Mr. Kari Sipilä, Executive Director, Licensing Technology,
Foundation for Finnish Inventions, Espoo, Finland.
Constant Renewal is Vital to Entrepreneurs
Demand is a central prerequisite for business and for new
products and methods. Consumers demand and buy
new products, and industries require better and more efficient equipment
to keep up with domestic and international competition. To make a product
succeed, enterprises need
aggressive marketing. New products also
have a great impact on employment, particularly in small and medium-sized
enterprises, as they secure existing jobs and create new ones. Preparing for the
future and for global markets is a long-term project.
New technologies change the fabric of the economy and
facilitate an improved standard of living and the creation of new jobs.
Growth of the economy is largely based on know-how and jobs requiring expertise
are multiplying. This has a great bearing on education as well.
Services account for over two-thirds of the output and jobs in OECD countries.
The world is going through a period of fundamental change due to the rapid
development of information technology and its ever-increasing utilization and
proliferation to most fields of technology.
New technologies support a renewing
success of businesses in founded in their capacity for renewal and
and intellectual property rights are related in
many ways. These include:
The intellectual capital of an enterprise and its
Intellectual property and
innovation strategies as parts of
overall business strategy
Vision regarding the importance of intellectual property
rights as a basis for business success
Preparedness for intellectual and financial investment into
product development and innovation
Strong contacts with
customers and stakeholders
Need for new products, competitiveness, international
expansion and successful business operations.
2. Patent Strategy and Policy
Technological and economic development world wide leans heavily on new and
competitive products. They can be classified on the basis of their
significance at different levels of sophistication and in different sectors of
the economy, from high-tech to mundane everyday products. Some reach
international success, while others are noted within their home region or
country. Technology and inventions promote general welfare and also play
an important role in the production of services.
In most industries, intellectual
property rights, especially patents
and their exploitation, hold key significance in the development and
commercialization of new products. Businesses should have an intellectual
property strategy as part of their
corporate planning and
An intellectual property strategy defines the principles that
intellectual property rights are designed to serve and how patent matters and
other intellectual property matters are handled within the enterprise. The
purpose of patent policy is to support the business operations of an enterprise.
Neglecting patent matters may turn into a threat to development in an
internationally expanding business.
The patent and intellectual property policy of a business
should include, among others, a definition of intellectual property rights, the
organization of corporate activity designed to protect intellectual property
rights (or just patents), making and acquisition of inventions and available
sources, instructions on how to secure and maintain adequate patent protection,
instructions on acquiring, tracking and otherwise utilizing patent information,
protecting corporate patents,
licensing behavior and publication
Corporate patent policies may be divided, for example, into
low and high profile policies, aggressive patent policies of businesses involved
in international markets, and patent policies followed by businesses engaged in
the commercial exploitation of intellectual property rights or transfer
The patent policies of diversified businesses can be
classified as follows:
patent portfolio commensurate with the scope of your operations and
technological sophistication and exploit it in your business.
avoid infringing on the patents and intellectual property rights of others.
protect your own intellectual property rights.
enter into liberal cross-licensing arrangements and/or find an ally.
Even a simple patent
policy is vital for smaller companies since their business is often based on
only a few key products.
3. Benefits of Patenting
A patent gives the inventor the
right to decide the fate of his or her invention. The inventor may
manufacture and sell the product himself or may assign his rights to someone
else. A trademark, on the other
hand, is a fanciful name given by a business to its product(s) in order to
distinguish them from other manufacturers’ goods. International
recognition of rights is also a common denominator for intellectual property
rights. All international property rights are subject to international
The legal protection afforded to intellectual property has
commercial significance to the owner since the owner may, for instance, preclude
others from taking advantage of the protected intellectual property in their
business. Businesses – manufacturers, merchants, etc. – need to, in fact,
establish a name or
brand for their
products so that customers can
tell them apart from other products. Likewise, an inventor must secure
an exclusive right to his invention, a patent, so that not just anyone can
exploit the invention in his or her business.
In a Finnish research study, businesses gave the following
reasons as the most important rationales for their patent interest:
Securing the basis for continued
Utilizing patent publications in
Pre-empting competitive market
Using a patent in
Monitoring competitors by
following patent publications.
Avoiding patent infringements and
Evaluating the level of technology
in an industry.
Using patents as a medium of
Components of the benefit – usually economic – derived from
important patents include:
Pre-eminent market position.
Pre-empting competitive entries.
Pricing flexibility with new
Quick payback period for
Strategic patent alliances.
Patent ownership as an
advantageous negotiating tool.
Breathing space afforded by patent
The protection afforded to the inventor or inventing
organization by a patent is an indisputable advantage, which does, however,
require some expenditures. A patent provides a head start on the
competition; even from the secrecy point of view 18 months. Filed patent
applications can also be used to intimidate competitors through, for instance,
corporate communications. Patents serve as flexible instruments of trade
through licensing and sublicensing and thereby open opportunities to earn
substantial income and to expand internationally. However, in cases of
dispute patents must be vigorously defended.
