Strategic intellectual property protection

• By Michael Whitehead, MS
• Feb 01, 2000

For most of the past two centuries, intellectual property has been little more than an arcane and obscure subspecialty. Today, virtually every business regards intellectual property as a critical asset. The environmental profession is no exception. The virtual explosion in remediation and treatment technologies during the past decade is just one of many developments that has forced managers to take a strategic look at intellectual property. For all of its importance, and all of its substantial costs, much of intellectual property protection is uninspired and treated as a mundane task. It is often entirely relegated to outside attorneys. That approach, however, is doomed to fail.

There are a number of challenges to effectively managing intellectual property, both substantial and subtle. While it may be relatively easy to get an individual patent issued or a trademark registered in the typical case, these challenges make effective intellectual property portfolio management extremely difficult. This is understandable, since our system is designed to facilitate registration in order to add to the pool of knowledge available to the public.

"Effective intellectual property portfolio management" means building assets that will protect the company's creative efforts and providing tools to exclude competitors from using the company's innovations. Unfortunately, the cost of effective intellectual property management is significant. Fortunately, as a business manager there is much that you can do to improve the quality of your intellectual property portfolio.

Challenges to effective portfolio management

There are four specific types of challenges to effective portfolio management:

1. The public policy bias toward disclosure;
2. The inherent conflicts between the various types of intellectual property protection;
3. The conflicts that arise in the larger context of trade regulation law in general; and
4. The basic biases with which many practitioners approach their craft that can result in narrow — and ineffective — protection.

These challenges, although very different, are each formidable.

Public disclosure

First, the system of intellectual property protection in this country was specifically designed not to reward the inventor or business owner, but to benefit the public. The reward to the inventor of the right to exclude competitors is merely the "carrot" to induce the inventor to disclose his or her invention to the public. Intellectual property rights involve a trade-off.

The public benefits from disclosure of inventions. Disclosure adds to the public domain of knowledge. The public can then use that knowledge in two ways:

1. During the term of the patent, armed with the disclosure of what the innovation is and how it works, to develop improvements or alternative ways of accomplishing the desired result; and
2. After the patent has expired, everyone is free to use the innovation without paying the owner a royalty.

The level of disclosure required is substantial, more so than the scope of protection. In return for the exclusive rights granted by intellectual property laws, the owner is required to put even more substantial disclosure in the hands of the public for everyone to use. This is the primary reason why trade secrets are so prolific.

Disparate types of protection

Second, the basic types of intellectual property protection available in this country are frequently inconsistent, conflicting and generally misunderstood. There are a number of reasons for this confusion. Patents, trademarks, copyrights and trade secrets are very different creatures. There are multiple types of each of these forms of intellectual property protection. They protect different things. They have no common theme, having arisen from different historical policies, in different time periods.

Consistently integrating these disparate strategies into the business strategy is always challenging. It would be hard enough were the lack of an overarching theme the only constraint. It is not. In addition to having to fit these pieces together into a coherent pattern of protection, some of the pieces contrast. For example, copyrights and patents are published; however, publication destroys a trade secret. Design patents and trade dress both protect designs, yet, they protect different aspects of a design. The line between some of these types of protection is not always clear.

Barriers to competition

Third, intellectual property laws exist in a larger context of domestic and international antitrust, trade regulation, tort and other laws, all of which must be considered. In effect, intellectual property offers one of the few ways that a company can lawfully impose barriers to competition to its competitors. Yet, the antitrust, trade and consumer protection laws carefully regulate and discourage barriers to competition. These competing interests must all be accommodated.

Diverse skill sets required

Fourth, intellectual property is a highly specialized area of law, requiring detailed legal knowledge, experience and judgment, as well as an ability to communicate effectively in complex and rapidly evolving engineering disciplines. The combination of these two skill sets is rare. Many intellectual property practitioners are not up to the challenge, excelling at one or the other, but rarely both. Far too often an intellectual property counsel is an engineer first and a lawyer second. Yet, truly effective protection requires both in ample measure.

The protection of innovation is a difficult task for any business. In many businesses the decision as to which innovations to protect and how to protect them is understandably left to the engineering managers. Combined with an intellectual property counsel who is more engineer than lawyer, this can be a potent recipe for giving away the fruits of a company's intellectual labors.

The problem with taking an engineering approach to intellectual property protection is that it is narrowing. Intellectual property protection is not an engineering problem. It is a legal problem. Adopting a narrow engineering perspective typically results in protecting only the narrow engineering features of the innovation at hand, at the expense of the permutations and variations of the concept that may be equally or more valuable commercially. Often, this narrow approach results in patents that are far too narrow relative to the scope of legal protection that the company could have obtained had the strategy been to fully protect the company's innovations.

Intellectual property provides one of the few barriers to competition available under our system of law. Approaching the problem as an engineering task leaves competitors and the public-at-large ample scope to compete with the company with minor variations and improvements of an innovation. Approaching it as a legal problem, on the other hand, ensures that the company has secured the broadest scope of intellectual property protection that the law allows. Only in this way can the public be protected, as well as the company's assets.

Three basic steps to protecting intellectual property

So how can a company best manage its intellectual property portfolio? There are three basic steps that any company can take in order to protect its intellectual property more effectively: information, strategy and implementation.

Information. First, it is critical that the company actively engage and support the engineering and legal managers in charge of the intellectual property protection. With responsibility comes accountability. Clear lines of authority must be created in the company, with one person serving as liaison. Effective protection requires complete access to information about the company's technology base. The managers must have complete access to all of the technology that the company is using. They must also have complete access to the people and resources necessary to understand whether or not the company is free to use that technology without being required to secure authorization from or pay royalties to third parties.

In addition, the managers primarily responsible for intellectual property protection must have unfettered access to engineering staff personnel and the legal personnel needed to ensure that every part of the innovations have been captured and recorded, and that the deliberate decision has been made whether or not to protect them.

Strategy. Second, intellectual property is not the end, but a means. Simply getting certificates of registration is not a goal in itself. The goal is to secure exclusive rights that give the company value and impair competitors from using the fruits of the company's creative labors. To that end, the strategy in projecting intellectual property must be integrated into, and aligned with, the company's business strategy.

Implementation. Third, implementation is essential. Effective implementation requires continual vigilance. It is essential that managers have current, up-to-date information about the company's base of technology. This requires cooperation from every unit of the business, from product planning, to research and development, to manufacturing, to marketing and sales. Effective implementation requires an effective strategy, not simply reacting to threats as they arise. Often the information needed at that point will already have been lost.

Overcoming the challenges

Although this list of challenges is formidable, it is workable. The key is to realize that intellectual property protection is not a one-size-fits-all commodity. Nor is it a seamless web of protection in which the company can wrap itself. It is a collection of different tools that can pose potent and effective barriers to competitors when deployed strategically and with effective planning. Making effective intellectual property protection part of the business strategy can maximize the value of the company's most valuable assets, its people and their imaginations.

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This article appeared in the February 2000 issue of Environmental Protection magazine, Vol. 11, No. 2, p. 25.

This article originally appeared in the 02/01/2000 issue of Environmental Protection.