IP Strategy for Greentech Ltd - Essay Example

? IP Strategy for Greentech Ltd in the area of Low Carbon Technology By Presented to IP Strategy for Greentech Ltd in the area of Low Carbon Technology Executive Summary Modern businesses cannot survive if they are unable to create, exploit, while at the same time ensure that Intellectual Property (IP) is protected; R&D efforts would be compromised, as well. In addition to the expertise provided by professionals, it is nowadays important for organizations to have an IP strategy, or an IP portfolio management process that is aligned to their business processes (Shultz 1996). A clear Intellectual Property Strategy is of significant importance as an organization seeks to develop and exploit partnerships with other organizations. In today’s marketplace, IP is not an afterthought, but an issue at the management and the board level, since it has shareholder value consequences. The critical value of high quality IP strategies cannot be overlooked, since it has the capability of fostering innovation and giving an organization a competitive edge and advantage. Licensing of IP, at a time when companies are considering other technological and commercial models, as is the case in the energy sector where most companies are considering climate-friendly technologies, can help protect a business from unnecessary lawsuits and legal battles, and provide an important source of revenue. This paper offers Greentech Ltd, a low carbon technology, energy firm, advice with regard to the management of its Intellectual Property portfolio, and proposes an a high quality IP strategy the firm can rely on in the management of any future innovations, especially in the area of Low Carbon Technology. The proposed IP strategy is aimed at enabling Greentech Ltd to maximize its Research Division innovative outputs. Additionally, the strategy is targeted at enabling the acquisition of innovative ideas and research outputs of persons who are not employed by Greentech Ltd, and facilitation of entry of such ideas and other new ideas into the market at a faster rate. The paper is divided into three parts; Part I offers a brief background of Greentech Ltd current IP holdings and status, Part II outlines recommendations with regard to how Greentech should manage its current Intellectual Property Portfolio, while Part III describes a high quality IP strategy that Greentech will rely on in the management of any future innovations, especially in the area of Low Carbon Technology. Part One: Background and Introduction Background Greentech Ltd at present has various Intellectual Property holdings; it has, over the years licensed various technologies, specifically, it holds 20 licenses, from other parties as a way of enhancing its research projects. The company continues to pay, as is contained in the licensing contracts, royalties for all the 20 licenses; however, some of those IP holdings are no longer needed. Greentech Ltd has in the past has licensed certain technologies to other firms without proper initial exploration and research of the market to ascertain how to strike a better deal for the firm. The company, as part of its culture, has always endeavoured to ensure that all its research outputs are patented, and that those patents are sustained. This it has done even in cases where some patents have failed to yield substantial returns. Currently, Greentech Ltd holds 10 patents, all of which were granted between the year 2000 and 2011. The firm has recently developed a new and a potential market-leading technology, that is patentable; however, given the estimated cost, ?10 million, of further development, the firm is unable to fund further development of the technology. The firm has very poorly drafted employment contracts, which is not strict on confidentiality issues; as a result the employees who leave are not in any way deterred from taking confidential information with them. Additionally, Greentech Ltd has failed, in some cases, to use non-disclosure agreements, or in some cases, has used them in a jumbled manner. Currently, Greentech Ltd has not thoroughly utilized copyright to protect its publicity and marketing work, and has failed to register its trademark, which it uses in all its publications and literature, as well. The company is currently unable to retain some of its highly skilled and qualified research personnel, most of whom fell excluded from financial compensation for their contribution, which the company has exploited; as a result, they feel dissatisfied and are like to quit and work with Greentech Ltd competitors. The company has also been currently threatened with legal action for copyright infringement by Greencarb PLC, who alleges that Greentech has infringed on its copyright its technical promotional literature. Introduction Intellectual Property Rights are considered to be very important in fostering innovations since they guarantee compensations and financial incentives for innovators and inventors to innovate and invent (Edvinsson & Sullivan 1996). Sound IP