Big vs. Small: The IP Irony
IP Business Management | IP Cost Management | Patent Management | Trademark Management
January 18, 2022
Thinking big is vital for small businesses, but, when you’re big, you can afford to think small, says Vincent Brault of Anaqua
For many small and medium-sized enterprises (SMEs), the world of intellectual property is a minefield that they approach with fear and trepidation. But it doesn't have to be that way. Larger enterprises have proven adept at ploughing a course through the IP minefield, and SMEs can learn a lot – and stay safe – by following their path.
SMEs should think big and approach their IP portfolios as if they were a larger enterprise. Like larger enterprises, SMEs should treat IP as a priority, defining a clear IP strategy that aligns with their business objectives: protecting innovation, building their brand, and achieving freedom to operate (FTO) in their target markets. This is vital, particularly for SMEs that are looking to make the transition from local to international or beyond that to global. They need to focus on capturing innovation, developing ideas, and ensuring those ideas are protected in order to build value in the business and help it grow.
Although SMEs naturally have smaller IP budgets, they also typically have fewer products, giving them a tighter focus, which, in turn, makes it simpler to align patents and trademarks to specific products and markets. Indeed, it is an irony of IP management that some of the world's biggest corporations owe their success in maximising the value and effectiveness of their IP assets to thinking like smaller, more focused enterprises, with dedicated teams working in specific technology areas.
This article will outline how SMEs can take a page out of the book of large enterprises by treating IP as a critical business function; committing to bridge IP knowledge gaps; optimising IP budgets through technology; developing processes to generate and capture impactful ideas; and utilising communication to drive IP leadership.
Keeping pace with a changing IP environment
To appreciate the challenges facing SMEs, you need to consider the developments in corporate IP in recent years. A fundamental change has been the shift from IP being seen as a relatively obscure legal function to becoming a critical business function.
Businesses have a better understanding now of the importance of IP, not only in terms of generating valuable intangible assets, but assets that are key to supporting and helping steer business strategy. The broader business is taking a greater interest and becoming more involved in IP. In some cases, procurement is driving a lot of the purchasing decisions. The various components of the IP lifecycle have been broken down and more rational frameworks established to allocate work to law firms and IP service providers, based on well-defined criteria.
At the same time, it is becoming increasingly complicated to operate globally, to understand the business landscape, to know who your competitors are and what they are doing, and what you need to do to compete on a global level and to protect your innovation. While these factors affect all companies, they are particularly challenging for SMEs.
It was encouraging to see World IP Day in April supporting SMEs with the theme "IP and SMEs: taking your ideas to market". According to WIPO, SMEs account for 90% of all companies worldwide and 70% of global employment. WIPO director general Daren Tang described SMEs as "the engines, the unsung heroes of our economy". And yet, he pointed out, "for many of them, there is still a lack of knowledge about how IP can help them translate their ideas into products, and how IP can be a powerful tool for them to not just survive, but to also compete and grow".
Becoming more IP savvy
Whether internally or through a trusted external resource, it is vital for SMEs seeking to expand and prosper to become more tech savvy.
Larger corporations tend to have dedicated resources for different IP portfolios and technologies, working with their counterparts across various business units (R&D, product, branding, marketing, etc.). They have the macro-level strategy, the big picture of how to navigate the IP landscape and how it affects all aspects of their businesses. But they also are very granular in how they align IP assets to specific product areas and markets. By focusing on a smaller number of IP assets and products, these teams are somewhat mirroring how SMEs operate. Their advantage is that, coming from an IP background, they know their portfolios well, they understand the technology, the competitive landscape and how to drive innovation that matters.
“We’ve seen examples in the past where some providers’ fees are like icebergs – the visible part of the fee being just a small proportion of the total.”
For many SMEs concerned about limited budgets and resources, IP can seem like a 'nice to have'. Yet, in today's highly competitive world, IP can be the difference between a business thriving or failing . Even if you are only a small company with one or two product lines, these are your 'crown jewels' that are mission critical to your business objectives and must be protected.
