Management of Intellectual Property by

AUTHOR: MRS IYABO ARINOLA AWOKOYA BEING A PAPER SUBMITTED AS FINAL EXAM AND IN FULFILMENT OF THE MODULE ON INTERNATIONAL PROPERTY (ELECTIVE) FOR THE MBA DEGREE OF THE: ROBERT KENNEDY COLLEGE
MANAGEMENT OF INTELLECTUAL PROPERTY
FINAL EXAM
(August 2, 2010)
IP AUDIT COMPANY WEALTH & VALUE CREATION IP POLICY IP BUSINESS STRATEGIES LECTURER: PROFESSOR TANA PISTORIOUS 1 Intellectual Property Final Exam CONTENTS
SECTION A ......................................................................................................................................................................................... 4 1. EXECUTIVE SUMMARY ..................................................................................................................................................... 5 2. STRUCTURE OF ESSAY .................................................................................................................................................... 5 3. INTRODUCTION ................................................................................................................................................................... 6 3.1 BACKGROUND .......................................................................................................................................................... 6 3.2 THE ISSUES ............................................................................................................................................................... 7 SECTION B ......................................................................................................................................................................................... 8 4. 5 6 IMPORTANCE OF INTELLECTUAL PROPERTY ........................................................................................................... 9 4.1 WHAT IS INTELLECTUAL PROPERTY ................................................................................................................. 9 4.2 INTELLECTUAL PROPERTY RIGHTS PORTFOLIO ........................................................................................ 10 4.3 IMPORTANCE OF IP GENERALLY ...................................................................................................................... 12 4.4 IMPORTANCE OF IP TO BERTRAM ................................................................................................................... 12 4.4 INTERNAL/EXTERNAL THREATS FACING BERTRAM CHEMICAL ............................................................. 13 AUDIT OF BERTRAM’S IP RIGHTS ................................................................................................................................ 14 5.1 WHAT IS AN IP AUDIT? ......................................................................................................................................... 14 5.2 WHEN TO CONDUCT AN INTELLECTUAL PROPERTY AUDIT ................................................................... 14 5.3 IP VALUATION METHODOLOGIES ..................................................................................................................... 15 5.4 BERTRAM’S IP AUDIT ............................................................................................................................................ 16 BERTRAM CHEMICAL’S IP PROTECTION AND MAINTENANCE STRATEGY ..................................................... 19 6.1 STATUS QUO FACTS ELICITED FROM CASE STUDY .................................................................................. 19 6.2 WHY DOES BERTRAM CHEMICAL NEED TO FORMULATE AN IP STRATEGY? .................................... 20 6.3 IP STRATEGIES GENERALLY .............................................................................................................................. 20 6.4 OVERVIEW OF CURRENT IP PROTECTION AND MAINTENANCE STRATEGIES .............................................................. 21 6.5. INTERNAL AND EXTERNAL STRATEGY SITUATION ANALYSIS: .................................................................... 22 ASSESSMENT OF BERTRAM’S STRATEGY ISSUES- PRESENT AND FUTURE .................................................... 22 6.5 AN IP STRATEGY FOR BERTRAM CHEMICAL ................................................................................................ 23 7. CONCLUSIONS AND RECOMMENDATION ............................................................................................................................. 24 8. BIBLIOGRAPHY ................................................................................................................................................................. 25 2 Intellectual Property Final Exam TABLE 1: INTELLECTUAL PROPERTY PORTFOLIO .......................................................................................................... 10 TABLE 2: LITIGATION ON IP INFRINGEMENT UNDERSCORING IMPORTANCE OF IP ASSETS TO
BUSINESSES .............................................................................................................................................................................. 12 TABLE 3: CURRENT IP VALUATION METHODOLOGIES .................................................................................................. 15 TABLE 4: BERTRAM CHEMICAL'S IP AUDIT ........................................................................................................................ 17 TABLE 5: IP STRATEGIES ....................................................................................................................................................... 21 TABLE 6: BERTRAM'S IP STRATEGY ANALYSIS ............................................................................................................... 22 FIGURE 1: IP VALUATION OF SOME TECHNOLOGY COMPANIES .................................................................................................... 16 FIGURE 2: RECOMMENDED IP PROTECTION AND MANAGEMENT STRATEGY ...................................................... 24 3 Intellectual Property Final Exam SECTION A 4 Intellectual Property Final Exam 1.
EXECUTIVE SUMMARY
Bertram Chemical (1982) Co. Ltd a family-owned, Thailand based company engaged primarily in the
production of non-chemical herbal products (oils and balms and other mint products) is faced with
Intellectual property challenges and requires consultancy services on how to understand the modern
concept of Intellectual Property Rights, identify different types and forms of Intellectual properties
generally, be able to zero in on those Intellectual Property rights available its company through a properly
structured and professional Intellectual Property Audit and thereafter to be able to devise an Intellectual
Property Protection and Management Strategy that will deliver value for the company.
Hitherto, the company appeared not to have appreciated the potentials of IP to deliver value through
strategic alliances. Also, the value of money spent on Research and Development by Bertram is not
being leveraged for additional value through standalone Patent generation, registration and licensing and
the Trademarks owned by the company are being infringed with impunity with the company seeming
incapable of taking credible action to protect its property leading to the inevitable conclusion that the
company has no strategy for IP Management and Protection.
The conclusions from the essay are that there is immense potential for growth in the alternative medicine
market worldwide and that Bertram Chemicals is well positioned to take advantage of the growth.
However for such value, Bertram must make Intellectual Property Protection and Management Strategy
central to its business strategy. In particular the Essay examines the following specific issues:
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Bertram Chemical’s aptitude in understanding the modern concept of intellectual Property as
being part of credible assets of a company.
The requirement for strategic management of Intellectual Property.
What actions need to be taken to protect Bertram’s market leadership especially as related to it
Intellectual Property.
The need for an Audit of Bertram’s Intellectual Property.
The varied Intellectual Property Protection and Maintenance Strategies available and the
recommendation on which would best suit Bertram Chemicals.
STRUCTURE OF ESSAY
This Essay comprises three (3) sections, A and B respectively.
Section A is introductory to the Bertram Chemicals (1982) Co. Ltd (hereafter called “Bertram Chemicals”
or “Bertram” case study. It provides a summary of the facts as well as the issues that are germane to
Bertram’s Intellectual Property Rights (IPR) protection and management.
Section B answers the questions posed by the Examiner. It is structured into 3 parts -1, 11 and 111 in
accordance with the instructions with each of the parts providing answers to the specific questions posed.
It also provides conclusions and recommends an Intellectual Property (IP) Strategy for Bertram.