Patent databases also
function as a vast source of information for inventors and businesses who wish
to find the latest technology in their field or are trying not to infringe on
competitors’ patents. Aside from databases available in most Patent
offices, a considerable amount of patent information may be found also on the
However, in some fields the
intellectual property rights are problematic. Information and
communications industries as well as biotechnology are examples of fields which
have developed very strongly in recent years. Consequently, the ground
rules for intellectual property rights and their exploitation have not kept pace
with this development in many countries. Particular attention should be
paid to rapid development of necessary legal protections in fields such as
4. Businesses Invest in Patents
An individual, research team, corporate employee or a product
development team may come up with an invention. Generally, an individual
owns his or her invention personally, whereas a corporation owns an invention
made by its employee if it is related to the employer’s business.
Ownership of the inventions of university researchers varies by country, but
often they are the property of the university. Inventions, however, are
always made by humans.
businesses know how to invest in research and development. Although
individuals and small and medium-sized companies suffer from lack of resources,
know-how and innovation can still produce inventions and patents. The
result is evident in the form of new products, improved competitiveness and
success. In a recent research, made by Statistics Finland, the profitability in
firms which are active in research and development is clearly on a higher level
than in the non-R&D firms.
Further in Finland, the world’s largest mobile phone
manufacturer, Nokia, invests annually approximately 1 billion U.S. dollars and
the labor of several thousand employees into research and product development.
Nokia files some 500 patent applications each year. IBM is the leading
U.S. patent applicant with its 2,657 filings. Next in line in the U.S. are
Canon, NEC, Motorola and Sony. Each day, two thousand patent applications
are filed around the world. A patent alone, however, is not enough.
The invention must be developed into a marketable product.
5. Earmarks of a Good Invention
remain innovative, successful and competitive, an enterprise must
continually make or acquire new inventions. Simplistically, one could
say that an idea or invention has established its worth when it has offered
a novel solution, has turned into a product, and has also been an economic
success. Successful inventions are
innovations. Success is always more easily recognized in
retrospect and the real difficulty lies often in evaluating an idea’s or
invention’s chances for success,
planning its execution,
and the execution itself.
A good idea, invention
or innovation and related products may be recognized in advance by the following
The product is market driven; it is in demand.
The product is inventive, novel, and patentable.
The product is significant to the business and to employment.
The product is functional, capable of being produced and economical.
The product can be launched quickly.
There is organizational commitment behind the development project and the
Investors are interested in the
is easier to raise development financing for a good, promising invention
because public or private backing or investment is required if the venture
is to succeed.
In many cases, several
stages are involved in the development of an idea or technological invention
into a marketable product, such as:
Planning, evaluation and preliminary technical and commercial studies.
Patenting or other intellectual property protection domestically and
Product development and related planning,
Business planning or
licensing of invention.
Pilot production runs and
An idea that seemed good
may fail at nearly any one of these stages and the venture may end there.
Terminating development in time is sometimes a better economic decision than
battling the odds and continuing to develop an idea that is likely to fail.
This, however, is often emotionally a difficult decision.
Characteristics of an Innovative Enterprise
Distinguishing characteristics of
innovative organizations include the following:
Innovation and intellectual property strategies are established, and followed.
Corporate culture is
Teams are created for tasks.
Creativity is rehearsed.
Creativity and innovation are
New opportunities are actively created.
Although these principles and
observations mainly relate to the evaluation and promotion of technical ideas,
inventions or innovations, they can also be carried over, where applicable, to
other innovations and business ideas.
and creativity are
excellent qualities in people and businesses. However, an invention
needs a home – in practice a business enterprise – where it will be
developed. Corporate management skills
often play a key role in the success of products. When evaluating the
competitiveness and likelihood of success of a business, especially a
startup business, one focuses on factors such as:
Demand for products, market conditions, and potential for increased production.
Patents on innovative products,
development resources, quality and significance of patents, and potential for
Finances and business operations.
These evaluation and
business planning stages are designed to identify the realities faced by and
chances of success for the
The chances of an
inventive product should be examined from a
by finding and evaluating answers to the following questions:
Who are your customers and what are your channels of distribution?
Does your profitability analysis look promising?
How important is the product to your business and your image?
Do you have the requisite intellectual and economic resources for product
How will the product impact your operations and bottom line?
Continually assessing the product’s commercial
potential throughout the development process is of key importance.
Marketing and commercialization measures take on added import as the project
approaches the commercialization phase. The business idea itself is
usually evaluated in the light of factors external to the organization on the
one hand and internal factors on the other.
Products stemming from inventions and related
intellectual property rights have, despite their many development stages and
difficulties, a great impact on businesses and their competitiveness, success,
development, and also employment. Businesses must undertake
new product idea
generation, acquisition and development timely and with a long-term view,
not only after troubles start to mount up.
Finally, perhaps the most significant competitive tool in
this decade is timing: you have to
market at the right time and with the right products. Due to advanced
communications services and extensive international cooperation, gathering and
effectively utilizing information is more important now than ever before.