History of IP Strategy Part 1 (the Evolution of IP Strategy Part 2)
IP Strategy is a field in which practitioners develop actionable operating plans for managing Intellectual Property Assets, to enable businesses to meet their commercial objectives including: increasing market share, improving profit margins, deterring competition and ultimately maximising enterprise value and shareholder wealth.
On World IP Day, ClearViewIP decided to reflect on the history and evolution of IP Strategy. Once the domain of a small number of sophisticated, large technology businesses and a similarly small number of expert practitioners around the globe, is this field now becoming mainstream?
By exploring the topics of the knowledge-based economy, the emergence of IP as a business asset in the 80s and 90s, the evolution of computing capacity, and the overall acceleration of innovation, the role of IP strategy outside of a legal context becomes clearer and its relevance more easily understood. IP strategists have a distinct set of business skills, different from other professionals within the IP space and these skills have emerged in parallel with the evolving demands of today’s global business climate.
The 1970s was the period when the knowledge economy began to take shape. There was a cultural shift amongst advanced industrialized nations away from a manufacturing-based economy toward a service-based one. In his book Value-driven Intellectual Capital, Patrick H. Sullivan provides a chapter on the history of the intellectual capital movement. He illustrates how intellectual capital was beginning to be recognized as a business asset in the early 80s and how the concept of managing and profiting from an intangible asset, like knowledge, started to really be explored. The 1970s was also when Moore’s Law emerged. This is important because computing capacity and the overall increased rate of innovation is an integral part of the IP Strategy story.
Intellectual property being treated as a monetization opportunity started to happen in the early 90s. The most often referenced example of this is when Texas Instruments (TI) started to purposefully mine their portfolio and began requesting royalties from competitors using their technology without their permission. Around this same time, IBM began a similarly lucrative licensing strategy netting them more than a billion in annual revenue from selling and licensing their patents. In his article “The defensive Patent Playbook,” James M. Rice explains how those activities created a patent battlefield in which competing organizations began to view their IP as something to protect and build defensive walls around. Their actions had a ripple effect on other tech-based companies and compelled others to seek more patents, in arguably the first phase of the patent arms race.
In 1982, the Federal Courts Improvement Act was put in place and the US Federal Circuit was established. In his article “Patent Reform: A Mixed Blessing for the U.S. Economy?” US Economist Robert Hunt explains how the US Federal Circuit relaxed patent filing requirements regarding the non-obviousness, often referred to as “inventive step”, of a patent creating a “pro-patent” environment that expanded the scope of what could be patented. Also around this time, the overall business landscape was changing with the adoption of personal computers. Software became a separate and valuable entity that required legal protection beyond copyright. All this led to a race to file more patents and build bigger and stronger patent portfolios. Between 1990 and 1999 the U.S. Patent and Trademark office (USPTO) issued more than 1 million patents – nearly triple the overall historical rate of patent issuance. How to leverage the value of all these patents became a business concern.
In 2000, the book Rembrandts in the Attic written by Kevin Rivette and David Kline was published and is noted for “helping to launch the IP revolution.” In it, the authors position patent portfolios as the “new currency of the knowledge economy” and use examples like IBM to illustrate the potential hidden value within an existing patent portfolio and how IP strategies, both defensive and offensive, can drive real value and create competitive advantage. One of the biggest takeaways the authors wanted was for IP to be viewed as a core and strategic part of a company’s overall business strategy and their book brought considerable attention to the value of Intellectual Capital (IC). This wasn’t the only publication on the topic and around this time blogs like IPWatchdog and the IAM publication were also launched, further raising awareness.
Towards the end of the 2000s, organizations specifically dedicated to IP strategy matters start to take shape. The IP Business Congress hosted its first conference in ‘08. The following year, IAM magazine began publishing their list of the top IP strategy professionals in the world, the IAM Strategy 250 and subsequently expanded it to the IAM300 as the pool of talent increased. Around 2010, the International Intellectual Property Strategists Association (INTIPSA) was formed to help “push IP strategy up the business agenda and provide a forum for professionals working in the field, both in-house and with service providers, to share their knowledge and experience and build on their careers.” All these milestones show an increased awareness of the benefit of treating IP as an asset and support for people who have and promote that expertise.
We can see that the rise of Intellectual Capital, Innovation and the “new economy” has indeed been supported by an evolution of IP Strategy as a discipline and the topic has gained wider acceptance across the business community, by becoming integrated into mainstream business processes. In Part 2 we’ll explore the role of technology in driving this need, but also its critical role in making the job of an IP Strategist possible.