5 Intellectual Property Final Exam 3.
INTRODUCTION
3.1
BACKGROUND
Bertram Chemical’s growth in the homoeopathic non prescription herbal products market is nothing other
than remarkable. The company is a family business, with three sisters, Supeeya, Titima and Suwanna at
the helm as Production Director, Finance and Administration Director and Marketing Director
respectively, having joined their father Booncha Emiakpul in the management of the business. The
company’s main product, the Siang Pure Oil and derivative balms remain traditional Chinese nonchemical based herbal oils produced on formula guarded by trade secret. The company’s history dates to
1963 with the start of the production and marketing of the Siang Pure oil by Booncha trading under the
name and style of Chakrintr Limited Partnership. When the girls joined the company in 1982, it was then
incorporated as Bertram Chemicals (1982) Co. Ltd.
This family owned business however has a business turnover of Bt600 million in a market size that it
estimated to grow worldwide into the trillion dollars segment. Hitherto Bertram’s market size and
segmentation was in the home country of Thailand and later became regional covering the whole Asian
region, but the growth has become worldwide with the industrialised nations being touted as a major
growth pole. Africa also remains a very promising market for growth because of the poverty level which
predisposes the population to favour alternative medicine as cheaper treatment option. Bertram is the
market leader in its Herbal oil product line and in 2009, the company realised more than 50% of its sales
from export.
But like all success stories, challenges have arisen to threaten Bertram’s position as market leader.
Following in the wake of success, Bertram has attracted both free loaders and genuine competitors. The
Trademark of Siang Pure Oil is being infringed with impunity and with detrimental effects and almost with
sinister motives. When it is infringed in the home country of Thailand, Bertram finds enforcement of its
rights difficult because the authorities, just as in most developing countries appear incapable or unwilling
to enforce intellectual property rights. Because Bertram’s trademarks are not registered in all the
countries where it trades, enforcing protection is also difficult although Bertram does not seem to wish to
aggressively defend its Trademark abroad.
The latest threat to Bertram is from the excessive trading on the internet platforms such as Ebay which
opens the products to a wide market in the world. Sadly Bertram will not see much of the profits in those
trade lines because the distributors rather than Bertram offer the products for sale often at exorbitant
prices thereby making the competitor’s products appear so much cheaper than Bertram’s. An additional
fallout from the Internet trade is the fact that some unscrupulous but internet savvy competitors register
websites with domain names that contain the Siang pure oil used in a derogative manner such as the
www.siangimpureoli.com or www.siangpureoilstinks.com. With the aid of mega tags traffic seeking herbal
oil products is directed to these websites where they are treated to derogatory statements and falsehood
about the quality of Siang Pure oil. For a product that was awarded the GMP mark for quality and
recognised worldwide for its quality this is real threat.
Bertram Chemicals have developed other products, although the contribution to market share for the
company is a little under 20%, yet in view of the expected growth of the herbal market in the future, the
company envisages that the products will have significant impact on future growth and is interested in
exploring this product line- the Peppermint field line, for a younger generation market.
In the light of this background details, it is imperative that Bertram develops an IP protection and
maintenance strategy that will stand the company in good stead to keep the competitors under check,
and to grow its IP rights and appropriate them for progress of the company.
6 Intellectual Property Final Exam 3.2
THE ISSUES
The following issues have been identified in this case study:
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Whether Bertram Chemicals understands the modern concept of IP as being part of credible
assets that a company has and ought to protect.
Whether there is any IP protection and maintenance strategy in place in Bertram.
Whether the company has done all it can to protect its IP in total given the fact that its products
are marketed worldwide through various distribution networks.
Whether the company has done credible justice to enforcing its IP rights locally and
internationally.
Whether in the modern world of the Internet the company appreciates the weakness of protecting
IP rights that are registered locally from being infringed internationally.
What actions need to be taken to protect Bertram’s market leadership especially as related to it
IP assets.
Whether the company appreciates that IP covers a lot more than Trademarks and Trade secrets.
Whether there has been any Audit of Bertram’s IP or a pressing need is felt to do so and whether
the company appreciates the need for a proper audit of the company’s IP portfolio.
What remedies are open to the company to take against the persons who infringe on its property
rights?
What IP Protection and Maintenance Strategy best suits Bertram?
7 Intellectual Property Final Exam SECTION B 8 Intellectual Property Final Exam PART 1
4.
IMPORTANCE OF INTELLECTUAL PROPERTY
4.1
WHAT IS INTELLECTUAL PROPERTY
IPR resides in persons who have created some intangible assets but have managed with the support of
the law whether national and/or international and tradition to clothe them with some form of tangibility. As
the word Intellectual implies, the asset created must have come from the intellect of someone. The
morale behind IPR is that if a person makes a discovery through his intellectual pursuit of knowledge and
the discovery will be of benefit to other people and may result in commercial value, then such a person
should own the rights to use such property to his advantage and to appropriate same for commercial
advantage. IPR laws and conventions weigh the rights of the owner of a property to exclusivity and value
creation against the rights of the populace to use the knowledge created for whatever means and
concludes that while the property owner may not exclude the legal use, he or she may exclude the illegal
use and may surely allow the legal use to some commercial advantage such as sale, license, user
charges, production of goods etc.
But the purview of IP is still largely a work in progress since technological advancement daily challenge
the definition of IPR. It appears thus that there was wisdom in the definition of IP by the Convention
Establishing the World Intellectual Property Organization, or "WIPO", wherein the States that drafted the
Convention chose to offer an inclusive list of the rights relating to: “Literary artistic and scientific works;
performances of performing artists, phonograms, and broadcasts; inventions in all fields of human
endeavour; scientific discoveries; industrial designs; trademarks, service marks, and commercial names
and designations; protection against unfair competition; and "all other rights resulting from intellectual
1
activity in the industrial, scientific, literary or artistic fields .” (World Intellectual Property Organization,
1967, July 14). But the modern world of technology continues to challenge the efficacy of legal protection
of IP, with activities on cyberspace moving at too fast a pace for the law to comprehend and as such
design a befitting control system.
The argument has been raised whether it might not be fortuitous to adopt a wait and see attitude to the
development of IP and technology so as to fully grasp the magnitude of the challenges that the law will
face in attempting a holistic control. For example copyright was thought to relate to only materials fixed in
a form and lawyers have been trying to see ways in which to fix the world of computer programmes and
source codes which are written in a computer code in order to offer protection on the Internet. But it must
be admitted that it is rather not so easy to broaden the meaning of “fix” in order to let computer software
and other codes and language fit into copyright or patent, rather another way may be to expand the
meaning of copyright or to create another type of IP that relates to computer programming and the
Internet. The ease of copying technology based IP means that the law is failing to protect IPR in
computer software efficaciously. Companies such as Microsoft discovered this weakness of the law in
developing nations where flagrant infringement of copyright thrives as a business.
