics can be used to adapt strategic approaches to the own business in place.

The university certificate IP strategy comprises issues like:

  • How to define your IP strategy to align with the business strategy
  • Strategic IP Management – file only what is worth filing
  • Market-driven Approaches for Optimizing Value-based IP Management – An Industry-Specific Use-Case
  • Protecting digital business solutions like apps, use cases, business models
  • How can I use patent information as a building block of my IP strategy?
  • How will third party IP influence my strategy and how can I find IP, especially patent information?

 

IP Valuation

Decision theory is a framework of logical and mathematical concepts helping managers in formulating rules that lead to a most advantageous course of action, based on a strategy under given circumstances. So, IP Valuation can be only meaningfully be used combined with a business strategy and also in a protective way to support the business strategy. This theoretical and interdisciplinary approach helps to determine how decisions are made given unknown variables and an uncertain environment. This is what IP managers need to know for a “VUCA world” where we have to face various dimensions of an ‘uncontrollable’ environment. VUCA is an acronym and stands for Volatile, Uncertain, Complex and Ambiguous. These environmental conditions in many businesses have concrete consequences for management, especially for decision making in IP management. Decision theory brings psychology, statistics, philosophy and mathematics together to analyze the decision-making process. Game theory, which explains social situations for example between competitors, is also discussed in this module. Game theory is a framework for social situations among competing players. It is the science of strategy and optimal decision making of independent and competing actors in a strategic setting.

With a basic understanding of decision-making IP valuation can be understood. Namely, companies create value through their operations. Managers consider operational excellence as a key ability to maximize firm value. But within the digital transformation, globalization, innovation and the ongoing war for talents the firm performance critically depends on a company’s ability to accurately determine its value and to assess the market impact of its IP. IP managers need valuation expertise to understand structured and systematic value creation by means of IP.

In our complex world, companies need to develop an understanding on how they create value for stakeholders and society at large, to be able to develop a long-term, viable strategy and to keep their license to operate. Value creation, however, is only partially captured by a company’s financial statements, since the latter mainly reflect its financial and manufactured capital. Other forms of capital, such as social, human, intellectual and natural capital, are only partially visible or not visible at all in a company’s financial accounts. Since these forms of capital often remain invisible, the question arises whether companies, and their stakeholders, have the right information base to make decisions and mitigate risks that could affect their overall value creation. Three quarters of the purchase price in M&A deals is represented by goodwill and intangible assets according to the 2017 Purchase Price Allocation Study from PPAnalyser. The report highlights the importance of identifying and measuring the value of intangible assets to support the rationale of an acquisition. With the introduction of always bigger IP portfolios and larger numbers of standard essential patents (SEPs), e.g. through the 5G standard, IP valuation in industry 4.0 and a global IP market becomes more and more important.

Intangibles – e.g. trading names, trademarks, brand names, patents, licenses, know-how, the author’s intellectual rights – can appear in all dimensions of business activity: distribution, financial services, sales and management. Usually, intangibles generate added value that exceeds the costs attributed to them and they cannot be replaced in a short time. Generally, the intangibles contribute to the growth of sales or the reduction of costs, and consequently they raise and enhance the value of the business.

The valuation of intangibles exhibits many similarities to business appraisal. Three traditional approaches are used in the valuation of intangibles: income, cost and market. Due to the usual lack of market data, the valuation of intangibles is in most cases limited to two approaches: cost (sometimes limited by access to historical data) and income.

A general profile of the three universally accepted approaches to the appraisal of intangibles:

  • The market approach (comparative) – the value of intangibles is estimated based on comparable market transactions. As the intangibles are rather seldom sold separately from the enterprise itself and it is hard is to find comparable assets being traded on an active market, use of this method is possible in practice only in limited cases.
  • The cost approach – the value of intangibles is estimated as the cost necessary to produce the asset or replace it.
  • The income approach – the income approach takes into consideration potential revenues, expenses, profitability and investment expenditures related to the appraised intangible asset. This approach estimates the value of an intangible asset as the present value or capitalization of future cash flows, sales or saved costs over the period of the economic life of the intangible asset.

