Intellectual property (IP) is the bedrock of every corporation. It serves as a foundation for an organization, setting a company's course and ensuring the long-term viability of profit margins. In fact, Harvard Business Review estimates that 80 percent of the worth of U.S. companies lies in their IP portfolios.
Given the tremendous value of these investments, forward-thinking business leaders take strategic measures to protect their organization's IP. They work to guarantee their company's exclusive rights to ongoing innovations to keep their market edge.
Protecting corporate innovation IP in a global world is incredibly complex, requiring diligence, proper planning and clear decision-making from the top down.
We spoke to three IP experts who identified the key components of a strategic approach to IP. With these principles, executives can drive innovation forward while safeguarding their most valuable assets from competitors.
Prevent IP Issues With Clear Contracts
IP lawsuits are extremely expensive and time-consuming for corporations. The American Intellectual Property Law Association reported that the average patent-infringement case costs approximately $2.6 million in legal fees for an involved party.
The best way to avert litigation is to take a proactive approach to preventing IP issues. That process starts with a company's employees, independent contractors and external partners. An effective strategy uses both non-disclosure agreements (NDAs) and IP assignment agreements in working relationships. By requiring confidentiality and designating all innovations as property of the company, leaders can deter most problems from the beginning.
Depending on preference, these IP contracts and NDAs can be built into general employment and independent contractor agreements or signed separately. Lawyer and IP specialist Philip Crowley emphasizes that it's important to require all collaborators to sign these agreements — not just those directly involved in R&D or innovation.
“Ensure that each employee (even those you might not expect to contribute to IP) has a written agreement in place," says Crowley. Complement this strategy with workshops that educate team members about IP rights. Since a lot of people don't read their contracts closely, breaking down the key points of an IP agreement brings an extra level of transparency and deters employees from potential missteps.
Taking legal steps to protect innovation IP is just as important when collaborating with external partners. Erica B. McCurd, a third-party technology escrow agent, always tells clients to delineate IP ownership when collaborating externally. Her advice: “When partnering with any other organization, especially a startup, ownership of the contributed IP from each partner should be clearly established in advance, as well as ownership rights of the jointly completed IP."
Working with a team of lawyers to develop detailed agreements around confidentiality and IP ownership guarantees exclusive rights. Through documentation, companies can prevent legal battles over potential infringements.
Audit and Prioritize Patent Applications
Patent portfolios are at the heart of protecting corporate innovation IP. Unfortunately, the patent application process is cumbersome, moving much slower than cutting-edge industries and agile firms.
In complex organizations, the sheer amount of IP at different stages of the application process can lead to a messy, complicated patent portfolio. For example, attorneys still may be putting effort into applications that are no longer relevant while more important project flounder. Corporations benefit from conducting regular audits of their registered and unregistered copyrights and patents, deprioritizing projects that no longer align with business goals.
This process allows leaders to assess the relative importance of new patent applications rather than giving equal value to every fresh application. Prioritizing the IP with the highest value maximizes the time and financial investment put into protection.
The complexity of seeking patents across international lines — a necessity in a global economy — requires another level of prioritization. A myriad of different patent laws, along with the cost of technical translators, can exponentially increase the cost of a project. “One may think there is a lot of duplicate tasks that can be removed, and thus costs are reduced (per country) as more are added," says Fowler, “This assumption is incorrect." Practicing discernment by selecting high-priority markets ensures that companies gain the IP rights they need without draining their resources.
An awareness of the inherent constraints in the patent process helps leaders make informed decisions about how to allocate their company's efforts and prioritize the protection of the most valuable IP.
Invest in Third-Party IP Custody
Protecting corporate innovation IP also extends to securing the information itself. Crowley believes that creating a tiered-confidentiality system (much like government agencies do) ensures that sensitive IP is only shared on a need-to-know basis within an organization.
Securing this information online and within safe physical spaces can deter potential theft or violation of a company's exclusive rights. As a third-party custody agent, McCurdy and her colleagues “provide secure, read-only storage environments, so that once materials are submitted, they can never be deleted."
Replicating IP in a neutral space also protects vital information in the case of accidental deletion, server failure, natural disasters, or unexpected leadership changes. Third-party agents use technology that enables automated replication, seamlessly integrating protection into the innovation process.
Keeping IP-related documents in the hands of a neutral agent like McCurdy brings an extra level of legitimacy to a company in the case of possible litigation. As McCurdy explains, “A service like mine can provide a documented chain of custody, as well as proof of contributions by individuals." This kind of information is valuable when companies need to take legal recourse against a former employee or contractor.
In short, developing secure internal and third-party systems for IP ensures that a corporation isn't thrown into chaos by an unexpected event or a need to litigate.
These three strategies for protecting corporate innovation IP mitigate risk and foster sustainable growth. Through watertight contracts, prioritization of patent applications and investing in third-party custody of IP, companies can safeguard their most valuable innovations. With the help of a competent patent lawyer or an internal patent team, leaders can put these ideas into action and strengthen their standing as an innovative organization.
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