Many companies have grasped that IP fits in very snugly with this technology driven age, being clothed
with intangibility as ephemeral to less discerning technology novices as the language of computer geeks
to most people. The world has clothed intangibility with tangibility and ephemeral assets such as IP
(literally the Brain) are valuable. It does make sense that every company that does rely on innovation, the
ideals of thinking and researching and product innovation must recognise these activities as their assets
that can be exploited for gain and must thus in similar manner as tangible assets (land, buildings,
machinery, cars, etc) protect these “intellectual” assets such as results of research, written word or
1
: "Small business - FAQ - USPTO Stopfakes.gov." <http://www.uspto.gov/smallbusiness/about/faq.html. N.p., n.d.
Web. 2 Aug. 2010. 9 Intellectual Property Final Exam programme, scientific discovery, advancement of a discovery, biotechnology discovery or advancement,
genetic engineering discovery and computer “abracadrabra.”
4.2
INTELLECTUAL PROPERTY RIGHTS PORTFOLIO
IPRs cover a wide range of assets. Bertram however appear only to understand Trademark or dress
mark as it is called in Thailand. Because of this poor understanding the company appears ill-equipped to
protect and defend its IP rights since no audit appears to have been done and no strategy in place to
appropriate their IP Portfolio to any advantage.
Table 1 following gives a full range of all IP rights that are available in the current age and briefly
discusses each one:
Table 1: Intellectual Property Portfolio
IP Right
1
Copyright
2
Related Rights
3
Trademarks
Definition, Purview, Benefits & Process
of Rights Acquisition
• An original work in a fixed and visible form such as books, other written word,
paintings, sound recordings, films, musical dramatic works, websites, sculptures,
videos, maps etc.
• What is protected is an idea to which expression has been given and not the idea
itself. The sign © is used to denote copyright.
• Right Inherent and automatic requiring no registration in a number of countries
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following the Berne Convention but in the US it is registered by the US Copyright
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Office
• Copyright entitles owner to derive benefits as with other property to sell, license,
transfer, or refuse the use in an immoral or other illegal manner.
• Copyright protection subsists for the life of the owner and for an additional 50-75
years thereafter on country wide average.
• Naturally inherent just like copyright as long as work is fixed and the original
copyright permission is received or content is in the public domain.
• Like copyright it allows the owner rights of transfer, sale, license etc.
• Unlike copyright, it only subsists for 20 years from the date of production.
• Word, symbol, device, logo or slogan by which a business is distinguished and
recognised as against others.
• Veritable marketing tools that owner may use to advantage to denote quality, class,
uniqueness etc. and thus represents a valuable asset to a company
• Examples are the Coca-cola logo, the Colonel’s face on every Kentucky Fried
Chicken franchise, the Red Cross logo and the Olympic logo.
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• The British register of Trademarks will not accept applications for marks which are
taboo, against the law or offensive. Protection is territorial so it must be registered in
all nations that a business trades.
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• Registration process dual, via the International Route under the Madrid Protocol
and the European Route through an application for a European Community trade
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mark• Trademarks are renewable every 10 years
2
Regulations
covering Right
• Berne Convention
• National
Regulations.
• Common Law
• Rome Convention
4
1961
• TRIPS agreement.
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• WPPT
• Paris Convention
• TRIPS Agreement.
• The Trademark Law
Treaty (TLT) was
adopted in 1994
• National laws
• Common Law
Berne Convention for the Protection of Literary and Artistic Works of September 9, 1886, completed at PARIS on May 4, 1896, accessed through http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html 3
www.copyright.gov 4
Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 5
WIPO Performances and Phonograms Treaty (WPPT) 6
http://www.ipo.gov.uk/myip.pdf 7
The Madrid Protocol is controlled by the World Intellectual Property Organisation (WIPO), which is based in Geneva, Switzerland. There are at least 70 countries subscribed. It requires that an application to be made first to the national registry as basis for an international application or simultaneously to the WIPO office. The system means all subscribing nations are taken to have received an application in their own nations. A grant in the applicant’s nation is not a grant in other nations, but if after a period of time, other nations do not object to the trademark 7
application, then mark will be protected in the countries as well. 8
An application is made via the Office for Harmonization in the Internal Market (trade arks and designs) (OHIM). The Community trademark gives protection in all European Union (EU) countries. 10 Intellectual Property Final Exam 4
Patents
5
Industrial Designs
6
Unfair Competition
7
Trade Secret
8
Geographical
Indication and
Appellation of
Origin
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Protection of New
Varieties of
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Plants
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Traditional Cultural
Expressions
• The symbol ® denotes a registered trade mark.
• Patents are inventions that are novel and are able to translate to industrial usage.
• All processes, descriptions, drawings, technical details that define invention must be
documented and number of patents that may be granted identified.
• Application must be filed in the Patent Registry of the applicant’s country or must be
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submitted to any of the contracting nations under the PCT or on a regional basis
under the European Patent Organisation.
• Patent rights are territorial so for protection in other nations, patent must be
registered in all the countries where Patentee does business.
• A PCT application is initially processed as a single application. An international
search report and written opinion is given to applicant and application is published
around 18 months from the earliest priority date. The applicant then has to process
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application separately in each country.
• Patents cannot be granted for things “falling under the category of: a scientific or
mathematical discovery, theory or method; a literary, dramatic, musical or artistic
work; a way of performing a mental act, playing a game or doing business; the
presentation of information, or some computer programs; an animal or plant variety;
a method of medical treatment or diagnosis; anything immoral or contrary to law.”
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(Intellectual Property Organisation UK, 2010)
• Design relates to the physical appearance of an item and not to its functionality. It
applies to both industry related designs (not patents) as well as handicraft. The
protection lasts for 5 years in the first instance in the UK and is renewable for five
year terms thereafter for a maximum of 25 years. it looks. It must be registered
• The Paris Convention defines it as “any act of competition contrary to honest
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practices in industrial and commercial matters”
• Acts that create or are capable of creating confusion About a company, its trade and
practice, patents and acts that are false allegations or torts such as passing off, free
riding or the divulging of a trade secret etc are all unfair practices.
• Unfair competition is not an IPR but rather an IP Protection.
• A trade secret is a confidential business or manufacturing information which gives
the business a competitive advantage and through which profit or some commercial
reward results.
• A trade secret must be kept secret unlike Patent which must be revealed. The
burden of protecting the Trade Secret rests with the owner.
• Trade secrets relate more to formulas for making some things for example CocaCola’s secret formula for its concentrates and KFC’s mix and blend of spices.
• “A geographical indication points to a specific place or region of production that
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determines the characteristic qualities of the product that originates therein.” It is
important that the product derives its qualities and reputation from that place. Since
those qualities depend on the place of production, a specific "link" exists between
the products and their original place of production.
• An appellation of origin is a special kind of geographical indication, used on products
that have a specific quality that is exclusively or essentially due to the geographical
environment in which the products are produced. The concept of geographical
indication encompasses appellations of origin.
• The IP acknowledges the effort and achievements of breeders of new plant varieties
by giving them, for a limited period, an exclusive right.