The income approach is perceived as the basic approach in the valuation of intangibles in most cases. The income approach can take various methods depending on the unique character of the appraisal process of the intangible. The main income methods are as follows:

  • Relief from royalty method
  • Excess rate of return method
  • Postulated loss of income method
  • Discounted cash flow approach

The university certificates on IP valuation comprises issues like:

  • Systematic valuation to secure an IP strategy
  • IP valuation & Determining appropriate royalty rates
  • Inside the global IP market
  • IP valuation in the fourth industrial revolution
  • IP negotiation class
  • FRAND/SEP licensing in different industries

 

Integrated IP and Innovation Management

The integration of innovation and IP management has received a rising attention over the last decade. The general shift from an industrial economy into the direction of a knowledge economy makes IP increasingly important. The ongoing and widespread prevailing integration of software into physical products, the usage of IoT technologies and different major technological shift for example in mobility, energy and health care shows, how important IP management within innovation projects has become. The accelerating speed and steeply rising complexity in product development create a need for further professionalism within the integration of IP and innovation management. The systematic interaction between IP competencies and innovation teams is industry specific and depends of the company size, but the integration of R&D staff in the IP filing process is crucial for success.

Innovation is crucial for competitiveness of companies, so also the IP filing tactics have to be aligned with the innovation process. There is no secret formula for success, but there are important insights in patterns of failure and management challenges. “The Innovator’s Dilemma” is one of the most important concepts, which explains how innovation takes place and why market leaders and incumbents fail to seize the next wave of innovation in their industries. Clayton Christensen shows how the same (good) practices that lead to a business success can eventually lead to its demise – this is the dilemma in a nutshell. Another valuable concept comes from James Utterback and helps mastering the dynamics of innovation, it’s called “dominant design”. A dominant design is that one, which wins the allegiance of the marketplace, so that customers expect certain features and a specific architecture of a product. Competitors and innovators must stick to the dominant design if they hope to receive a significant market share. Dominant designs may not be better than other designs; they simply incorporate a set of key features that sometimes emerge due to technological path-dependence and not necessarily strict customer preferences. Obviously, this understanding of innovation has strong implication for IP strategies and practice.

An important and frequently used concept in the field of innovation is the integration of lead users into the proofs for developing innovative product concepts. Lead users are customers who think future orientated and can articulate challenges, which they would like to solve. With lead users it is possible to develop concepts and experimental solutions for generating new products. Social media has offered promising new possibilities for companies in terms of supporting lead user integration. The lead user approach was developed by Eric von Hippel and is used for developing breakthrough product. This method is applied in very successful and innovative companies like 3M and Hilti.

Innovation frequently translates into the creation of new markets forcing firms, which decide to enter a new market, to choose an appropriate strategy. Timing is a very important strategic tool for example when launching a new product. Companies follow different entry timing strategies for hitting the market. There are first mover and follower advantages and disadvantages, which have both strong implications to IP management. The timing of entry depends for example significantly on the demand and technology uncertainty of a new product. Creating a brand identity, finding the dominant design or crating a standard and a licensing program are means of IP management to support the timing strategy in innovation management.

Regarding the innovation process and the IP management processes the discussion leads to business process management (BPM). BPM is the discipline of improving a business process from end to end by analyzing it, modelling how it works in different scenarios, executing improvements, monitoring the improved process and continually optimizing it. A business process is an activity or a set of activities that will accomplish a specific goal like the FTO process, the trademark-enforcement process or the IP-design process. BPM allows organizations to understand the various processes that happen within an organization, analyze them from end to end and improve them on an ongoing basis. IP management as an integrated management system is based on a process landscape, which comprises all technology and market-relevant processes in addition to innovation- and information processes. Optimizing this process landscape according to the IP strategy is the challenge of IP management. Here, also the use of modern IP management systems can help in the innovation process.

The university certificate on integrated IP and innovation management comprises issues like:

 

  • Disruptive Innovation: How can data driven use cases, customer benefits and business models be designed and legally protected?
  • Analyzing and optimizing the generation of inventions and patent filing tactics
  • Inside innovation intelligence and the need of information for growth and competitive advantages in a globalized hyper-competitive world
  • The integrated next generation IP management system
  • Motivation and participation Challenges: How to integrate and engage R&D and technology experts to deliver creative, unique and protectable inputs for creating successful IP?

