Leveraging Intellectual Property Assets for Business SuccessTamara NanayakkaraCounsellorSmall and Medium Sized Enterprises DivisionWorld Intellectual Property Organization

tamara.nanayakkara@wipo.int

Outline

The challenge of the new business environment

SME competitiveness IP and SME competitiveness Services provided by the SME

Division of WIPO

Old v New Economy

Industrial economy – focus on physical goods. Dependant on natural resources (finite)

New economy – Greater reliance on know-how, knowledge, human creativity and innovation (infinite)1950 knowledge component in manufactured

goods 20%, 1990s 70%

In 1998 intangible assets constituted 80% of value of Fortune 500 companies.

“It is estimated that by 2007, as much as 90% of the value of the world’s top 2000 enterprises will consist of intellectual property”

Building and Enforcing Intellectual Property Value,An International Guide for the Boardroom 2003PriceWaterhouseCoopers

New Economy

Global market place More demanding and fickle consumers Shorter product cycles Working through relationships and networks Differentiating products Selling an image, concept, idea Out sourcing Efficient use of resources resulting in lower

cost

Example

A pair of jeans bought in a street market may cost US$ 10 while the same pair of jeans bought in a high end boutique will cost US$ 80. The difference accounted for in the intangible components in the latter.

It is likely that the same (outsourced) manufacturer produced both.

While a market continues to exist for pure physical products (people will continue to buy jeans) high profit margins cannot be expected.

High profit margins are possible when there is improved efficiency, lower costs, appealing and differentiated products and services from reputed sources.

Globalization and trade liberalization has made it crucial for SMEs to become internationally competitive even when competing exclusively in domestic markets

Application of knowledge, creativity and innovation key in competitiveness

Competitiveness of SMEs

To be competitive SMEs need to constantly improve their efficiency, reduce production costs and enhance the reputation of their products and services by: Investing in research and development Acquiring new technology Improving management practices Developing creative and appealing designs Effectively marketing their products and

services

The IP System

Provides SMEs exclusivity over the exploitation of their innovative products and services, creative designs and brands

Thus creating an appropriate incentive for investing in improving their competitiveness

Ensures a competitive market place, honest trade practices and overall national development

Intellectual Property Rights

Innovative products or processes

Cultural artistic and literary works

Creative designs

Distinctive signs

Microchips

Denominations of goods attributable to a geographical origin

Confidential business information

Patents or utility models

Copyright and related rights

Industrial design rights

Trademark

Layout-designs or integrated circuits.

Geographical indications

Trade secrets

Patents

Gives the exclusive right to prevent others from using the invention for a maximum period of 20 years

An invention could be a product or process providing a new way of doing something, or a new technical solution to a problem

It may lower cost, create efficiencies, enhance performance, add new features etc..

Through exclusivity an opportunity is provided to recoup costs and make a profit

Trademarks

A sign that distinguishes the goods and services of one enterprise from that of another

Right to prevent others from using identical or similar marks with respect to goods or services that are identical or similar

Rights obtained through registration (or use) Famous marks have greater rights

Protects consumers They can differentiate between similar goods Information as to the source (quality,

reputation, trust) Protects the company –

Enables the company to build up a reputation and a loyal clientele and thus a market niche (brand)

Creates an overall competitive environment which benefits society as a whole

Case Study on Trademarks

An Italian businessman buys unmarked t-shirts from manufacturers of generic clothing, attaches his trademark (Pickwick®, which pictures a rebellious-looking teenager) and begins to sell them to retail stores

Started in a garage in the periphery of Rome Today the Pickwick® trademark is perceived by

Italian teenagers as a synonym of style and quality Pickwick® has began to export its products

across Europe Its trademark is its most valuable asset

Interbrand 2006 Annual Survey of the world’s most valuable global brands

Coca-Cola: 67 Microsoft : 57 IBM: 56 b US$.

Industrial Designs

The ornamental or aesthetic aspects of a product, that which distinguishes that product from the competition and makes the product appealing to a consumer

Right to prevent others from using identical or similar designs

Design Rights

Adds value to the product by making it more appealing to consumers.

Some products (e.g. furniture) are primarily sold on the basis of their appearance

Enables customization of products to specific markets

Geographical Indications

Goods that have a certain quality or reputation due to the geographical region it comes from

Generally pertaining to agricultural products Examples: Bordeaux wine, Ceylon tea,

Gruyere cheese, Swiss chocolates, Champagne, Colombian coffee

Protects local industries, preserves traditional ways of producing and builds regional reputation and image.

Used by SMEs to jointly commercialize products

Provides SMEs the opportunity to make their products recognized by consumers, distributed by the main distributors and sold by the main retailers

Provides consumers certain quality guarantee

Copyright

Copyright law grants authors, composers,and other creators legal protection for their creations usually referred to as “works.”

It protects books, music, films magazines, paintings, photographs, sculptures, architecture, computer programs, etc

It gives an author or creator certain rights for a limited period of time.

They are economic rights which enable the author to control the economic use of his work and moral rights, which protect an author’s reputation and integrity.