• To obtain such, protection, the new varieties must satisfy specific criteria.
• The organization overseeing the protection of new plant varieties is referred to
as UPOV, which is an acronym derived from the French name for the organization,
Union internationale pour la protection des obtentions végétales.
• The TRIPS agreement allows three types of protection: patenting, special (“sui
generis”) system related to plants or through a combination of both.
• Currently a work in progress but seeks to protect knowledge base on traditions and
cultures of specific areas from exploitation by persons outside the knowledge
centres. Such knowledge could include traditional alternative herbal therapies.
• National Laws
• Patent Cooperation
Treaty
• National Laws
• National Laws
TRIPS Agreement
National laws
• Paris Convention
• European PDO and
PGI systems
• National Laws
• 1958 Lisbon
Agreement
TRIPPS Agreement
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Patent Cooperation Treaty-­‐Done at Washington on June 19, 1970, amended on September 28, 1979, modified on February 3, 1984, and October 3, 2001-­‐accesed through http://www.wipo.int/pct/en/texts/articles/atoc.htm 10
http://www.ipo.gov.uk/types/patent/p-­‐manage/p-­‐abroad/p-­‐worldwide.htm 11
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http://www.scribd.com/doc/16894086/Intellectual-­‐property-­‐explained-­‐UK-­‐ Paris Convention Art.. 10bis 13
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http://www.1000ventures.com/business_guide/ipr/geo_indications_main.html http://www.scribd.com/doc/28125894/Study-­‐Note-­‐This-­‐Module-­‐Should-­‐Take-­‐Around 11 Intellectual Property Final Exam 4.3
IMPORTANCE OF IP GENERALLY
There is a popular statement in IP to the effect that “if you don’t own it, you can’t defend it”. The basis of a
suit in court to enforce an IP right can only be that the plaintiff believes he has the legal right to the
property and that such a right is being infringed upon. Apart from this, the value of an IP would never
really become a point of contention for any reason unless ownership is claimed by someone. All these
underscore the need for ownership of IP generally. Table 2 below summarizes some of the reasons why
IP is important and some landmark decisions in courts on IP.
Table 2: Litigation on IP Infringement underscoring importance of IP Assets to Businesses
Source (Lang, 2001)
4.4 IMPORTANCE OF IP TO BERTRAM
It is in Bertam’s best interest to appreciate the importance of IP to its company’s growth. A company’s
competiveness can be augmented if its IP is properly harnessed along such lines. Products of the
intellect are special and oftentimes unique and it is only logical that the owner should benefit from the
products rather than that free loaders should profit. In Bertam’s case, the Siang Pure Oil is indeed made
from a combinations of produce all converted into oil. The blending of the ingredients gives it its special
formula and allure, the word pure refers to the quality of the production which is that its oils have no
adulteration. Siang Pure Oil’s formula is protected by trade secret, but the competitors’ inability to decode
the secret formula has not stopped them from producing inferior quality oils and passing them off as of
similar quality to Siang’s, thereby riding on the reputation of Siang and the area of production (Asia) as
credibility for their products. The competitors’ acts are even more sinister, as unfair practices are rife. The
internet based sales point is used to denigrate Siang’s products as inferior while using the name of Siang
to divert customers to their own inferior products. Siang appears helpless against this erosion of its
competitive edge and they watch market dominance reducing and sales forecasts dicey.
In order to be able to use IP to advantage Bertram must truly understand the concept of IP as valuable
business assets with real financial value and the company must take the following actions:
12 Intellectual Property Final Exam • Audit and value all its IP rights.
• Adopt an IP Protection and Management Strategy that will:
o protect its IP rights against infringement;
o Defend in the courts the company’s sole right to use the IP or sell to someone else for
pecuniary rewards;
o stop others using, copying, subjecting it to unfair trade practices
o earn royalties by licensing its IP rights
• Exploit IP in other avenues such as forming strategic alliances that can promote its business
interests.
4.4
INTERNAL/EXTERNAL THREATS FACING BERTRAM CHEMICAL
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Is the continued protection of Siang products best served by trade secret which hides the formula
from the world or would patenting offer better protection?
How can Bertram secure and ensure the protection of the Trade Secret?
The digital technology which has turned cyberspace into a boundary-less global world makes
legal jurisdictions difficult to define and prosecution difficult.
How does Bertram ensure protection and defence of it IP rights when it only has its trade dress
registered in its home country with an application pending in the USA, but its products are sold
worldwide via the Internet?
13 Intellectual Property Final Exam PART 2
5
AUDIT OF BERTRAM’S IP RIGHTS
5.1 WHAT IS AN IP AUDIT?
An audit in its ordinary sense means an evaluation of something, or someone or some process, system
or project. Thus we have Project Audits, Project appraisal, financial audit etc. An IP Audit is an appraisal,
measurement, identification and evaluation of the Intellectual Property Portfolio of a company for
purposes of determining their comparative advantage and importance to the company’s financial health
and well being. Just as audits connote some accounting, an IP Audit also takes into cognisance the
financial value of the IP portfolio. Thus an IP Audit should identify, classify, and measure the value of IP
and be the basis for which an IP strategy may be formulated and the IP appropriated for benefit.
Ian Cockburn (Cockburn) defines an IP Audit as “a systematic review of the IP assets owned, used or
acquired by a business. Its purpose is to uncover under-utilized IP assets, to identify any threats to a
company’s bottom line, and to enable business planners to devise informed strategies that will maintain
and improve the company’s market position.” With this very encompassing definition it is imperative that
all companies actually develop strategies to continually smell their cheeses to see that none is going
stale and that they are still valuable and to formulate strategies for increasing value that the IP may
generate to company.
An IP Audit is best conducted by people who have the know-how and the team should comprise people
from within the company and external persons, a lawyer and an IP specialist. The IP Audit properly so –
called should examine the following:
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5.2
Whether all IPs real and potential, owned by company have been properly identified
Whether the IPs are genuinely owned by the company and are legally secured by registrations or
the stage of applications for registration.
Relative health and security of the IPs such as lifecycle, when renewals are due, likely
technological changes that may challenge relevance, the competitors’ actions and policies that
may undermine future relevance of IP etc.
Identification of the IPs of other companies that the company being audited is using and whether
proper licenses were obtained for their use.
Whether the company has commenced licensing of its IP to other users and if not whether there
are some such IPs that could be commercialised through licensing.
Terms of existing license agreements.
Agreements with Distributors of company’s products containing terms and conditions that will
prevent unauthorised divulging of trade secrets or IP of the company.
Co-development agreements with other companies for R & D.
Employment arrangements and contracts, particularly for those employees that are involved in R
& D and such valuable to the development and maintenance of trade secrets of products or
patentable materials.
