Using IP Strategy to Reduce the Strategic Uncertainty of Business Decisions

Unfortunately, IP strategy has traditionally not been a pillar of corporate strategy because, in my opinion, business leaders have assumed that IP is not a topic that could be known or understood. Thus, business leaders did not realize that IP concepts could be applied to strategic business decisions.

To illustrate, in the traditional model of corporate IP management, the in-house or outside patent attorney typically has little to no interaction with the business decision makers during the product development process. As such, the patent attorney normally becomes involved in addressing potential patent infringement concerns only when the business identifies the precise parameters of a product or service that is expected to go to market in the short-term. In this scenario, the patent attorney usually conducts a clearance search of relevant patents to see whether the proposed product or service will run afoul of third party patent rights. In this traditional model, the patent attorney serves as a gatekeeper to effectively allow or disallow the company’s product from entering the marketplace. This is a go or no go decision based on concrete questions and, as such, this traditional patent attorney model does not provide for the management of uncertainty. Rather, this model allows only the “management” of certainty; that is, the question is whether the proposed product or service infringes a third party’s patent rights. If the answer is “yes”, the company will likely have to quickly modify or even abort its business plans and the business plans may end up in the loss column of the balance sheet. In this scenario, IP issues must be viewed as inherently uncertain and not manageable, much to the possible detrement of the company’s business objectives.

However, a company that integrates IP strategy into its corporate strategy can significantly reduce the uncertainties involved in product or service introduction. In particular, corporate decision-makers who understand that ignorance of the company’s own and other’s IP increases the risks associated with product or service introductions will be able to reduce such risks by seeking to understand how IP affects the potential payback in that investment.