Trade Secret

You may, either because it is not patentable or because you prefer to do so, keep certain business information secret

If you have taken reasonable steps to keep such information secret and it has commercial value by virtue of being secret you may have trade secret protection

Example – Coca Cola

Said to be the best kept secret Formula kept in a bank vault

Can only be opened by a resolution of the company Board of Directors

Only two people know the secretTheir identities are unknown

They cannot travel together

They oversee the production

Trade Secrets or Patents

No registration (costs/time factor)

Unlimited duration No disclosure Wider information Difficult to enforce No protection

against independent discovery or RE

Registration required (cost/time factor)

Limited duration Disclosure required Limited to claims Easier to enforce Exclusive rights

One product many IPR

Patent for the fountain pen that could store ink

Utility Model for the grip and pippette for injection of ink

Industrial Design: smart design with the grip in the shape of an arrow

Trademark: provided on the product and the packaging to distinguish it from other pens

Source: Japanese Patent Office

Invention of CD playerprotected by patent

Brand on CD playerprotected by trademark

Design of CD player protected by industrial design

Music played on CD playerprotected by copyright

Intangible to Tangible

By providing such protection the IP system gives the owner of those intangibles a right of exclusivity, the right to prevent others from using them.

Bringing intangible rights closer to tangible property

IP Policy

Beyond exclusivity – IP rights are not only about exclusivity and the right to prevent others from using and exploiting them

They are assets as important or even more important than its physical assets (buildings, machinery)

Like any asset they must be maintained, managed, exploited and enforced.

IP Audit

Identify the IP assets of a company Have rights been acquired for them Are they been maintained Are they exploited optimally Is there any redundant IP Is there any infringement of third party rights

Exploiting IP Assets

Sale or License Joint ventures and strategic alliances Business format franchising Merchandising Better bargaining position in licensing-

in Defensive patenting, publication Collateral for finance

The inventor licensed the system to Coca-Cola at 1/10 of a penny per can. During the period of validity of the patent the inventor obtained 148,000 UK pounds a day on royalties

Franchise

A specialized license where the franchisee is allowed by the franchisor in return for a fee to use a particular business model and is licensed a bundle of IP rights (TM, service marks, patents, trade secrets, copyrighted works…) and supported by training, technical support and mentoring

Why enter into a Franchise Lower risk of failure Recognisable image On going support Easier to obtain financing Benefit from franchisors

R&D

Why not enter into a Franchise

All IPR owned by the Franchisor

Payment of fees Obliged to follow the

business model Innovations may be

assigned back to the Franchisor

Depend on the success of the Franchisor

Merchandising

The licensing of trademarks, designs, artworks as well as fictional characters (protected by these rights) and real personalities are broadly referred to as merchandising

Why merchandise?

For the licensor Extend into new products Increases exposure, strengthens image

(could also damage) Revenue Relatively risk free

For the licensee Increase appeal of its products Relatively low cost way of gaining market

share

SMEs and IP• Enterprises worldwide largely under-utilize the

intellectual property system due to– Perceived lack of relevance of the IP system– Perceived high costs and complexity of IP system– Limited awareness of the IP system and its

usefulness– Lack of qualified human resources to use the IP

system

What Can Support Institutions do to Assist

• Awareness-raising and Training Activities• Technological Information Services• Financial Assistance• Customised Advisory Services• Assistance on IP Exploitation and

Commercialisation • Diagnosis of the IP needs of the enterprise (IP

Audit)

WIPO SMEs Division

• Promote greater use of the IP system by SMEs and enable them to make more effective use of their IP assets

• Strengthen the capacity of governments to develop strategies, policies and programs to meet the IP needs of SMEs

• Improve the capacity of SME support institutions, to provide IP-related services to SMEs

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Demystify

• Studies

• Guides

• Events and missions

• Web site and newsletter

• Multimedia products

Studies

• Studies on national policies on SME development and the role of IP– completed or under way in Argentina, Bhutan,

Mongolia, Nepal, Philippines, Sri Lanka, Tanzania, Sierra Leone, Romania, Chile, Colombia, Costa Rica, El Salvador, Honduras and Paraguay, Egypt, Morocco, Lebanon

IP for Business Series • Making a Mark

(Trademarks)• Looking Good

(Designs)• Inventing the

Future • (Patents)• Creative

Expression (Copyright)

More guides

• WIPO/ITC Guides on:

– Marketing of Crafts and Visual Arts; Role of Intellectual Property; A practical guide

– Secrets of Intellectual Property: Guide for Small and Medium Sized Exporters

– Exchanging Value: Negotiating Technology Licensing Agreements - A Training Manual

Events

• Special programs, seminar and workshops organized by the SMEs Division in Geneva in partnership with selected associations and organizations

• Contributing to programs organized by other divisions within WIPO and external organizations

www.wipo.int/sme/en

• The Website of the SMEs Division is in six UN languages (English, French, Spanish, Arabic, Russian and Chinese)

• More than 200,000 pages viewed every month in 2007

• Contents include sections such as IP for Business, IP and E-Commerce, Activities, Best Practices, Case Studies, articles and publications

WIPO “Best Practices”

• WIPO collects information on policies, programs and strategies that aim to encourage a wider and more efficient use of the IP system by SMEs

• Objectives:– Identify experiences that have had a real impact in

making the IP system more accessible to SMEs– Identify replicable mechanisms that may be adapted

to the institutional and economic context of other countries

– Encourage exchange of experiences

Newsletter

• Monthly e-newsletter in the 6 UN languages (Free)

• Content includes articles, updates with information, links and documents

• Launched in August 2001

• Total number of subscribers: >25,000

IP Panorama

• WIPO, KIPO and KIPA have recently released an e-learning product consisting of ten modules on different aspects of intellectual property from a business perspective entitled, “IP PANORAMA”.

Conclusion• New (knowledge) Economy rewards those

enterprises that are creative, innovative and understand the importance of the market for ideas

• The IP system provides the formal framework for protecting their knowledge, creativity & innovation

• To maximize the potential provided the IP system one has to think beyond exclusive rights to IP assets

• IP offices, Chambers and other support institutions have an important role to assist