Exploiting Intellectual Property to Promote Innovation and Create Value

Joe Tidd

• Publisher: WSPC (EUROPE)
• Year: 2017
• ISBN:
  9781786343529
• Topic: Social Sciences
• Subtopic: Cultural & Social Anthropology
• Index: Social Sciences

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There are two traditional views of the role of intellectual property (IP) within the field of innovation management: in innovation management research, as an indicator or proxy for innovation inputs or outputs, e.g. patents or licensing income; or in innovation management practice, as a means of protecting knowledge. Exploiting Intellectual Property to Promote Innovation and Create Value argues that whilst both of these perspectives are useful, neither capture the full potential contribution of intellectual property in innovation management research and practice.

The management of IP has become a central challenge in current strategies of Open Innovation and Business Model Innovation, but there is relatively little empirical work available. Theoretical arguments and empirical research suggest that from both an innovation policy and management perspective, the challenge is to use IP to encourage risk-taking and innovation, and that a broader repertoire of strategies is necessary to create and capture the economic and social benefits of innovation. This book identifies how intellectual property can be harnessed to create and capture value through exploiting new opportunities for innovation. It is organized around three related themes: public policies for IP; firm strategies for IP; and creating value from IP, and offers insights from the latest research on IP strategies and practices to create and capture the economic and social benefits of innovation.

--> Contents:

• Introduction (Joe Tidd)
• Public Policies for Intellectual Property:
  • Appropriation and Appropriability in Open Source Software (Linus Dahlander)
  • Formal Institutional Contexts as Ownership of Intellectual Property Rights and Their Implications for the Organization of Commercialization of Innovations at Universities — Comparative Data from Sweden and the United Kingdom (Peter Lindelöf)
  • Open for Business: Universities, Entrepreneurial Academics and Open Innovation (Allen T Alexander, Kristel Miller and Sean Fielding)
  • Repurposing Pharmaceuticals: Does United States Intellectual Property Law and Regulatory Policy Assign Sufficient Value to New Use Patents? (Thomas A Hemphill)
• Firm Strategies for Intellectual Property:
  • Differences and Similarities Between Patents, Registered Designs and Copyrights: Empirical Evidence from the Netherlands (Mischa C Mol and Enno Masurel)
  • Imitation Through Technology Licensing: Strategic Implications for Smaller Firms (Julian Lowe and Peter Taylor)
  • Firm Patent Strategies in US Technology Standards Development (Thomas A Hemphill)
  • What's Small Size Got to Do with It? Protection of Intellectual Assets in SMEs (Heidi Olander, Pia Hurmelinna-Laukkanen and Jukka Mahonen)
  • Knowledge and Intellectual Property Management in Customer-Supplier Relationships (Jaakko Paasi, Tuija Luoma and Katri Valkokari and Nari Lee)
  • More than One Decade of Viagra: What Lessons can be Learned from Intellectual Property Rights in the Erectile Dysfunction Market? (Cássia Rita Pereira Da Veiga, Claudimar Pereira Da Veiga, Jansen Maia Del Corso, Eduardo Winter and Wesley Vieira Da Silva)
• Creating Value from Intellectual Property:
  • Intellectual Capital, Innovation and Performance: Empirical Evidence from SMEs (Karl-Heinz Leitner)
  • Intellectual Property Appropriation Strategy and Its Impact on Innovation Performance (Sairah Hussain and Mile Terziovski)
  • The Role of Patent, Citation and Objection Stocks in the Productivity Analysis of R&D — Using Japanese Company Data (Yasuyuki Ishii)
  • Host Location Knowledge Sourcing and Subsidiary Innovative Performance: Examining the Moderating Role of Alternative Sources of Knowledge and IPR Distance (Georgios Batsakis)
  • Profiting from Invention: Business Models of Patent Aggregating Companies (Carol A Krech, Frauke Ruther and Oliver Gassmann)

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--> Readership: Students and researchers studying innovation and intellectual property rights; professionals in the innovation/intellectual property rights field. -->
Keywords:Intellectual Property;IP Rights;Innovation;Industrial Property;CopyrightReview: Key Features:

• This book aims to identify how intellectual property can be harnessed to create and capture value through exploiting new opportunities for innovation
• The book is different because it does not focus on the legal requirements of IP, but instead identifies how intellectual property can be harnessed to create and capture value
• The book offers insights from the latest research on IP strategies and practices to create and capture the economic and social benefits of innovation

Firm Strategies for Intellectual Property

Chapter 5

DIFFERENCES AND SIMILARITIES BETWEEN PATENTS, REGISTERED DESIGNS AND COPYRIGHTS: EMPIRICAL EVIDENCE FROM THE NETHERLANDS

Mischa C. Mol and Enno Masurel

Amsterdam Center for Entrepreneurship VU University Amsterdam (ACE@VU)

Most of the literature on intellectual property protection focuses on patenting and neglects alternatives, such as registered designs and copyrights. The literature that includes these alternatives generally treats them as nominal alternatives, and ignores the fact that copyrights are cheaper and easier to obtain than patents or registered designs, which would make it more sensible to treat them as ordinal. However, this ordinal behaviour could not be confirmed on the Dutch 2006 Community Innovation Survey dataset. Treating our protection variable as multinomial confirmed the influences on patenting found in the literature, but showed registered designs and copyrights to behave differently.