strategies are important in ensuring that companies foster their R&D, and ensure that their competitive edge and advantage over their competitors is maintained. Most importantly, maintain a firms IP portfolio and implementing a high quality IP strategy ensure that a firm/company is not faced by unnecessary legal suits, and that their employees are compensated for their research and innovation contributions, thus ensuring highly skilled employees are retained (Colvin n.d.). Currently debates regarding energy technology, specifically low carbon technology, and IP are currently very polarized. In order to protect Intellectual Property, most companies and researchers have patented the outputs –technological inventions-of their research, as has been done by Greentech Ltd. A patent offers a patent holder protection to his/her invention from unauthorized or unlicensed use for a given period of time, usually about 20 years, within a given territory (Palfrey 2011). Usually, patent holders can offer others a license so as they can use the technology in return for royalties; this implies that patents are not meant just for protection of IPs but are strategic tools that holders can use in various ways such as generating income for technological innovations and inventions that are costly in terms of further development. For this reason, it is proper to consider patent-based IPs as the movers of the diffusion of major technologies and the cornerstone of societal innovations (Barrett 2005). Development and dissemination of technology in the low carbon energy industry is hindered or affected by inadequate research and development, and/or where adequate research and development is significant, there is a problem of easy and quick appropriation of the gains and benefits of R&D to the investing firm. Utilizing a high quality IP strategy such as the use of design rights, trade secrets and patents is one important way in which a company can increase its ability to earn its R&D investment (Menton 2004). In pursuing low carbon energy technologies, no pricing structure exist that compensate for the efforts input by organizations. In this regard, patents act as incentives for innovations since their offer holders’ exclusive rights to their inventions and innovation for a given fixed period (Reichman et al. 2008). Exclusive rights give companies that hold such patents the capability of setting a price that is above the marginal production cost making it possible for them to recover their investment. The ways in which companies use IPs differ within and among industries, usually, ranging from open innovation strategies to highly protective strategies. The choice of an IP strategy is dictated by the nature of business a firm/organization is involved in, it business processes, context, the history of the industry and behaviours or habits of individual actors within an industry; for this reason, no single IP strategy can be considered to be optimal for all industries or companies (Menton 2004). It is, therefore, important for the policy-makers at Greentech Ltd to understand how IP are used, especially within the low carbon technology industry. The following two parts, Part II and III are, therefore, dedicated in outlining how various IP practices can be utilized in managing current IP portfolio for Greentech and a sound high quality IP strategy is proposed for the management of future innovations. Part Two: Recommendations for the management of current Intellectual Property Portfolio At present, Greentech holds about 20 licenses for Intellectual Property holdings from other parties of which it is no longer needs despite the fact that it continues to pay royalties for all of them. Holding licenses for technologies patented to other parties is a good practice; however, it is important for Greentech Ltd to terminate payments of royalties for those technologies that it no longer needs. This it can achieve by terminating the contracts or agreements for the licenses of technologies that no longer needs, or uses. As has been noted, licensing is a business practice frequently used; it allows patent holders to license other parties to use their IP for. Greentech has extensively used this practice; however, it has done so without proper exploration of the market for a better deal for the firm. We recommend the continued usage of this practice, licensing, rather than resorting to litigation-legal actions-or other enforcement measures, which are expensive and time-wasting. However, we advise that those responsible for policy making and decision making should first carry out extensive market research to ascertain a proper value for an IP that is to be licensed. In this regard, it is important for Greentech Ltd to consider using a controlled licensing model in which it will ration the flow of licenses so as to cushion it from competition and limit expansion by its competitors (C. Chiarolla & Matthews 2009). As earlier noted, the firm patents all the outputs of its research and development department, even, those that are unable to yield