10 May 2006

What I need to do is protect the IP ...

Well ... yes, up to a point. But protecting a piece of IP which you don't know how to commercialise is a waste of your money. Having a patent is not going to make you rich - not unless you can sell licences to the IP or can sell the product or service delivered by the IP through your own organisation.

Sometimes defending the IP has direct commercial benefits. Let's imagine that our happy inventor has registered a patent to produce an improved widget. He sells manufacturing licences to 1 or 2 widget manufacturers and sits back to grow fat and happy on the licence income. If an unlicensed manufacturer copies the new design and sells in competition to the official licensees then the holder of the IP is obligated to defend it. If he doesn't then:
  • he sends a message to the existing licence holders that their licence is of little value since it offers no protection against unlicensed competitors
  • he sends a message to the unlicensed manufacturer that there is no economic penalty in copying protected IP
In the trade, actions against unlicensed manufacturers are known as "stick licensing". The objective is to encourage the unlicensed manufacturer to become officially licensed - increasing overall licence income and to discourage existing licence holders from failing to renew. Protection of IP wouldn't normally be thought of as business development but in this example it includes both business development and churn management.

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