Company procedures in place to prevent, for example, accidental disclosure of trade secrets
WHEN TO CONDUCT AN INTELLECTUAL PROPERTY AUDIT
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Attorney Leslie J. Lott identified several appropriate times in the life of an organization for intellectual
property audits as follows:
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http://ezinearticles.com/?The-­‐Intellectual-­‐Property-­‐Audit-­‐-­‐-­‐Finding-­‐What-­‐You-­‐Have-­‐(Part-­‐II-­‐of-­‐V)&id=567158 14 Intellectual Property Final Exam •
•
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5.3
When starting a new IP Management Strategy.
During Merger, Acquisition, Significant Stock Purchase.
Transfer or Assignment of Interest in Intellectual Property.
Licensing Program.
Significant Change in Law.
IP VALUATION METHODOLOGIES
There has always been skepticism about whether intangible asset valuation is an art or a science and
whether the methods of valuation actually give a credible valuation. Bridgehead International Limited
concluded in an article (Bridgehead International Ltd) that Valuation of Intellectual Property is not a
precise art and as such it is usually wise to use several valuation methods as virtually all of them employ
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varying considerations leading to different values. Caroline Woodward (Woodward) posits however that
valuation of Intellectual property is possible and that employing the right method will lead to a market fair
value. The Table below shows the various methods used in valuing IP Assets currently. It is always
advisable that at least two methods should be used in combination or in comparison.
Table 3: Current IP Valuation Methodologies
Valuation Method
1.
Cost Approach
1a.
1b.
Reproduction Cost
Replacement Cost
2
Income Approach
3
4
Market Approach
Excess Operating profits
5
Cost savings
6
Royalty
7
Royalty savings method
8
Hybrid
Description
The cost approach aggregates all costs used in producing an IP and determines it as the
value of the IP. Method is however universally adjudged not quite accurate. Two types of
cost approach have thus been differentiated as being cost of Reproducing the IP or cost of
Replacing Aggregate same. The important factor in either of the two approaches is that the
17
valuation be done at the current period and not done historically. The logic of cost approach
is that no investor would pay more money than what it would cost him to reproduce or
replace the asset.
This approach looks at the ability of the IP to generate revenues or cash flow. Seeks to
establish the net present value (hence use of discounted cashflow). It also uses Decision
tree analysis (DTA)-based on an underlying DCF analysis and moves further to take into
18
consideration flexibility available.
The market approach values the asset based on comparison with sales of similar assets.
“The excess operating profits method determines the value of the intellectual property by
capitalising the additional profits generated by the business owning the property over and
above those generated by similar businesses, which do not have the benefit of the
19
property.”
The cost savings values IP by calculating the present value of the cost savings that the
business expects to make as a result of owning the asset.
calculates the value of IP according the royalty rates that have been applied to
similar technologies. With this method, the inventor would typically receive a
return on sales of the final product, with risk being shared between the inventor and the
20
developer.
The royalty savings method is based on the principle that, if the business did not own the
asset, it would have to in-license it in order to earn the returns that it is earning. Alternatively
the business could out-license the asset if it did not wish to use it. The value of the asset is
calculated based on the present value of the royalty stream that the business is saving by
owning the asset.
The Hybrid Approach uses the value of a technology to be determined by a combination of
21
the income and market approaches.
16
Caroline Woodward is with Price Waterhouse. Has been involved in carrying out business valuations for privatisations and for more traditional M&A situations and assisting companies in many countries to prepare accounts in accordance with International Accounting Standards in Central and Eastern Europe. 17
David Drews: Intellectual Property Valuation Techniques http://www.ipmetrics.net/IPVT.pdf 18
Christopher M. Kalanje, (Consultant, Creative Industries Division, WIPO): Valuation of Intellectual Property Assets http://www.wipo.int/edocs/.../en/.../wipo_smes_ge_07_www_81581.ppt -­‐ 19
20
Caroline Woodward: IP Valuation http://www.buildingipvalue.com/n_special/70_74.htm Class resources: Unit V-­‐Valuation of IP 15 Intellectual Property Final Exam 9
Other methods
Industry Standards Method, Rating/Ranking method, Rule of Thumb, method, Discounted
Cash flow Analysis with Risk-Adjusted Hurdle Rates Method, Advanced Tools Method and
22
Auctions Method.
As seen above, the conclusion reached by the Bridgehead article holds true, that valuation of IP is
presently still more of an art than exact science. This writer’s position is that valuation should be demand
driven and it should be the amount that the buyer or investor would be prepared to pay in desperation,
that it, the seller should use other methods to have a sort of reserve price (base level) and attempt to get
the buyer to pay much higher than that. This differs from an auction method which presupposes that
there will be many contenders and the valuation would go to the highest bidders. The method being
advocated would put the burden of valuation on the buyer who would have to conduct its due diligence
and valuation to arrive at a value that the owner of the IP will be prepared to accept.
23
Figure 1: IP Valuation of some Technology Companies 5.4
BERTRAM’S IP AUDIT
From the case study detail the following table represents all the current present and potential IP portfolio
of Bertram Chemicals.
21
Class resources: Unit V-­‐Valuation of IP Methods suggested by (Anatole Krattiger and Stanley P. Kowalski Unit 9 Strategic Management of IP Assets http://binas.unido.org/moodle/) –class resoures-­‐Unit V-­‐Valuation of IP 22
23
http://consultaglobal.wordpress.com/2007/11/
16 Intellectual Property Final Exam 1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
3.
3.1
INTERNAL ASSETS
24
Trade Secrets
Siang Pure Oil (Formula 1)
Siang Pure Balm (derivative of Formula 1)
Siang Pure Oil (Formula 11)
Siang Pure Balm (derivative of Formula 11)
Siang Pure Inhaler
Peppermint Field Balm Stick (original)
Peppermint Field Balm Stick (Green Tea)
Peppermint Field Gel (Original)
Peppermint Field Gel (Green Tea)
See Chuan Oil
Trademarks
Siang Pure Oil Red
Siang Pure Balm Red
Siang Pure Inhaler
Siang Pure Oil White
Siang Pure Balm White
4.
4.1
4.2
4.3
5
5
5.1
5.2
5.3
5.4
5.5
5.6
6
Peppermint Field Balm Stick (original)
Peppermint Field Balm Stick (Green Tea)
Peppermint Field Gel (Original)
Peppermint Field Gel (Green Tea)
See Chuan Oil
Patents
Drug Patent for Asthma and upper respiratory
diseases from results of R & D tests of Siang Pure
Oil
Designs
Siang Pure Oil Bottles
See Chuan Oil bottles
Peppermint product designs
Copyright
All company records, charts, software
Formulas in written form
Manuals and Translations
Publications
Training documents
Publications
Training Materials
Geographic Indication
7
Traditional Knowledge
PRODUCT LIFE (YR)
25
Trade Secrets
Trade Secret
Trade Secret
Trade Secret
Trade Secret
Trade Secret
Trade Secret
Trade Secret
Trade Secret
Trade Secret
IMPORTANCE
Very Important
Very Important
Most Important
Very Important
Important
Important
Emerging
Emerging
Emerging
Emerging
4+ (renewable)
4+ (renewable
4+ (renewable)
Do not appear to have
been registered because
only the red is registered
Not registered
Not registered
Not registered
Not registered
Not registered
Not yet comprehended
Not registered
Not registered
Not registered
Inherent rights
Inherent rights
Inherent rights
Inherent rights
Inherent rights
Inherent rights
Inherent rights
EXTERNAL ASSETS
8
Product Brands
9.
