Intellectual Property and Knowledge Management

Objective:

In this case study, focus in on how knowledge management can be applied in the area of IP management and promoting innovation in the organization. I am trying to asses this based on my experiences with real world IP projects that aimed to manage patent knowledge and incite innovation in the company.

Background:

According to various business journals, there are 4 important pillars for a business viz. Working Capital, Fixed Assets, Intangible assets (IA) and Intellectual Property. Intangible assets include contracts, know – how, customer lists etc. Intellectual Property includes copyrights, trademarks, patents and industrial designs.

In last three decades world has witnessed an economic inversion in the importance of these four components in the business. It has been empirically proven that during 70’s a company’s 80% value was associated with its tangible assets viz. working capital, fixed assets etc and only 20% in its IA and IP. In present scenario, a company’s 80% value is associated with its IA and IP and only 20% in tangible assets. Businesses across the world are now operating in a knowledge based economy.

For knowledge based companies operating in dynamic space such as Pharma, Telecom need to actively protect their interest by securing patents on innovating technologies. Inventors and start up need to understand the dynamics of IP and finance to effectively plan success of their ventures. Educational institutes also play important role in advancement of technology and need to plan effective strategies to ensure utilization of their resource at full potential while staying economically viable.

Companies such as Xerox, Dell, Dow Chemical and Gillette, effective exploitation of IP rights has moved to the top of the corporate world. IBM, one of the ‘poster boy’ for all the companies aiming to adopt an aggressive IP "milking" strategy. Company saw its annual patent licensing revenue increase from approximately USD 30 million in 1990 to well in excess of USD 1 billion by 2001.

As a consequence of these developments, modern standards of corporate governance require that a company's IP assets are effectively managed and exploited. Effective management of IP and particularly patents requires some form of knowledge management system. The extent and sophistication of the knowledge management tools employed by a business will largely be dictated by the nature of the business. A global technology company will have a greater imperative for sophisticated systems, but even a small start up should adopt some form of knowledge management as IP may be its most significant asset in terms of attracting investment and building a market, and for developing innovation strategy.

Why Knowledge Management and Patents?

Depending on the organization, there could be various objectives for managing patent knowledge or apply patent in knowledge management. However, broadly there could be following objectives:

Innovation Capture: Patent knowledge management systems enable a business to effectively identify and capture innovation. This ensures that innovations are identified from the time they are developed at R&D level and are then tracked through the development cycle to enable informed decisions about patent registration strategy. Knowledge management systems should have appropriate safeguards are in place to maintain confidentiality.

At the less sophisticated end, such systems involve implementing non-technical management processes. These include record keeping and reporting protocols for R&D, appointing IP gatekeepers to manage innovations, work with professional advisers and report to senior management, and maintaining detailed IP registers.

Promotion of Innovation culture and inciting ideas: Patent knowledge management systems can also enable idea generation. Companies developing certain technology/product use patent to track latest innovations happening the space. This helps the researches to not only generate new ideas it also helps them in finding creative solution to real world problems. This can help companies to increase their product line or improve existing.

Patent Portfolio Management: Taking into account ‘What you own’.

Knowledge management systems are critical for companies who manage an existing patent portfolio. These systems could also help in managing annuity deadline as if the patent is a potential 'blockbuster', missing one of these deadlines can mean the loss of substantial revenue. Various companies offers such software to manage patent portfolio etc.

In this it is also important to technically classify patent by technology, business unit, product etc. This can help R&D staff from ‘reinvention of wheel’ and effectively integrate existing knowledge.

Competitive Intelligence: Another useful application of a patent knowledge management system is assessing the scope, extent and direction of competitors' patents. A key aspect of the patent system is that complete details of patents and the innovations they encompass are publicly available. Businesses are increasingly implementing patent mapping strategies and knowledge management systems to gather intelligence on their competitors' technology. This enables a business to track competitors' innovations, anticipate their future direction and in some cases beat them to a solution. Critically, it also enables businesses to "design around" their competitors' patents, thereby avoiding or reducing the risk of costly patent infringement actions.

Source: EPO conference of Patent system

How can this system benefit and give tangible results?

The business world and capital markets have recognized that intangible assets such as IP and in particular patents can have substantial value if they are effectively managed. It is becoming a corporate imperative to efficiently identify, protect and exploit this IP and a range of new technologies and solutions are emerging to provide IP knowledge management systems. A number of businesses ranging from global giants to small technology startups have recently demonstrated that combining an IP strategy with an efficient knowledge management system can produce a powerful competitive advantage and promoting innovation in the organization.

How the system can be implemented? What should be its Architecture?

Source: 129109391053281250-KM_Lec_20Feb2010

The architecture of the system of this system can be similar to the shown above. Since patent are complex to classify and mine. A manual or semi-automated approach can be used as engine to data mining. Various companies (including CPA) offers such services where vendor provides data to the companies who then deploy using web interfaces or as standalone database (excel/access).

It is very important to link this data with market sales of product such that researchers can identify its effort, objective and impact of the patent knowledge management system.

How to measure effectiveness?

So far, there have been no clear evaluation criteria for such system. However, some research institutes propose certain models to evaluate companies strategy on patent management.

Success Stories:

There are various companies who are presently on top in the world and generating high revenue partly due to their state of art patent knowledge management practices.

Some such companies are:
  Qualcomm,   Interdigital,    Dow chemical,  IBM,   BT,   DSM,  P&G, Intel, and many others....

References: 

Some thoughts presented here are borrowed from public presentations made by prominent speakers and writers. 

Thanks for overlooking the typos!
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