Keywords: Innovation; patents; registered designs; copyrights.

Introduction

The protection of innovations has been the subject of publications by the European Patent Office (1994), Hall et al. (1999, 2000), Kitchen and Blackburn (1999), Brouwer and Kleinknecht (1999), Masurel (2002, 2005), Suthersanen et al. (2007) and many others. Most of these publications focus on patenting and neglect other formal registered alternatives such as copyrights and registered designs. Furthermore, the publications that do consider these alternatives (e.g., Cohen et al., 2000; Levin et al., 1989; Amara et al., 2008) treat them as equal nominal variables. They neglect the fact that copyrights can sometimes be used as a cheaper, less powerful, alternative for both patents and registered designs. These differences make it more relevant to treat different forms of formal protection as ordinal alternatives.

In this paper, the data of the Dutch 2006 Community Innovation Survey (CIS) are used to test which variables influence the choice of different formal protective actions. First, in Sec. 2, existing theories are considered, followed by the formulation of our hypotheses in Sec. 3. Section 4 deals with the fieldwork and the descriptives of the variables. Section 5 presents the results of the regressions, first by treating the different forms of protection as ordinal, and later as nominal. The discussion of the results follows in Sec. 6, and finally, Sec. 7 provides the conclusions of our research.

Innovation and Its Protection

Much has been written on innovation over the years (see, e.g., Brouwer et al., 2008; Burton, 2001; Cooper and Kleinschmidt, 1990; Drucker, 1985; Garcia and Calantone, 2002; Kleinknecht et al., 2002; Montoya-Weiss and Calantone, 1994; Nelson and Winter, 1982; Nonaka and Takeuchi, 1995; Wissema and Euser, 1991). However, the foundations of modern innovation theory were laid down by Schumpeter (1934), with his process of creative destruction. He mentioned five forms of innovation: creating new products; introducing new production processes; entering new markets; using new supplies; and developing new organizational forms. Over the years, researchers have elaborated on this and presented numerous definitions and forms of innovation.

In his seminal work, Schumpeter (1934) drew attention to the fact that innovation concerns a step outside the boundary of routine and brings with it difficulties. These difficulties all have to do with the uncertain future. Schumpeter (1934) focused on the consequences of this uncertainty for the entrepreneur; in this paper, however, the focus is on the uncertainty on the outcomes of the investments in the innovations. Innovation needs investments, both in time and money. In order to ensure that the innovator is able to recoup his investments, protection of innovations was introduced. The patent is probably the best-known form of formal protections of innovations, but it is not the only one. Well-known alternatives are registered designs and copyrights. Patents are used to claim a 20-year period of monopoly (at least in most countries) on an invention that is new, innovative and industrially applicable. Registered designs, sometimes called “industrial designs,” are used to claim a 25-year monopoly on the visual aspects inventions (at least in the European Union), that are novel and do not stem from its technical function or interconnection features. This differs from the US, which use criteria that are much harder to meet (see Suthersanen et al., 2007, for a comparison). Copyrights can be used for almost any kind of original work, but the protective usability of copyrights is much lower compared with patents and registered designs, since just a minor change of the “copy” would be sufficient to create a new original work. Corrigan et al. (2005) state the following about copyrights compared to patents: “Current copyright law protects the creator for up to 70 years after their death, significantly longer than patent protection (20 years after invention). Copyright law aims to balance the incentive to create new work against the costs associated with high prices and restricted access to this work.” Finally, trademarks are specifically not mentioned here since they are aimed to protect only the word or pictorial trademark and not the tangible innovation itself.

Patents and registered designs are relatively expensive (a rough guess is about €10,000 for the preparation by a patent attorney and application of the patent) and have time-consuming application procedures. After a patent or registered design is granted, its main goal is to claim a temporary monopoly for the good or design involved. Patents and registered designs are used to prevent others from copying an idea (offensive), and to prevent others from claiming that the idea has been copied (defensive). Copyrights, on the other hand, are a much cheaper form of protection (a rough guess is about €500), but are generally only useful in case someone claims that the idea has been copied (defensive) or in order to stop a competitor from patenting it. As stated before, copyrights are not very useful to stop others from copying your idea, since just a minor change would be sufficient to prevent a “copy” from violating the copyright involved. The alternative to these formal forms of protection is to abandon any form of formal protection, leaving informal protection (see Mol and Masurel, 2011) and no protection at all.