 

IP in the Industry 4.0

The evolution of digital business models follows constant patterns. By using the logics on which these patterns are based, digital business models can be systematically developed and optimized. Digital patents are used to protect digital business models. The structure of digital patents follows the logic of business models that are used in Industry 4.0 approaches. The basic principle here is the use of four distinguishable dominant logics, which are used to generate economic advantages in the business models:

  • enabling logic,
  • data and information logic,
  • simulation and mapping logic as well as one
  • networking logic.

These logics describe the cognitive map of companies that implement digital business models. This is the dominant logic that determines the relevant activities of the implementing companies, i.e. how customer needs are met. With these dominant logics, eight different technical concepts can be applied:

  • success critical information preference systems
  • assistance systems
  • cyber-physical systems
  • IoT systems for networked abilities
  • Value-added networks
  • infrastructure for collaboration
  • data models and simulations
  • integrated system architecture

The application of these concepts leads to various efficiency and effectiveness-based benefits for the customer and user groups in the digital business models:

  • Increase people’s ability (increase in effectiveness)
  • Increase in ability of objects (increase in effectiveness)
  • Horizontal networking in value creation networks (increase in efficiency)
  • Vertical networking in the automation pyramid (increase in efficiency)

The increases in effectiveness work on the market side of the business model and influence the earnings mechanics, the increases in efficiency work on the resource side of the business model and influence the cost structure.

Digital patents are characterized by the fact that their protective effect means that elements of digital business models become exclusive. In order to actively generate such patents with IP design, it is necessary to think through digital business models conceptually and to describe the possible technical requirements and solutions. This process is highly individual and always related to the respective business model.

Using the example of a navigation system, the necessary transformation process from the description of a technology to a business model and the associated patents can be described as an example.

The Global Positioning System – GPS for short – is a satellite-based technology that can determine geographic points with the help of an electronic computing chip and a radio antenna. GPS technology is protected by many patents. However, GPS is not a business model, but a technology. GPS can be used in a variety of business models, such as a logistics company. On the basis of GPS, various optimizations on the resource and on the market-side can be realized in a logistics company and these optimizations can be protected by digital patents.

For example, route documentation to have automated route verification and thus make the billing process more cost-effective. Based on the GPS data, traffic jams can be avoided by an assistance system, thus improving the planning performance of logistics. The overall performance and planning security of logistics can also be improved through optimized route planning based on simulation and preference systems.

In the times of 5G and the development of new business eco-systems the development of IP Strategies regarding industry 4.0 applications becomes even more critical than before through the ever-increasing complexity. So, questions about AI in IP, blockchain in industry 4.0, licensing in IT in times of open source in the IoT world, the best practices in IP to achieve a sustainable eco-system and the protection of data driven business models arise.

The university certificate on IP and the Industry 4.0 comprises issues like:

  • Protection of IoT, AI and blockchain solution in the industry
  • 5G as enabler for IoT: understanding the interplay of IP and telecommunication
  • AI in IP and protection of data driven business models
  • Licensing in IT in times of Open Source and in an IoT world
  • Internet of Things – Challenges for IP and Best Practices to Achieve a Sustainable Eco-System Position
  • Digitalization and IP Management – A Practical Approach to Digital Transformation

 

Quality in operational IP Management

DIN77006 is a guideline for the quality of intellectual property management. The starting point of the standard is the business model of a company. In the digital transformation, IP has a significant impact on the ability of a company to create long-term added value than the provision of products and services. The processes of IP management take place with the involvement of stakeholders. The aim of IP management in accordance with DIN77006 is to ensure freedom of exercise and to protect the business model. For this purpose, the following processes are applied company-specific and needs-based:

  • IP strategy
  • IP generation
  • IP administration
  • IP risk management
  • IP enforcement
  • IP defense
  • IP transactions
  • IP reporting
  • IP awareness building

The IP strategy according to DIN77006 must describe the need for IP and must consider the continuous further development of the business model. As part of the IP strategy:

  • determine the degree of differentiation of the digital business model,
  • Show the added value for the customer
  • Compare your own IP situation with the competitive environment.
  • determine the performance promised to the customer and the
  • to determine the differentiation in communication.