If you don't have the IP knowledge and expertise internally, you need to find it externally – someone who can understand the business objectives and provide guidance on what ideas to file and what not to file, foreign filing, blocking competitors, FTO, etc. In many cases, SMEs turn to their outside counsel for such guidance and this can work well, particularly where there is a strong relationship with the outside counsel, who effectively becomes an extension of the company, serving as a virtual chief IP officer.
Achieve excellence in IP strategy and operations while meeting the daily demands of growing your organization.
Managing budgets
Large corporations have been very successful at breaking down the components of the IP lifecycle and determining how best to allocate that work – whether internally, to outside counsel or IP service providers – in order to optimise their budgets. It is now a buyers' market and, while SMEs may not have the same 'clout' as large corporations, they can still shop around for more cost-effective solutions for different activities, helping them to get a bigger bang for their IP bucks.
When outsourcing IP work, a fear amongst SMEs is that they will be overcharged, and not even realise they are being overcharged. That is understandable. We've seen examples in the past where some providers' fees are like icebergs – the visible part of the fee being just a small proportion of the total. However, there are a number of excellent software solutions available now which provide IP cost estimates and enable users to benchmark what they are paying against a fair market average.
Where budgets are tight, it is even more important that companies check, measure and manage what they are spending on their IP, and such software solutions provide a cost-effective way of doing so, allowing SMEs to conduct a spend audit to compare the fees of their outside counsel and their service providers and to flag pertinent questions such as the level of currency exchange charges or the number of intermediaries involved in a particular task. In this way, SMEs will be able to identify ways to save money, and get more and better IP services for their spend.
By checking and validating costs and bringing that level of transparency to the table, it enables boundaries to be established with outside providers from the start, encouraging the right behaviours and facilitating a true sense of partnership leading to long-term trusting relationships.
Developing and protecting ideas
Ideas are the lifeblood of a business, so it is important to keep the pipeline going and to capture the innovation that comes through. The companies that are best at doing this are those with the broadest funnels and very few filters. This helps avoid potentially good ideas being blocked at the outset, whether through lack of knowledge, bias, or discrimination (intentional or unintentional). There are established processes in place with clearly defined communications channels, roles and responsibilities. While SMEs may not have such formal processes, they can devise their own ways to bring the various stakeholders together to discuss ideas and agree which should be developed further. Whatever form that review process takes, good communication and keeping an open mind are essential.
In protecting innovation, SMEs should determine with the help of their internal or external IP advisers which ideas are business critical and need to be filed – whether patenting a product or process, or filing a trademark or design. For other IP assets, such as knowhow and trade secrets, it is more difficult, not just for SMEs but for all companies. A first step would be to establish a strictly enforced export control policy, covering downloading, accessing confidential information, etc. However, a number of new solutions are also emerging which utilise blockchain technology to timestamp documents, emails, memos, other exchanges of information, patent committee reviews, etc. Timestamping is able to confirm that the knowledge was there, at a particular time on a particular day, as well as the people involved. It is a powerful and cost-effective tool and sends out a strong message that knowledge needs to be documented.
Quality of leadership
Great IP leaders in SMEs engage actively with their internal business clients – R&D, innovation, marketing, branding, products, sales, and finance – to create a culture where IP is at the heart of business decisions. They have to be excellent communicators to encourage information to flow freely between these various business functions. And they have to be IP savvy – not just knowing about IP but also how best to apply IP to benefit the business. It doesn't matter if you are a giant corporation or an SME with a small number of IP assets and products, it is the quality of leadership that makes the difference.
SMEs have a lot to handle with limited resources, but IP cannot be left unchecked. Just as SMEs would invest in someone in finance, in product, and in sales, so they need to invest early on in someone for IP. If you are too small to do that internally, do it externally. Give yourself the means to be successful by better aligning your IP strategy with your broader business strategy and ensuring that your key IP assets are properly protected.
Vincent Brault is senior vice president of product, innovation and marketing at IP management technology solutions and services provider Anaqua in the US.