IPR rights like patents, registered designs, and copyrights can be used with different strategic intentions. First of all patents can be used offensive (by covering inventions likely to be needed by competitors), or defensive (by protecting the companies’ inventions). Gilardoni (2007) distinguishes the latter in three different intentions. The first defensive intent is making money by licensing, selling the patent, creating strategic alliances, or exploiting directly. The second intention is to increase bargaining power for cross-licensing arrangements. The third defensive intention is for promotional reasons. Patents are often used to secure payback for R&D investments. Next to the above Gilardoni (2007) also adds an image intention: patents are often used to measure the innovativeness of a company, therefore having a filled patent portfolio would increase the image of the company towards innovativeness. Finally, Reepmeyer et al. (2011) also add out-licensing of patens as a means of recouping some investments made in terminated R&D.

An important difference between patents and registered designs is that the former focus on technology and the latter on the format. For example, a registered design can be used to protect the shape of a bottle or of a car, while a patent can be used to protect the contents of a bottle and the technology behind the car.

Innovation in SMEs differs substantially from larger firms. The main reason for this is SMEs’ lack of resources (Welsh and White, 1981). On the other hand, SMEs are, according to Nooteboom (1994), much more flexible, motivated and original. As a result an important role in SMEs is taken by incremental innovations (Bashkaran, 2006), which most of the time are not patentable, or it is just not cost-effective enough to patent. The latter is confirmed by Kleinknecht et al. (2002), who state that patents “. . . underestimate the rate of small firms that innovate.” We would also expect larger firms to introduce more innovations than smaller ones. However, when we take a look at the literature, i.e., Scherer (1965a, 1965b), Acs and Audretsch (1987, 1988), Pavitt et al. (1987), Cohen et al. (1987) and Kleinknecht (1989), we find that the influence of size on the number of innovations is not that clear.

Influences on the Protection of Innovation

Factors that influence protection can be found by looking at the extensive literature on innovation protection. This literature mainly focuses on patenting, and predominantly neglects alternatives, such as registered designs and copyrights.

A frequently mentioned variable of influence is the size of the firm. Baldwin et al. (2002), Blind et al. (2006), Cohen et al. (2000), The European Patent Office (1994), Hall et al. (1999, 2000), Levin et al. (1989) and Masurel (2002) discovered a positive relationship between the size of the firm on the one hand, and the use of patents, on the other: larger firms use patents more often than smaller firms.

Another well-known variable of influence on patenting is the level of R&D investments (see, e.g., Van der Panne, 2004; European Patent Office, 1994). Higher investments in R&D more often lead to the decision to patent an innovation compared with lower investments in R&D. However, the influence of R&D investments on the use of other formal protective actions again remains insufficiently studied.

Product innovations are more often protected by patents than process innovations, according to Cohen et al. (2000) and Arundel and Kabla (1998). According to Cohen et al. (2000) this “. . .is unsurprising because process innovations are less subject to public scrutiny and thus can be kept secret more readily.” Again, the influence on the use of other formal protective actions remains unclear.

According to Brouwer and Kleinknecht (1999) and Arundel and Kabla (1998), the use of patents is also influenced by the sector in which the firm operates. According to Brouwer and Kleinknecht (1999), large similarities were found between their results and those of Arundel and Kabla (1998). They both found: “chemicals and pharmaceuticals,” “mechanical engineering,” “office and computing equipment,” “electrical equipment,” and “precision instruments” most patent-intensive for product innovations and “chemicals and pharmaceutical,” and “rubber and plastics” to be most patent-intensive for process innovations. Again, the relationship between the sector and other forms of formal protective actions remains unclear.

Nowadays many firms are in the process of adopting some kind of open innovation principle (Chesbrough, 2003). Important aspect of open innovation is that a firm not only trusts on its own expertise and knowledge, but also includes external parties in the innovation process. This openness also has an impact on the protective behaviour of the firms involved, according to Chesbrough (2006): “In open innovation, intellectual property (IP), represents a new class of assets that can deliver additional revenues to the current business model” and “Open innovation supplies a coherent rationale why companies should be both active sellers and buyers of IP.” The Dutch 2006 CIS did not measure all the aspects of open innovation, but did ask if a firm has cooperated during the innovation process, which is at least an indicator. Based on the above, we would expect a positive influence of cooperation on the use of formal protective actions. However, according to Paasi et al. (2010) joint patenting is not a common practice, and confidentiality clauses (not measured in the 2006 Dutch CIS) are typically used in open innovation processes.

Next to these more or less proven factors that influence the use of patents, a number of new factors that influence the use of patents (and possibly other forms of formal protective behaviour) can be pointed at. These factors stem from earlier (explorative) research (see Mol, 2009; Mol and Masurel, 2011), and from different expert interviews. First, we expect that there is a positive influence of the size of the geographical market. Firms that sell their products or services only on a regional market seem less likely to ...

Table of contents

• Front Cover
• Title
• Copyright
• Contents
• Introduction
• Public Policies for Intellectual Property
• Firm Strategies for Intellectual Property
• Creating Value from Intellectual Property