Is It Always Right To Simply Protect Your Intellectual Property?

IP lawyers take it as read that if you can, then you will always register your intellectual property rights – be they patents, design rights or trade marks. The logic goes like this…

Take something novel and stop everyone else from using it, apart from you, and make lots of money!

However, this type of absolute protectionism isn’t always a good business model. And here’s the commercial angle. In 1936 Kodak® started to produce 35mm film and having protected it, they started to make a considerable sum in selling chemicals to process and develop film. However, in 1975 Kodak’s® engineer Steve Sasson invented the digital camera. (Yes – 1975 the first digital camera!). “Yikes” went the management, “that’s a great idea but it will adversely affect our business. Let’s suppress it now”. They did however, patent the technology. In fact Kodak® went onto file around 1000 patents on digital imaging.

In suppressing the technology, Kodak® then started to watch their business unravel. You see as Zig Ziglar said, “people don’t buy drills they buy holes”. In suppressing the technology, they made a short term gain but a much longer term loss, and in 1999, after the first digital camera patents were expiring, their competitors leapt ahead of Kodak®, smashing Kodak’s® share price and forcing Kodak® to drastically cut jobs and costs just to survive. Customers buy photos, not chemicals and film. Had Kodak® licensed out their technology well before they did, they would have shared the technology, been market leaders and maintained their share price. You see digital images were what we now call disruptive technology. (See my blog on this topic.)

The problem is that some companies are TOO protective of their ideas. Many years ago Tetra Pak® made a similar mistake by forcing customers to buy both machines AND packaging directly from them rather than licensing the technology out. After a short space of time the European Court stopped this anti competitive practice which tied buying one product to another. Tetra Pak® then made up the difference in sales by licensing their technology out and building a World Wide network of licensees. Ironically this latter strategy gave them instant market presence in a number of places that they’d never done business in before.

A major issue is that companies get SO tied up in protecting what they make, that they forget about their customers and why their customers buy products. Whilst intellectual property exists to create a barrier to being copied, the most intelligent use of IP comes when it is licensed out and monetized to make an income stream. Syndicate and recycle are two useful mantras.

So the question to ask yourself is this. How can I use my IP to create an income stream and what do I need to do to get it out there and shared in an intelligent way? We’d be happy to help you make that judgement call!

Virtuoso Legal are specialist Intellectual Property Advisors.  Because our expertise and commercial acumen are second to none we are an Award-Winning Team.  Our reputation as one of the UK’s leading Intellectual Property Practices is built upon delivering the highest quality work for our clients.  If you need any help or advice on any Intellectual Property matters then give us a call on 0113 4032102 and we provide a free consultation.

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