The rapid evolution of technology is influencing all areas of human activity. Its impact on the functioning of the modern business enterprise is very significant, particularly in industries and activities that are driven by innovation. The competitive nature of free enterprise and free markets compels every business organization to deal with the challenges thrown up by the rapid pace of technological change, as well as to innovate constantly to survive and remain successful.
Patents are inherently associated with the promotion, creation, protection and utilisation of innovation, and therefore innovation-driven organizations, whether large enterprises or small businesses, find the role of patents is critical to their business. For the small firm, the implied threat of patent litigation can adversely impact its survival and therefore assumes vital importance in determining business strategy.
A comprehensive awareness of the existing and projected patent landscape is essential to orient business strategy based on available freedom to operate (FTO). To the extent that an organization has patents of its own, it can reduce the cost of licensing technology from existing market players by providing them as part of a cross-licence agreement.
Many large organizations build significant patent portfolios for defensive strategies. They operate on the premise that large portfolios dissuade competitors from “mutually assured destruction” litigation – produced by two large portfolios in conflict. The effectiveness of such portfolios is enhanced if the technology involved covers several patented innovations in any single product each – as in smartphones.
Major players in such markets can reach a state of equilibrium, with relatively little active conflict. Litigation occurs only when that equilibrium is disturbed. However, some major players appear to use these monopolies strategically to assert market dominance, shown by some 50 lawsuits between Apple and Samsung, and 20 cases between Apple and Google.
A firm can refrain from offensive use of its patents and still derive value from them. Patents offer a unique opportunity to the small innovation-based startup by providing the company an automatic stay of competitive activity long enough to enable the firm to develop its technology and insulate itself from external threats and attacks.
Patents also promote the creation of important structured knowledge bases. These are crucial to value creation for a startup, especially in supporting valuations. It can package its innovations in a manner that enables them to be accessed as independent tradeable assets sufficiently independent of individuals.
The increasing importance of the role played by patents in the expanding population of modern business enterprises, both large and small, has created new opportunities for patent professionals. Unlike traditional services, these opportunities are intimately linked to the core business needs of client organizations, and therefore have the potential to provide immensely greater value.
However, the provision of these services calls for a radically new approach from patent professionals. Whether in-house counsel or contracted consultants, such professionals must work very closely with the business and technology teams in the client organization. They will provide synergy to strategies that will enable innovation to overcome threats to the client’s freedom to operate. The client will therefore use technology to gain market advantage over its competition.
Fulfilling such roles requires patent professionals to acquire a business skillset that is essential to understand and interpret business needs and trends. Investment in skill enhancement can yield rich dividends for the patent professional in terms of the vastly increased value proposition that they can provide.
At the same time, effective implementation requires patent professionals to acquire, understand and deploy new sets of tools. These will enable patent professionals to bring greater efficiency to the capture and analysis of information that is more relevant to the business needs of the client.
Such tools, using powerful emerging technologies such as artificial intelligence and machine learning, are now available. It is important that patent professionals become aware of these tools, familiarize themselves with their use, and deploy them to fulfil such business needs. In many respects this endeavour requires a significant and unavoidable re-skilling effort, which is representative of the much publicized disruptive effect of these technologies in many fields of activity.
In summary, the emerging landscape of opportunities for patent professionals calls for a business-oriented approach to providing an integrated suite of services that is synergistic and customized to specific business needs of the client organization, rather than a purely legal approach. Implementing this requires patent professionals to re-orient themselves to client needs and challenges while equipping themselves with the necessary business skills and tools to meet these requirements.
Rajiv Bhatnagar is a senior director, technical, at Anand and Anand
Anand and Anand
B-41, Nizamuddin East,
New Delhi 110013, India
Tel: +91 120 405 9300