Product Certification
9.1
GMP (Good Manufacturing Practice) standard,
established by the World Health Organization
(WHO) and implemented by Thailand’s Food and
Drug Administration (FDA) for quality and safety.
Halal seal of quality meaning process of production,
service and distribution complies with the Islamic
Codes.
Distribution Contracts
Raw Materials networks
9.2
10
11
Trademark
24
All Bertram Chemical’s products appear to be protected by Trade Secrets rather than by patents 25
Trade Secrets endure for as long as they are kept secret. There is thus no time limitation by law 17 Intellectual Property Final Exam ESTIMATED
VALUE (BT)
Valuation not done in view of Insufficient Data
Table 4: Bertram Chemical's IP Audit
IP ASSET
12
13
14
15
16
Client Lists
Marketing / Advertising
Goodwill
Customer Loyalty
Import / Export networks
Copyright
Note: Valuation not done because it is outside the scope of paper and not enough supporting data for an
estimate
18 Intellectual Property Final Exam PART 111
6
BERTRAM CHEMICAL’S IP PROTECTION AND MAINTENANCE STRATEGY
6.1
STATUS QUO FACTS ELICITED FROM CASE STUDY
Bertram is quite slow on the uptake when it comes to recognising IP as strong an asset base of its
company as the other tangible properties. If the reason for engaging in business is primarily to make
money then Bertram should focus on a strategy that will agglomerate all its resources both, tangible and
intangible and human capital for profitability and value. From the IP Audit of Bertram as attempted in Part
11 above and primarily from an extraction of facts from the case study, Bertram appears to have a poor
health report on IP and Strategy for protection and maintenance:
•
•
•
•
•
•
•
•
•
The company appears naive about IP in general and the need for a Strategy of protection and
maintenance in particular and no strategy is in place.
The company does not pursue any strategy of registering IP. Apart from the original formula 1
26
(Siang Pure Oil red with three products, Oil, Balm and Inhaler), no other product is registered.
Given that Siang Pure Oil is its strongest product and a second formula developed with different
packaging (white instead of Red), a second Trade Mark should have been registered or the first
updated.
The company has a lackadaisical attitude to protecting its main product in key markets as even
the original packaging for the Formula I is protected only in the home country in Thailand. The
American Trademark Application has not been granted.
For a company which has its products traded in several nations covering the entire Asian
continent with market growth possibility in the whole world (from both developing and developed
economies) and with its products freely traded on the Internet, the company is negligent in
protecting its IP.
The company also appears unable to understand the need to defend its IP, market presence and
dominance by going after the competitors who infringe its trademark with impunity. A look at
27
Appendix 2(a-c) shows that the Trademark being infringed is the one for Formula 11 which
unfortunately has not been registered.
Not only do the competitors copy the trade dress in manner of colour, they do so in manner of the
name Siang, and in manner of the photograph of an old man, but whereas the old man in
Bertram’s product has a right to be there, being the originator’s father, theirs is placed there
simply to cause confusion with purchases and they are apparently succeeding in diverting
market.
Having failed to protect it by registering or appropriating it for value, the company does nothing
about infringement as well. It files not claims in court on its common law rights even of copyright
which is inherent, but cry wolf quite timidly at that.
Appendix 2 (c) in particular shows that when no attempt is made to deter infringement, droves of
infringers will attack just as the vulture does a weak body. All the others save Hov Pure Balm and
Siang Pieng Balm have attacked Siang’s Formula 1 red trademark and Bertram has a claim
against them in trademark infringement. The other two have infringed on the Formula 11 and
action could also be maintained against them in copyright for the use of the word Siang in
relation to their product, because Siang is not the name of a place or region to which
geographical indication or appellation of origin may be applied. To put the history in perspective;
Siang Pure Oil is based on traditional Chinese recipe (Traditional Knowledge) from China as
revealed by one Leong Yong to Boonchual Eiampikul both of whom emigrated to Thailand, but
produced in Thailand with raw material (plants) largely sourced from China.
26
27
See Appendix 1 extracted from Figure 1-­‐ Certificate of Service Mark Registration in case study Appendix 2 (a-­‐c) as extracted from Case Study 19 Intellectual Property Final Exam •
•
•
•
•
•
•
6.2
Even if IP protection by the Government Authorities in Thailand is weak, the company has not
helped matters by not registering its trade mark elsewhere where there is better protection.
The obvious passing off of its products by competitors as seen from Appendix 2 (a-) represent
copyright infringement as well as unfair practice which can be safely litigated even under the law
of Tort in all legal systems.
On the internet, Bertram Chemical is subjected to even more unfair practices such as
represented by Thato’s two websites that slander Bertram’s product as impure and smelly while
using the product’s name to attract genuine Siang customers to purchase inferior products.
Bertram Chemical’s new product lines especially the Peppermint line appears not to be
registered by Patent or trademark.
There is an over reliance on trade secrets without the corresponding protection measures to
protect the trade secrets since there are no agreement with employees for Non disclosure, and
unlike Coca-cola or Kentucky Fried Chicken, there does not seem to be some complicated and
serious protective measures.
The Brand name Siang Pure Oil is not protected as a brand. The appellation “Siang” should be
registered as a Trademark so that it becomes a brand and should be used on all the company’s
product is to represent the company then the Peppermint etc should have Siang. That is
leveraging on a brand.
It does appear though, that Bertram wants the Peppermint field line of products to be separate
and distinct from the Siang lines since the market segmentation and product segmentation are
different and the two younger generation Vs older generation may wish to be separate. In that
case, the branding of the Peppermint line should be pursued separately and aggressively, but the
risk is that the company fails to leverage on the brand of quality given by the GPM and Halal
seal.
WHY DOES BERTRAM CHEMICAL NEED TO FORMULATE AN IP STRATEGY?
Bertram Chemicals must formulate and implement an IP Strategy for the following reasons
•
•
•
•
•
•
It is fast losing its competitive edge in the herbal oil market to fake products and the activities of
those who infringe on its rights.
It must remain competitive because at least 80% of its revenue is from Siang Pure Oil products
Formulas 1 and 11 and the derivative corresponding balms.
It’s new product lines are not yet secure in the market and has no brand loyalty the way the other
one has.
