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ABSTRACT

This paper reviews the process of adding a new Intellectual Property (IP) legal team or “IP Group” to a company. This group deals with the legal specialty of Intellectual Property (IP) and manages all the IP legal issues assigned to it.

Ideally, a company uses IP to enhance the company’s “freedom to act” within its marketplace. A company assigns the task of maximizing this freedom to an “IP Group”.

This information is useful for any enterprise who wants to increase their IP portfolio, protect their new ideas, or simply needs to coordinate communication among their “creators”. These creators are the teams who stand for the “creative forces” within the organization.

The information in is paper is also useful for Legal Services firms when offering added IP protection options to their clients.

INTRODUCTION

A company can expect to meet many challenges when creating an IP Group. But what does it do?

An IP Group can be an enforcer. Here’s an example: A lot of us have had (or know somebody that has) a legal group that tells us not to post other people’s music online and most people have a vague idea how this works.

Publish someone else’s music, and an Intellectual Property (IP) group will tell you to take it down. That’s what an IP Group does, and they do it on behalf of their employer, often as an enforcer.

Or an IP Group can be a defender. Here’s an example: What would happen if, in the above example, you think that the legal group who tells you to take down your music has no legal right to do so?

You get legal help from an IP Attorney. Then your attorney prepares a “counter” to the above demand and tells the other organization why you have a legal right to post the music.

Thus begins a negotiation process that can even place you and your attorney in court.

Legal maneuvers can become expensive, but you may get what you want in the end. If you had an IP Group at your disposal, they would manage all of this for you, as a defender.

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UNCERTAIN IP GOALS

Most companies have some knowledge of how Intellectual Property (IP) works. However, their use of it varies greatly from industry to industry and company to company. Some rely on IP to start and stay in business, while others have little documented IP in their operation.

Usually, IP usage is related to factors such as company size, technology used in products, or the need for venture capital.  Different combinations of these factors can affect a company’s use of IP even more.

Whatever the reasons for justifying investments in IP, every company views this process differently.  Therefore, in the case of IP, Return on Investment (ROI) calculations show results that vary widely.

Because of this, many companies create IP Groups just to get these issues under control.  At least there will be someone reporting on the effect that IP has on a company’s operation.

Often the aims of IP investments are unclear, not based on market realities, not based on R&D development activities, but instead based on setting trademark and patent quotas to stock up the corporate arsenal.

Some businesses need more IP protection than others.  But how is this figured out?  Many marketing professionals agree that trademarks and copyrights keep competitors from knocking off their clever marketing campaigns, but that’s about all.

However, few marketing professionals understand how patents can help a marketing effort.  Just how can a company include a strong patent portfolio in a marketing campaign?

ADDRESSING CONFUSION

Unfortunately, general confusion about IP on the “line” is still prevalent.  Too few training programs are available to put departmental programs in place to address this issue.

Then where is the best place to make changes and start an effective IP program?  In just about every case, it’s at the top.

When a company needs IP legal action, the company faces a choice between an external or internal service.  If the answer is internal, and the company already has an IP Group, then fine.

However, if IP is not yet an integral part of the company’s Corporate Governance, the company will need to make changes. These changes can be significant.

Most companies organize an executive management structure around the functions of sales, marketing, administrative, development, and a short list of industry-specific areas.  Integrating an IP Group into this structure makes sense.

As a result, companies who employ the above management structure prefer to make their IP Group functionally reportable to their C-Suite team.  There are good reasons for this, the most important of which is to focus IP investments on projects that maximize ROI.

When IP goals are set, they generally appear as a goal in a business plan and arbitrarily assigned to one of the above functional groups to create/manage.

Because smaller companies generally do not have any of the above internal capabilities, this situation forces management to make IP decisions without much guidance. To resolve this issue internally, the company will find the process of setting up an IP Group a major obstacle.

ORGANIZING AN IP GROUP

As an understatement, IP work is expensive. Therefore, the IP Group must focus and prioritize. Results of such work must pay off as quickly as possible. This is what keeps IP close to Corporate Governance.

Consequently, it is no accident that IP administration normally exists at a central point within the organization.  From that vantage point, it is relatively easy to examine each of the functional areas for opportunities for an IP Group then apply them appropriately within the operation.

Normally, that starts with Product Development. If a company is in a high technology industry, Product Development generally needs patents to backup externally distributed products, so Product Development often goes on the “IP critical List” quickly.