The development of the IP strategy for the digital business model then includes:

  • Analysis of critical development paths and identification of relevant future trends;
  • Determination of measures to suppress imitation for own valuable resources as well as products and services;
  • Creation of offer exclusivity for products and services;
  • Definition of measures to secure one’s own freedom of action;
  • Definition of measures to secure the own market position in relevant countries and regions as well as future market positions and the
  • Communication of the unique position e.g. through brands

IP management in accordance with DIN 77006 can help improve company performance at all levels. For example, money can be saved through process optimization, profits can be increased by reducing incorrect work, and new business can be generated by identifying opportunities. Quality, customer satisfaction, efficiency and responsiveness are decisive factors in order to survive successfully in the competition and are targets in IP management that can be achieved by implementing DIN77006. An IP management according to DIN77006:

  • increases the transparency of operational processes in IP management;
  • sustainably improves customer satisfaction by focusing on customer benefits and
  • reduces the error rate and thus the costs in all IP-associated processes.

The consistent implementation of DIN77006 allows the continuous adaptation of business model protection to the further development of the digital business model as well as ensuring freedom to operate in a highly dynamic global digital competitive environment. So, quality in IP-management includes practically for example quality in patent searching and valuation of IP.

The university certificate on quality in operational IP management comprises issues like:

  • IP cost optimization
  • Insourcing vs. Outsourcing – how to organize IP work?
  • How to optimize IP work within a company?
  • Process quality
  • Quality in patent searching
  • How much do you want to pay for your future opportunities? Cost-Quality-Ratios in practical IP management

 

IP Portfolio Management and Controlling

A portfolio analysis is an examination of comparable economic assets such as industries, companies, business units, products, and technologies in order to determine the optimum allocation of resources. The categorization within a portfolio is made according to the relative competitive position of the elements analyzed. A portfolio analysis is performed in order to develop and support a strategy. Typically, a business portfolio analysis is performed to access a firm’s competitive position and business performance relative to its market. It is used in strategic planning to optimize investment activities and effectively allocate resources towards optimal business opportunities.

Modern portfolio theory dates back to the economist Harry Markowitz, who studied the effects of asset risk, return, correlation, investment, and received the Nobel Prize for his work. He published his model in 1952. The Markowitz model is based on an investor who has a certain amount of capital and wants to invest over a certain time horizon. The investor can choose between different investment instruments such as stocks, bonds, options, or currencies for his portfolio. The investment decision depends on the future risk and return. The decision also depends on whether the investor would like to maximize their yield or minimize their risk. In this model, the investor is only willing to accept a higher risk if he gets a higher expected return. The Markowitz model is useful in deciding on the most efficient option by analyzing various possible portfolios of given securities. Markowitz offered mathematical proof that a diversified financial portfolio will be less volatile than the sum of its individual parts. His work was later improved and expanded by his doctoral student William Sharpe, who created the Capital Asset Pricing Model

One simple way to look at portfolio analysis is SWOT analysis, which is an acronym standing for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a high-level strategic development tool that can be applied to any given business object such as a specific project, a business unit, a firm, or a whole sector. These analyses lead to a richer and more transparent understanding of what the business object can offer, the key weaknesses that need to be addressed in order to achieve success, and where to bring in external partners for assistance. SWOT analysis is important to make sure the executives keep an eye to the big picture. It provides a framework for identifying and analyzing the factors that can have an impact on the viability of a business object.

In order to remain competitive, firms continually invest in technologies, but resource limitation necessitates an optimized resource allocation to different technology projects. New product development requires investments in terms of money, time, and manpower, without direct income from these investments. The fact that the greatest part of the follow-up costs for a product is determined during development and construction requires that this stage in the innovation process is managed carefully. This includes a systematic and strict assessment of projects, as well as new and already applied and used technologies. Technology portfolios are an instrument for systemizing and assessing technologies in firms. Just like the market position, the technology position is an indicator for the competitiveness of a firm.

Patent documents are a rich source of information about technologies, markets, companies, and trends, and are used widely in competitive intelligence. They provide current information in a uniform structure. Around 80 percent of patent information is never published in journal articles, and with the patent information that is published as journal articles, the patent is usually published first. Only 15 percent of the information presented in the patent literature can be found elsewhere in scientific technical documentation. With the availability of databases and internet-based data sources, portfolio analyses were developed which use this unique information source. The more than 120 different patent information databases accessible online contain more than 1.3 billion records.