It is losing revenue to distributors who trade on the Internet because they sell at much higher
retail value than Bertram would have recommended, but it has no strong distributive network of
its own and just attempting to formulate one using Seven Eleven etc.
There is no licensing of its IP at all so no revenue is coming from such value-added business
template.
There is no collaboration in research and no strategic alliances formed with any one either in
Thailand or in the developed economies meanwhile there is a huge market waiting to be explored
in those economies. If its IP strategy is properly formulated, Bertram may be in a position to form
alignments with giant pharmaceutical companies that are beginning to make a foray into
alternative medicine.
6.3 IP STRATEGIES GENERALLY
The goal of an IP strategy according to WIPO “is the creation, ownership and management of IP assets
28
to meet national or business needs and to increase economic growth. The strategies take into account
28
http://www.wipo.int/ip-­‐development/en/strategies/ 20 Intellectual Property Final Exam the whole business entity both Internal and External. The ideal strategy should encompass a company
entire system and should be part of strategic management such that IP strategy is one central theme of
positioning a company for economic success and dominance with returns for the stakeholders.
An IP strategy usually comprises of some of the following components and strategies either as drivers to
IP policy formulation or as essential strategies:
•
•
•
•
•
•
•
•
•
•
•
•
IP Audit
IP Policy
Patent Filing Strategies
Trademark protection strategies
Defensive control
Cost centre
Cross licensing
Appropriation Regimes that focus on the competitor-their edge, technology pursued, market
dominance, alliance possibility, mergers and acquisition possibility.
Appropriation Regimes that focus on the future use of the IP e.g as bargaining chips or as
standalone asset.
Focus on Risk mitigation by monitoring lifecycles of IP and taking appropriate actions to protect.
External strategies of enforcement and defense and competitiveness.
IP Business –based Strategies based on Pike's “Monopoly”-models as follows:
29
• Fortress-Monopoly - describes an IP-associated Business model for companies with an
extensive patent portfolio. The thinking is that Patents grant a monopoly and monopoly
equals wealth (if the property is quite valuable) and therefore the conclusion is that patent
30
equals wealth . Companies with this model have a large patent portfolio which is used to
create barriers to entry to other companies and becomes a bargaining chip in future.
• Value added-Monopoly:
•
Hub-Monopoly exists when companies define their own platform to implement standards for
their products. Those firms create an industry standard through an IP-Holdings to generate
income via entry licenses.
• Monopoly in-a-box or Nutshell-Monopoly is suitable for firms with well-positioned and welldefined IP portfolios. Those companies show good technology coverage with enforceable
rights. In this model the firms also generate their income via entry licenses This business
strategy is found amongst companies in the biotechnology and consumer industry
6.4 OVERVIEW OF CURRENT IP PROTECTION AND MAINTENANCE STRATEGIES 31
Table 5: IP Strategies
1
2
Appropriation Regimes/
Business Strategies
•
Defensive
•
Protection
32
•
Fortress monopoly
(Strategy for Intellectual
Property Management
Unit VIII)
•
Reserve Flexibility
Cost Centre/Control
Characteristics of Regime
Best Practices for Success
Company generates IPs, registers them to
claim ownership and gain monopoly rights
enabling it to safely defend its Assets
Regime also secures rights for future use of
IP such as licensing or transfer or as
bargaining chips. Watchwords are register
and defend.
Focuses on value impact of IP. IP which will
not yield much value is not registered in
deference to registration costs. IP generated
by R&D is put through process of strict
•
•
•
•
•
Identification of IP Portfolio.
Mapping portfolio to ascertain key
valued
Proactive and reactive legal
department quick to protect and
defend IP.
Mapping, tracking and ranking IPs
against
particular
benefits
to
company.
A cross functional IP Management
29
Class resources. http://www.oecd.org/dataoecd/35/30/35428544.pdf 31
Table generated by Author and used in Midterm exam. 32
Appellation derived from Pike’s Pike's “Monopoly”-­‐models” –see Class Resources, Unit VIII Strategy for IP Management 30
21 Intellectual Property Final Exam value/benefit analysis resulting in
prioritization of IP with the ones at the
highest rung patented.
Regime is dual focused. IP portfolio contains
first and second value creating chains. In
former, IP uses monopoly rights to protect its
products and retain market. Defensive
regime is active. The second value chain
focuses on creating additional value where
IP can be used as new commodities for
trade through licensing/transfer for profit.
3
•
•
Profit Centre
Value added33
Monopoly
4
•
•
•
Asset Centre
34
Monopoly-in- a box
Licensing out
5
Integrated Development and
Management
6
Visionary Development and
Management
6.5.
Team responsible for assessing costs
and value and recommending
decisions on IP acquisition.
• Mapping of Portfolio into first and
second value chain segments.
• Developing strategies to create and
exploit second value opportunities of
licensing and resale.
• Establishing cross-functional teams to
understand the new regime and
objectives and conduct market SWOT
and develop marketing strategies.
• Strong R & D department effective
in patent discovery.
• Strong IP Management Team that
scans market for technology trends
and can forecast prospects.
• Competent legal department versed
in
patent
registration
and
commercialisation.
• Establishing IP interface across
company departments or cross
functional teams.
IP Department focuses on developing
patents as standalone products. Seeming
tangibility is brought to intangible assets
for the purpose is to develop IP for
commercialising it at various levels.
Companies such as Sony, Philips and Intel
35
create such patent pools.
IP is undertaken as integral to overall
company strategy and not just a department.
Principles of Strategic Management are
applied and IP is part of vision, mission and
action plans.
IP strategy is based on industry forecast as it
relates to economics and technology.
Company is positioned to take advantage of
IP forecasts.
•
Ability to forecast similar to the
Stock/Investment brokers.
INTERNAL AND EXTERNAL STRATEGY SITUATION ANALYSIS:
ASSESSMENT OF BERTRAM’S STRATEGY ISSUES- PRESENT AND FUTURE
Table 6: Bertram's IP Strategy Analysis
Issues
At Present
Ideal Future Outlook
A pragmatic Portfolio with value
of IPs known and leveraged for
value.
A functional defence strategy
that protects against
infringement.
Competitive advantage over
competitors.
An IP Policy drafted and
disseminated to and followed
by all staff and stakeholders
All products to be protected by
Trademarks, Industrial designs,
copyright and other IP Rights
applicable.
