Post on 25-Dec-2015
SEN 650: Software Marketing
Module-04
Lec 04: Basics of Intellectual Property
Innovation Process:
“The successful exploitation of new ideas”
• Generating ideas is (comparatively) easy...
• … it’s screening, selecting, researching, developing, prototyping, taking to market that’s tough..
Innovation S-curves:
S-curves visually depict how a product, service, technology or business progresses and evolves over time.
S-curves can be viewed on an incremental level to map product evolutions and opportunities, or on a macro scale to describe the evolution of businesses and industries.
Innovation S-curves…:
On a product, service, or technology level, S-curves
are usually connected to “market adoption”
since the beginning of a curve relates to the birth of
a new market opportunity, while the end of the
curve represents the death, or obsolescence of the
product, service, or technology in the market.
Usually the end of one S-curve marks the
emergence of a new S-curve – the one that
displaces it (e.g., video cassette tapes versus
DVDs, word processors versus computers, etc.).
Example from software?
Innovation S-Curve:
Innovation Adoption Pattern:
Product Maturity and Decline of Unit Cost of Production:
Proprietary Knowledge
content
In the initial “Proprietary Advantages” stage, the technology can be used by an individual company as, in effect, a proprietary resource and can thus be the basis for a lasting advantage.
The high cost, risk, and difficulty of using the technology during this stage provide strong barriers against competitive replication.
It can take years for rivals to catch up. When American Airlines built its Sabre reservation
system, for instance, the IT infrastructure was at such an immature stage that the system created a strong competitive barrier.
IrrationalExuberance
HolySh*t
Reality Maturity Obsolescence
Emotional Zenith
Reality HangoverReminiscing
Denial
Requiem
IrrationalExuberance
HolySh*t
Reality Maturity Obsolescence
Emotional Zenith
Reality HangoverReminiscing
Denial
Requiem
IrrationalExuberance
HolySh*t
Reality Maturity Obsolescence
Emotional Zenith
Reality HangoverReminiscing
Denial
Requiem
IrrationalExuberance
HolySh*t
Reality Maturity Obsolescence
Emotional Zenith
Reality HangoverReminiscing
Denial
Requiem
Time
Con
fid
en
ce
IrrationalExuberance
HolySh*t
Reality Maturity Obsolescence
Emotional Zenith
Reality HangoverReminiscing
Denial
Requiem
Business emotional lifecycle
Emotional Zenith
Reality HangoverReminiscing
Denial
Intellectual Capital and Its Major Components:
Human Capital
Know-how
Skills
Creativity
Intellectual Assets
Programs Methodologies
Inventions Documents
Processes Drawings
Databases Designs
Intellectual Property
Patents
Copyright
Trademarks
Trade Secrets
Elements Comprising Intellectual Capital:
Human Capital
Customer capital
Intellectual property
Structural capital
R&D
Intellectual assets
Codified knowledge
Innovation
IT
Tacit knowledge
Users of Intellectual Capital (IC):
The users of intellect capital tend to fall into several groups as listed below, each with strongly held and sometimes vehemently defended points of view: Knowledge and learning Knowledge management Innovation management Capital markets Shareholders Company mangers
How does IC bring value to a firm?
Profit generation Income from products and services Income from patents Price premium Increase in sales Improve productivity Cost reductions
Strategic positioning Market share Leadership (technology, innovation etc) Standard setting Brand Customer loyalty
Strategy of Using IP and Its Effect on Value: Different kinds of firms uses different strategies to
obtain different mixes of value from their intellectual capital.
Firms that physical products often protect their product innovations by patenting them.
In other words, they seek innovations from their human capital that will make the company’s products differentiated from those of their competitors and attractive to customers.
Other kind of firms profit by selling the knowledge of their human capital. Consulting firms, law firms, software service firms.
IP Utilization and Types of Firms
The fundamental nature and functions of a firm may be a primary determinant of its strategy and the kind of value it can and should extract from its intellectual capital. Based on the strategy of extracting value from IP, companies can be divided in four broad categories:
Differentiated products company Commodity products company A network services company: this type of firm uses
technology to create a network over which customers communicate with one another. Innovations focuses on creating, improving and maintaining network quality and on creating and improving products and services. Telephone and utility companies are examples.
Direct services companies: Law firms, consulting firms.
A Brief History of IC:
The subject of IC appeared on the business scene in the 1990s.
However, this history actually began in the early 1980s, as managers, academics, and consultants around the world began to notice that a firm’s intangible assets, its intellectual capital, were often a major determinant of the corporation’s profit.
What is intellectual property (IP)?
