(Source: The SMU Blog)
There is a common perception that intellectual property (IP) laws only serve multinational conglomerates with product functions that require patenting, or pop superstars with content that requires copyright protection. But IP is relevant to small- and medium-sized enterprises (SMEs) too—it could even be the key to their survival.
IP is an umbrella term which refers to creations of the mind such as logos, designs, and software. Fu Zhikang, a trainer for the Strategic IP Management for Businesses course at SMU Academy, says: “Many SMEs think they don’t have any IP and that simply isn’t true. As long as the company has something that differentiates them in the market, or provides them with a competitive advantage, the IP underlying this differentiator or competitive advantage should be properly managed and protected.”
What is IP?
IP can be classified as trademarks, patents, registered designs, copyright, and trade secrets. IP may also be considered a subset of intangible assets, which include other classes such as know-how, data, and key relationships.
Zhikang, who is also an IP Strategist at IPOS International, explains what SMEs should target when identifying IP: “When undertaking a stock-take of their IP, SMEs should not take the approach of identifying the IP rights they have class by class, and viewing different classes in silo. Instead, they should start by identifying their key differentiators and competitive advantages, then further analysing these to identify the key IP that underlie these key differentiators and competitive advantages. They should focus on managing key IP assets that provide the company with most value.”
Challenges faced by SMEs
The IP Value Hierarchy, first proposed by the academics and founders of knowledge-based international corporation ICM Gathering Harrison and Sullivan, and later expanded upon by Michael A. Gollin, the author of “Driving Innovation”, classifies companies into six levels, from Level 0 (non-strategy) to Level 5 (visionary).
Many companies today are in Level 0. They do not understand what IP they own, and how that can impact the value of their business. Zhikang advises making use of publicly available IP resources or taking IP courses to enhance their IP awareness level to gain an understanding of why IP matters to their business.
Some companies may be aware of their IP value but struggle to tier their IP assets or identify the ones most in need of protection. These are classified as Level 1 (defensive) in the value hierarchy. “These companies tend to overprotect their IP assets, which leads to escalating IP registration costs,” says Zhikang. A more in-depth analysis of the company’s IP and how they are aligned (or misaligned) with the company’s business goals, is needed to make more effective choices.
Though some believe that IP protection is cost-prohibitive, Zhikang states that this can be due to a partial misunderstanding. “Many companies equate IP protection with patent protection, which is more expensive than other forms, and not always the most suitable,” he says. “Holistic IP protection for a company’s key differentiators do not always have to be costly. For example, the cost of protecting trade secrets is only the cost of putting management measures in place to keep these secrets confidential.”
How to avoid IP disasters
When SMEs do decide to protect their IP assets, they should be aware of some common mistakes, notes Zhikang. “Even if they have patents, SMEs should be aware of what their patents actually protect, and should understand that narrow scopes might not provide adequate protection.”
Third-party engagement should also be managed carefully, he adds. “Whether it is a procurement, commissioned work, or R&D collaboration, SMEs must be very clear on IP ownership issues and positions when working with a third party. Commissioning someone to develop a design does not automatically guarantee ownership, and that can be a stumbling block for commercialisation.”
How IP can impact companies
Though the protection and management of IP may not be straightforward, there are vast benefits to be reaped from doing so. Take Spic & Span, a cleaning solutions company that developed Speco®, a durable disinfectant solution that protects work environments from harmful microbes. Having formulated an IP strategy before the Covid-19 crisis struck, they were clear about how they could protect their key IP, and how they could license their IP to scale quickly. When the Covid-19 crisis struck, they reformulated Speco® to be effective against coronaviruses, and were able to expand their market presence confidently guided by their IP strategy.
“With good IP management and protection, you will have more options to prevent competitors from copying your product and / or service, allowing you to go to market confidently and command a premium for them,” concluded Zhikang.
As the expertise and enterprise engagement arm of IPOS, IPOS International helps enterprises and industries use IP and intangible assets for business growth. To learn how you can leverage on your IP, email us at [email protected] or call +65 6330 8660.Book a complimentary IA chat with us