The Value of IP

As long as your company has something to sell it will survive, which is why it is important to make the best use of your intellectual property and above all protect it. Mike Lloyd discusses the issues

When did you last think about or concern yourself with intellectual property (IP)? Not for a while? The problem with IP-related issues is they are strategic, which for a lot of us means ‘important but not urgent’. Also in many people’s view IP only means patents.

Take a look on any global Internet product search directory and you will see what is available from Far Eastern manufacturers and how specialised they have become. The home markets have a voracious appetite, and these products are being extended into the global marketplace.

The passion and enthusiasm the Far East has for wanting a Western lifestyle is massive. In the West we should be equally passionate and enthusiastic about innovating and protecting our products and services, otherwise we risk being left behind. The technology, skill and quality gap we have enjoyed for many years cannot be assumed any more.

Whatever happens there will be businesses in Europe and there will be products and services. In all of these the common factor that will remain is IP. Every business has some value that it draws on, whether it is formally contained and ‘published’ to the world in a patent or simply a collection of trade secrets that make them the leanest supplier.

Bulb in Box Companies will survive as long as they continue to have something to sell. The ones that flourish will be the ones that understand the markets within which they operate, getting products to market quickly and effectively, and making the best use of what they know that makes them different - their IP.

Commercially one would think the pressure is on to retain all IP rights (IPR) in-house, but this is not necessarily beneficial. Inevitably many jobs require a reasonable amount of other technologies, and the maintenance of these within your business can cause human resources problems. What happens when you have to offload resource during a lull in the design cycle?

Protect your good ideas, but don't lock them out of sight forever...

Likewise, if working with a design consultancy, what happens when you want to launch the next version of your product and they are fully committed to another project?

In the engineering world there are many hardware and software modules now available for various specific applications. These may be PCB modules, algorithms, or peripheral drivers that have taken many man-hours of development. This all becomes part of a mix of licensable material and there are many options for purchasing such material.

The demand for functionality by the marketplace means many companies, especially SMEs, do not have the budget to employ engineers in all the necessary sectors to assemble this mix into a robust and commercial offering.

The key to addressing this is to know what you are good at and focus on it. The faster you can get your application out there, the more new IP you can generate and validate.

The real value is in delivering the IP you own to the specific client that needs it. In many cases any additional IP required to complete the product is then purchased separately, either as off-the-shelf technology or a bespoke additional system Mike .

The important thing to remember is there are increasing numbers of companies that can offer the appropriate technology that glues the product together - companies that contain the missing link which could take six months to develop in-house. Some can rapidly manufacture the prototypes and source overseas production.

Mike Lloyd (right): The important thing to focus on is what value we bring to our market

Pursuing development in this way means your specific IP is developed into a product by a team of players that are able to integrate both new and existing technology to create the functionality required. In some cases they may bring their own IP to the table, adding further value to your product.

The off-the-shelf technology used within your product’s development, whether a system or a specific part, is not worth owning if it does not contribute to your product’s innovative IPR.

This is especially the case if it slows down the launch of your new product, and you have to maintain it at a high cost. Working with the right companies to avoid this means your product has the potential to be delivered with a very fast turnaround.

This style of development requires great partnerships with high levels of trust and win/win thinking. Both companies enter this relationship with lots to lose, in terms of delays, technical issues, or problem relationships. The upside however is massive, with a fully specified product delivered rapidly to market.

The successful companies will be the ones managing this mix correctly. They will have the greatest flexibility and ultimately the greatest amount of relevant IPR in the marketplace.

The important thing to focus on is what value we bring to our market.

When companies and suppliers are prepared to create alliances and partnerships, to devote a lot of energy into maintaining outstanding relationships and are able to work within the IP food chain with high levels of trust, then the best teams will be created which outperform the rest.

Protection by the well-advertised routes from patent through to trade secret keeps your knowledge safely at home. The key is to find suppliers that work in this way who are familiar with the value of IP and will respect yours in the same way. Perhaps IP should stand for integration and protection?

This article was first published in Electronics Weekly magazine, 10th May 2006

Mike Lloyd is the Managing Director of ML Electronics

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The Value of IP