Property indicates legal ownership, that something is recognized by law as being “mine” or “yours”.
Can music be property? Can software be property? The term intellectual property could easily be called
information property. Intellectual assets that receive legal protection are
called intellectual property. Intellectual property law, the body of law dealings with
the protection of intellectual assets, recognizes five forms of legal protection.
Patents, copyrights, trademarks, and trade secrets are examples of IP.
These forms of IP are information and easily stolen, businesses must be alert to their misappropriation.
Patent Law: A patent is a type of property created by statute and recognized by the
government for a limited period of time.
This property applies to inventions, which are new applications of information.
To obtain a patent, an inventor must pay a filling fee and file an application with the patent and trademark office (PTO).
The application must in words and drawings (1) how to make and use the basic invention, (2) show why the invention is different from prior art, that is, from all previous and related inventions or state of knowledge, and (3) precisely describe what aspects of the invention deserve patent.
The PTO assigns an examiner to consider the application and there is usually a great deal of communication between the examiner and the applicant over the adequacy of application’s explanation.
Patentable Subject Matter:
Usual patentable subject matters are as follows: Processes Machines Composition of matter Improvements to processes, machines, or
composition of matters. Nonfunctional designs of a manufactured
article. Certain plants.
Overview of patent prosecution process:
Technology Research and Development
Inventor Disclosure Program
Patentability Determination and Valuation of Potential Scope of Protection
Patent Prosecution
Patent issued or granted
Patent Infringement:
Patent infringement takes place, if some one uses technology covered by a patent without permission of patent holder.
SUED for Patent Infringement
Settle, work out a licensing agreement or cease use of technology
Argue non-infringement and attack validity.
Check own patent portfolio
Counterclaim or separate suit for infringement of your patent(s).
Licensing, Selling, and Buying Patents:
Licensing without litigation
Negotiated Royalties
Litigation
Reasonable royalty
Lost profits
Increased damages
Interest and attorney fees.
Patent Duration and Enforcement:
The property represented by patents runs for limited duration.
U.S. constitution limits utility patents to 20 years, plant patents to 17 years, and design patents to 14 years. (patents which do not belong to plant and design are utility patents)
When a patent expires, the invention is in the public domain, and others may use it without limitation.
The explicit purpose of patent law is to make inventions public following the limited period of legal right.
For the duration of a patent, the owner can sue those who infringe on it. If successful, the owner can get an injunction prohibiting future infringement and damages.
Trademark:
Trademarks constitute a form of IP. Like patents, they can be registered with PTO. Recognizability or distinctiveness is the function of trademarks. Types of trademarks:
Trademark-any mark, word, picture, or design that attaches to goods to indicate their source.
Service mark – a mark associated with a service, for example bdjobs.com
Certification mark- a mark used by someone other than the owner to certify the quality, point of origin, or other characteristics of goods or services, for example US Cotton.
Collective mark- a mark representing membership in a certain organization or association.
Trademark Registration:
To be registered, a trademark must be distinctive. The PTO may deny registration in the following circumstances: If the mark is the same or similar to a mark
currently used on similar related goods. If the mark contains certain prohibited or
reserved names or designs. If the mark merely describes a product or
service. If the mark is generic.
Trademark Enforcement:
Trademark law protect the trademark’s owner from having the mark used in an unauthorized way.
Remedies for infringement include a variety of damages, injunctions, prohibiting future infringement, and orders to destroy infringing products to any one’s possession.
Trademark owners must be vigilant in protecting their marks.
Copyright:
Copyright gives a property a certain creative work that keeps others from reproducing it without owner’s permission.
Three criteria are necessary for copyright protection to occur: A wok must be original. It must be created, not
copied. The work must be fixed in tangible medium of
expression like a book, canvas, compact disc, computer disk.
The work must show some creativity.
Copyright Protection:
Although Copyright protection is automatic, an action for copyright infringement cannot be begun unless the author has properly filed copies of protected work with the copyright office.
The Copyright Act specifies that a fair use of copyrighted materials is not an infringement of the owner’s property.
In determining whether a particular use is a fair one, a court will consider:
The purpose and character of the use, including whether such use is fir commercial or nonprofit educational purposes.
The nature of the copyright work. The amount and substantiality of the portion used. The effect of the use upon the potential market for the
copyrighted work.
Trade Secrets:
Trade secret relates to any formula, pattern, device, or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.
Information that is general knowledge is not trade secret.
Many times employees who leave their employment to go into competition with their employers are accused of misappropriating trade secrets.
For a trade secret to remain a trade secret, a business must take reasonable steps to keep it from disclosure.