substantial returns; this is not sustainable. There is a need for the company to, therefore, change its strategy and only patent those innovations that could yield substantial returns; otherwise it should opt for secrecy, ensure that such technological innovations-those that does not yield substantial returns-are kept as trade secrets. Additionally, for those patents that do not yield substantial returns, the company can adopt the scarecrow strategy to ensure that competitors keep off those patents that the company is not willing to enforce its rights on. With regard to the 10 patents that the company holds, most of which were granted since 2000, it should consider licensing them to other so that it can receive royalties; however, it should that the license being issued is controlled, so that the company can limit its flow and the expansion by its competitors. Given that the new and potential market leading technology is expensive for the company to further develop, it should employ the blocking strategy and patent the technology so that it can use it in future as a viable alternative against its competitors. Additionally, on the basis of the company’s commercial strategy, the company may also opt for the ad hoc patent strategy and protect the technology in a special way at a low cost (Lee et al. 2009). It is important for Greentech to ensure that all its employees with knowledge of or access to any trade secrets, should sign confidentiality contracts that can accord it additional legal protection. This will also ensure that employees who leave the company do not disclose or reveal any proprietary or trade secrets. Part III: Proposed IP Strategy In order to protecting any of its future innovations, from its R&D, employees and other parties, Greentech Ltd should rely on the following IP strategy “Patent all innovations that are in line with the company’s strategy and only sustain those patents that yield strong returns. Keep strategic discoveries a secret, as trade secrets, especially those that would be hard to keep track of and enforce if patented. Idle patents should be utilized, where appropriate to block competitor activities and invested in as part of a joint venture. Less valuable IP that are costly to sustain should be left to expire (Jaffe et al. 2003). A management system for Intellectual Property asses will be kept, at least capturing the nature of the IP, the ownership of the IP, and any rights that other parties have to exploit or use. Contracts with employees, especially those with access to or knowledge of trade secrets should contain strict confidentiality agreements that would deter those employees who may leave, from exploiting or using those secrets (Claudio Chiarolla 2010). Any agreements with external parties or employees should contain clear clauses on compensation and IP ownership. IP assets will be reviewed annually in line with business direction and context. The company shall regularly monitor the market to ensure that its IP assets are not violated, and where such infringements are detected, the IP portfolio or management system maintained by the company will be used in defence (Hogan 2005).” Reference List Barrett, W.A., 2005. Building a strategy for maximizing intellectual property value. Nature publishing group. Available at: http://www.nature.com/bioent/building/ip/012005/full/bioent842.html [Accessed April 1, 2013]. Chiarolla, C. & Matthews, D., 2009. International Intellectual Property Strategy and Development, London. Chiarolla, Claudio, 2010. Intellectual Property Strategies for Low Carbon Technology Research, Development and Diffusion. In 2nd Yale/UNITAR Global Conference on Environmental Governance and Democracy. New Haven: Yale University Press. Colvin, C.A., The human dimension in IP valuation. Building IP Value. Available at: http://www.buildingipvalue.com/06US_Can/101_104.htm [Accessed March 30, 2013]. Edvinsson, L. & Sullivan, P., 1996. Developing a model for managing intellectual capital. European Management Journal, 14(4), pp.356–364. Hogan, J., 2005. Open innovation or open house: How to protect your most valuable assets. Medical Device Technology, 16(3), p.30. Jaffe, A., Newell, R. & Stavins, R., 2003. Technology Policy for Energy and the Environment. In NBER Innovation Policy and the Economy Meeting 15 April. Lee, B., Iliev, I. & Preston, F., 2009. Who Owns Our Low Carbon Future? Intellectual Property and Energy Technologies, Chatham House. Menton, S., 2004. Placing IP management at the heart of a business. Les Nouvelles, 39(September), pp.112–116. Palfrey, J., 2011. Intellectual Property Strategy (MIT Press Essential Knowledge), Cambridge, MA: The MIT Press. Reichman, J. et al., 2008. Intellectual Property and Alternatives: Strategies for Green Innovation, London. Available at: www.chathamhouse.org.uk/research/eedp/papers/view/-/id/691/. Shultz, C.J.I., 1996. Protecting intellectual property: Strategies and recommendations to deter counterfeiting and brand piracy in global markets. The Columbia Journal of World Business, 31(1), pp.18–28. Read More