In addition, patent portfolios of technology and innovation-driven companies have increased in size and complexity. This also leads to a sizeable cost for portfolio maintenance. For bigger companies, this cost can add up to a multi-million Euro budget every year. IP management must decide whether the portfolio fits the company’s strategy and whether the cost-benefit ratio fits the firm’s objectives. Here the use of IP-management tool and also AI in analyzing patent portfolios can help in monitoring and structuring those portfolios.

The university certificate on IP portfolio management and controlling comprises issues like:

  • Patents, Trademarks, Design Rights and Copyrights: Developing a coordinated protection strategy
  • How to Structure and Optimize International Patent Portfolios?
  • KPIs for IP portfolios: Motivation, Challenges and Pitfalls
  • It Is Time to Interface your IPMS! How Data-Interfaces Can Make IP Administration Easier
  • International practice in patent monitoring
  • Overview of IP Management Systems
  • Benefits of an integrated IP-Management-Software Eco-System
  • AI powered patent monitoring

 

Leadership in IP Management

Digitization is not a passing phase: it is the next industrial revolution. Now companies require a digitally adapted new kind of leadership and strategy. Digitization has brought about a myriad of growth opportunities as well as unprecedented challenges. For example, it has redefined the boundaries between partners and competitors. In many industries digitization has lowered the barriers to entry, making it easier for newcomers from other industries and with different technologies to compete, often more aggressively and briskly.

Digitization brings great challenges for leaders of business organizations, who now must deal with disruptive changes on the commercial landscape, with data-driven decision making, as well as with new ways of crowd-based working; and with a workforce with ubiquitous access to information and establishing new ways of communication. In this module, we discussed leaders’ perspectives on these digitization-driven developments. Leaders, as the focus of our analysis, discuss environmental changes of leadership as well as updated practices of leaders’ communication with their followers. In addition, we discussed leaders’ self-reported context-transcendence of their individual leadership styles. The lecture contributed to a more integrative view of the interplay of digitalization and leadership and to the thinking on whether the assumptions of leadership theories of the non-internet era are still valid.

Prior to diving into the implications on HR functions, it is important to identify selected organizational implications of the digital economy: Increasingly, responsibility is sitting closer to where decisions are most effective: Organizations are flatter and decision-making leaner. This should also become reality in modern corporate IP teams with advanced workflows for effective patent information sharing and collaboration for example.

Leaders have always focused on outcomes. With the digital transformation, there are technological enablers that make it possible to measure and test the soundness of decisions quickly and easily.

Mobility and flexibility are crucial for employees to remain relevant in the digital economy. Accordingly, competencies are transferable and internal and global movements are more appealing to both employers and employees.

So, the HR dilemma no longer lies solely between cost savings and value added. Instead, HR’s concerns will soon be revolving around the changing nature of the organization and employees becoming increasingly digital and influenced by the following disruptive themes:

  • Digital mega trends, including but not limited to cyber, data, cloud, social and mobile.
  • A multi-generational workforce including Millennials or first-generation digital citizens.
  • Merging work and life with hyper- connected employees.
  • Emergence of a new set of digitally skilled employees.
  • Business models under stress from digital disruption.

The employee being perceived as the first consumer of the employer’s brand. HR needs to be more pre-emptive regarding the digital transformation as it plays an important role in shaping the organization’s digital identity. It is a challenge and really complex to plan the future capabilities of a workforce in the digital economy. This is also true for the ability to integrate the right people into a dynamic organizational context and to help existing employees and leaders gain new digital competencies to be able to drive transformation.

To be successful in the new generation of business ecosystems that is based on innovation, collaboration and digital transformation we need whole-brain skills that fosters creative business leadership and increases the effectiveness of human centered learning and Design Thinking methodologies:

  • creativity
  • thinking out of box
  • ideation
  • observation
  • contextual thinking
  • asking good questions
  • pattern recognition
  • empathy
  • emotional intelligence
  • inspiration
  • concretization

The university certificate on leadership in IP management comprises issues like:

  • Digitalization and change management
  • Motivation and encouragement within human resource management within interdisciplinary teams (R&D, Marketing, Product Management etc.)
  • Leadership skills and negotiation power
  • Teamwork in agile teams – how to integrate IP work in flexible working structures and work in a 21st century corporate IP team
  • Getting your IP tasks done right – workflows optimization for effective IP information sharing and collaboration
  • Value based leadership, transformational leadership and authentic leadership – is there a digital leadership for IP?