Top 5 IP challenges all executives will face in 2015 (Part 1)

By Peter Cowan

As much as the IP leaders wish IP to be top-of-mind in every business and investor, in reality this is not always the case.  In an ever more globalised environment, there are seemingly more immediate needs to speed up R&D execution, lower local manufacturing costs to compete globally, and constant pressures to attract more customers or clients.  In short, global competition and accelerated technology development timeline has fundamentally changed how successful businesses need to be managed.

However as this has happened, IP has become the common pillar of success for key market leaders. This poses the question: What are market leaders doing different than their competitors? How are all levels of their management bringing IP discussions to the C-Suite?

What are the key business oriented challenges that any manager or executive should be considering in 2015?

Based on patent and market changes, below are the top 5 challenges all executives or company leaders will face in 2015 – these challenges directly impact R&D departments, legal groups, innovation teams, and even finance departments.

Challenge #1 – IP requires a change in core actions

There has been enough legal and business environment shifts in 2014 that the long-term results of IP programs will have changed for many companies.  Patent Reform in the US has brought an increase in use of IPR reviews (Patently O has the data here), which is becoming a “first stop” of competitors to test the waters of your patent without needing an expensive trial. Changes in patent law in the US around Software patentability in the Alice decision also have lowered, if not killed, the value of some portfolios.  If executives knew what kind of IP the business had in 2014 –  either on file or granted – it is without a doubt different now in 2015.

Having the environment shifts happen to IP is no different than a change in the way technology platforms or standards shifts in the technology market – a shift that every technology leader understands.  As a result there needs to be a short-term action to re-develop and review IP programs and outputs. The challenge will be taking this action in all executive teams that interact with the IP process as part of the business strategy for 2015.

Challenge #2 – IP enforcement and defense plans need revised

Litigation costs, for both enforcement and defensive position, mean that both competitor and  NPE strategies are also shifting.  No longer is it always cheaper to just immediately settle in the face of a lawsuit, but it may actually give a higher ROI in the long term to build the business case for litigation. With the reduction in litigation in 2014, where Erich Spangenberg predicts it may drop as much as 50% in 2015, there also exists an opportunity to negotiate different pricing structures for the predicted oversupply of IP litigation talent.

As a result new strategies, and perhaps budgets, need to be developed in the areas of IP monetization and defence. Particularly in the long term monetization of a portfolio, with the necessity of quality over quantity there is the need for all executives to ensure any IP generated out of their business has potential for use.

Challenge #3 – IP Intelligence needs valued over IP Data

Compiling and analyzing data from the patent office has never been easier – many companies offer patent landscaping services, or they can easily be done in-house.  However the challenge for any executive is to move from Data to IP Business Intelligence.  A technology or patent landscape is a good piece of the puzzle yet is meaningless unless it can be combined with market data and translated into business actions for every executive or manager – IP as well as non-IP focused.

The challenge for executives is to take IP data and turn it into an intelligent piece of information that can be used as part of the overall business strategy.  A hint: If you need a business report to decipher your IP report, you just have data.

Challenge #4 – IP purchases proactively driven by the C-Suite

The perfect storm for bolstering an IP portfolio is coming: IP transactions are increasing again, and there is a downward trend of purchase prices.  The bottom of patent valuations may not be there yet, but it gives a challenge for all executives: Be in a position to identify and purchase relevant IP before either the competition does, or a NPE realizes the benefit first.  The secondary challenge will be convincing the C-Suite to spend today’s capital to build the portfolio for tomorrow’s IP – it is the tension between the short-term action needed against both the long-term benefits it will bring and defense long-term costs it will help avoid.

Challenge #5 – The status quo is not sufficient anymore.

From the above challenges, it is clear that what worked well for executives managing IP only 12 months ago, will not work today, nor in the next 12 months.  Budgets and processes need to be revised in light of these new challenges, and they need to be addressed across many types of industries.

For example, the smart-phone wars may be ramping down, but there are many other industries that are poised and ready to explode for IP monetization and enforcement starting in 2015:  Energy (Smart Grid, Connected Homes), Oil & Gas (Exploration and Extraction), Automotive (EV, Advanced Connectivity, Safety), Health (Wearables, Sensors), Internet of Things, Banking (Security, Crypto Currency).

The status quo of simple IP-maintenance by any executive team operating in these industries will for certain put the company behind the times as the benchmark raises and IP savvy competitors and NPE’s take advantage of the existing patent gaps.

Where does this leave us?

Next post I will writeup the key actions all startups, investors, executives, and business leaders – not just IP focused leaders – need to take in 2015 to address the challenges.

[This post originally appeared at Northworks IP.]

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