1
IP Audit
Confusion on what IPs
are owned, which are
valuable, important and
which have potentials for
appropriation for added
value
2
IP Policy
None seems apparent
3
IP ownership
Less than 20% of
products have some IP
protection despite large
level of trademark
infringement
Trade mark registered for
3 products only
4
IP Maintenance
The only trademark
33
Strategies & Recommendations
•
•
•
IP Audit to be conducted by Professionals
IP Valuation to be part of Audit
Functional and strong IP Unit in the company
•
IP Policy prepared and published
•
Pursue aggressive trade mark registration
Own everything as it is never sure which IP will
prove to be valuable for future strategic
alliances.
in continents where market is strong or has
growth potentials register and defend IP rights
Pursue the European Community mark
registration for access to many countries and
secure American marks on all products
Internal IP Watch to be set up from a cross
•
•
•
•
Trademark of all products
Pike’s Appellation see Class Resources, Unit VIII Strategy for IP Management Pike’s Appellation see Class Resources, Unit VIII Strategy for IP Management 35
Class Resources-­‐ Module II IP-­‐Management – Economic Perspectives Philipp E. Hammans, Alexander J. Wurzer 34
22 Intellectual Property Final Exam 5
Trade Secret Vs
Patents
6
Market
dominance
7
Trade Secret
Protection
8
Market
positioning and
leadership for
new products
Unfair practices
9
6.5
registered has 4 years life
span to go.
Trade secrets not
protected with security
consciousness.
All products subject to
Trade Secret
registered and Trade secrets
guarded very seriously.
•
•
•
section of company departments.
Monitor IPs being created and register them.
Monitor activities of the competition.
Prosecute IP infringement.
Some products could be
patented giving room for easier
licensing and value added
strategies
Market leadership and
expansion into new markets
•
Unassailable protection
•
Weak positioning for
peppermint field products
Brand development and
marketing
•
•
•
•
•
•
Non Disclosure Agreements and non
competition agreements.
Security measures
Computer software encoded protection
Strategic Alignments
Patents registrations
Licensing out
Mergers and acquisitions
Competitors undermining
products by unfair
practices
IP rights secure against
infringement
•
•
•
Defend and protect
Stop Internet abuse.
Filing International suits under WIPO
Core products are being
aggressively undermined
by infringement
Loose security
•
•
•
It is risky to have all products protected by trade
secret especially if protection is not so secure.
Put in place protection strategies similar to
Coca-Cola trade secret strategies.
Aggressive defence and protection.
Strong legal department that enforces IPR
AN IP STRATEGY FOR BERTRAM CHEMICAL
From an examination of all the challenges facing Bertram Chemicals nationally, regionally and in new
markets and from the uniqueness of the company’s product differentiation and the ability of the company
to generate and develop new products for an even larger market segmented on age and alternative
medicine, the following IP Strategies are recommended on a National, Regional and new market basis.
In order to fully operate the recommended strategies, Bertram would require the following business tools
and actions:
a) A very strong Intellectual Property Unit looking at the overall strategy and enforcing compliance
b) A strong Policy statement and an IP Strategy Document that all Staff and other stakeholders will
readily assess and abide by
c) A strong R & D Department focused on IP generation for the emerging markets and strong legal
Department registering the IP as they are generated.
d) A Branding and Advert Department that is cross referenced with the IP Unit.
The Recommended IP Strategy is depicted in the Figure1 below:
23 Intellectual Property Final Exam Figure 2: Recommended IP Protection and Management Strategy
Policy: New market appropriation Strategies: Fortress Economy Defensive/Protection Cost centre/control Asset Centre Actions: Register relevant IPs in countries Strategic alliances with local companies Licensing/franchising Distributor agreements Policy: New market appropriation Strategies: Visional Development and Management Actions: Global Alliance -­‐ Strategic alliances with local companies for asset control Licensing/franchising Affiliation with IP protection Agencies Global Developed Economies (North America & Europe) Developing Economies (Africa) Regional NaVonal Policy: Regional Market Dominance Strategies: Fortress Economy Value Added Monopoly Profit Centre Defensive/Protection Actions: Register relevant IPs in countries Licensing out Patents or Franchising out trade secret formula for regional production -­‐ Distribution contracts -­‐ Defend and protect IP rights 7. Policy: New market appropriation Strategies: Fortress Economy Defensive/Protection Value Added Monopoly Profit Centre Actions: Register relevant IPs in countries -­‐ Strategic alliances with local companies Licensing/franchising franchising out trade secret formula for regional production Policy: National to Global IP Strategy Strategies: Integrated development and management of IP Monopoly-­‐in-­‐a-­‐box Actions: IP Audit, Ownership of all IPs Defend ownership Monitor competition Protect IPs by monitoring lifecycle Non disclosure Agreements CONCLUSIONS AND RECOMMENDATION Bertram Chemical’s IP Management at present requires professional management. The company has
potentials to turn its IP Portfolio into credible asset centres for value, but without an IP Strategy weaved
into the overall strategic policy of the company, the potentials may never be fully realised and optimized.
It is thus quite timely and fortuitous that the Board has decided to appoint an IP Manager.
It is recommended that the company takes it IP Strategies in compartments as contained in the figure
above. A development of National, Regional and Global strategies must be followed and pursued
concurrently.
24 Intellectual Property Final Exam 8.
BIBLIOGRAPHY
•
Bridgehead International Ltd. Valuation of International Property in Pharmaceuticals. In C. Resources. •
Cockburn, I. (n.d.). IP Audit-­‐ A "How To" Guide. Retrieved July 30, 2010, from http://www.wipo.int: http://www.wipo.int/sme/en/documents/ip_audit.htm •
Intellectual Property Organisation UK. (2010, July). Retrieved July 29, 2010, from http://www.ipo.gov.uk/myip.pdf: http://www.ipo.gov.uk/myip.pdf •
Lang, J. C. (2001). Management of intellectual property rights: Strategic patenting. Journal of Intellectual Capital, Vol. 2 Iss: 1 , 8-­‐26. •
Philipp E. Hammans, A. J. Module II-­‐ IP-­‐Management -­‐Economic Perspectives. Class Resources. •
Ray Parry, C. L. (2010). Protecting Your Intellectual Property. Retrieved July 30, 2010, from www.theABI.org.uk: http://www.theabi.org.uk/press/p0308.htm •
Strategy for Intellectual Property Management Unit VIII. WIPO/OMPI (Class Resources). •
WIPO/OMPI. (n.d.). Unit VIII: Strategy for Intellectual Property Management. Class Resources . •
Woodward, C. (n.d.). http://www.buildingipvalue.com/n_special/70_74.htm. Retrieved July 30, 2010, from http://www.buildingipvalue.com/n_special/70_74.htm •
World Intellectual Property Organization. (1967, July 14). Convention Establishing the World Intellectual Property Organization. (pp. Article 2, Section VIII). Stockholm: World Intellectual Property Organization. APPENDICES 1, 2 (A-C)
25 Intellectual Property Final Exam Appendix 1
26 Intellectual Property Final Exam Figure 1: Certificate of Service Mark Registration
APPENDIX 2a
27 Intellectual Property Final Exam APPENDIX 2b
28 Intellectual Property Final Exam APPENDIX 2c
29 Intellectual Property Final Exam 30 Intellectual Property Final Exam