If a company performs a pure service, like water purification, most of the engineering work is process oriented, limiting patent applicability to internal process improvements that provide a competitive advantage.

Regardless of the business needs analysis, just about any enterprise requires some degree of IP protection for products and processes. They make improvements every day to meet customer requirements while still supporting a competitive advantage.

Extrapolating the proper applicability of IP to a wide spectrum of business practices is a challenge. Organize your IP Group to address these challenges as your company defines them.

MAKING ADJUSTMENTS

Turning to Sales & Marketing, they should share their compilation of current and planned campaigns. Then, the IP Group cross references it to the IP Critical List created above. It is essential that this analysis shows those products/services at the beginning of their life and those at the mid-point in their life.

For trademarks, it is straightforward to glean from this analysis that a company must register all new and existing efforts, properly label them, and support them.

Where there are products that have existing patent portfolio applicability, it is essential to list the patent numbers on key public documents and to mention the “patented functions” within sales materials that highlight the capabilities covered by the patent.

In areas where the IP Group finds that future IP protection is necessary, it is essential that the product labeling includes “patent pending” language.

In areas where marketing formulates new campaigns, it is essential that marketing shares their new trademark ideas with the IP group. This allows the team to conduct follow-up searches that narrow down and share a list of eligible names for filing with the USPTO.

For international marketing and service areas the team often repeats the same process as described above again, simply because different markets require different IP protection.

If there is an interaction with government agencies, the IP Group may revise documentation to keep the operation of certain products and services secret. Management must then review these areas for other IP issues, possibly creating new goals for the IP group.

SETTING UP SHOP

Most companies follow the practice of obtaining the rights to the domain name collection, either when their trademark receives approval, or later, after the trademark becomes registered. Note that there is a distinct possibility that another party may apply for and get a domain name first.

In a competitive situation, a company can use ICANN rulings to “pull” the domain names standing for owned trademarks from others. This process can take a while, but a company can complete the domain transfer by being persistent.

A domain name becomes a functional entity using a networked host computer system that generates an expense. Use of the domain name only continues if the company pays the required maintenance fees, and a competitor does not successfully challenge its fair use.

The ongoing expenses for online services are relatively easy to finance as compared to other industries such as manufacturing. These low barriers to entry also encourage a lot of unfair competition. This factor alone makes effective IP protection necessary.

Because of the low maintenance costs, it is not surprising that people (Cyber Squatters) hold onto domain names and offer them for sale. Often, the price is set just below the cost of filing an ICANN challenge, and so it goes, another market opportunity for some random operator.

When managing an online business, it is best for a company to focus on the parallels between domains and trademarks. It is often a cost-effective procedure to apply for the collection of related domains when the IP Group first files for a trademark registration.

Today, with nearly every business having a web presence, this is essential and should be part of any go-to-market strategy.

ONGOING MAINTENANCE

Once Accounting has taken on the responsibility of adding the IP portfolio to the balance sheet as an asset in a similar manner to property and equipment, the company can watch the value of IP over time. Consequently, Accounting may find a significant amount of leverage in the portfolio assets.

By keeping the IP portfolio limited to only those items that are actively “in the game” of enforcing infringement and supporting cross-licensing negotiations, the company will realize competitive parity and even an advantage when using IP in the competitive environment.

In summary, the type of company is the main determining factor in settling on the proper use of IP within the business. The IP Group must define goals for IP portfolio management and make the portfolio available to authorized personnel.

Once the IP Group properly sets up the IP portfolio, it becomes integrated into the company’s day-to-day operation as a part of the administrative function.

Companies must continue to actively manage their IP portfolio, while providing visibility to the ROI that is related to the IP Group’s activities.

PROCESS FOCUS

Below is a diagram of the process areas that take part in coordinating the IP Group with other groups on an ongoing basis in an enterprise. The information previously covered involves active participation in the areas shown on the diagram.

Of course, if IP issues expand enough to require the participation of more groups, the process interactions will increase accordingly.

• Corporate Governance
• Product Portfolio
• Project Backlog
• Product Development
• Sales and Marketing
• Project Management
• IP Legal
• Patent Portfolio

CONCLUSION

The nature of a company’s business is the main determining factor in settling on the right use of IP within the business. The list of the overall goals for IP portfolio management should be accessible by authorized staff.

An IP Group must actively manage the IP portfolio with visibility to the ROI of the IP Group’s activities.

Once the IP portfolio management process has been properly integrated, it becomes a part of Corporate Governance and its day-to-day operations.