MIT Sloan Management Review

Corporate Strategy, Management of Technology and Innovation

Patenting for Profits

By Vinit Bhatia and Gib Carey

July 1, 2007

Effective patent strategy is tailored to the market, mindful of competitive positioning and supported by organizational structure.

Managing intellectual property rights used to be straightforward. A company produced great innovations in its research and development labs, obtained as many patents as possible and exploited those patents in the marketplace — or prevented others from doing so. The more patents, the better.

How the world has changed. The link between the number of patents a company has and the amount of money it makes has broken down. Today, leading companies are finding they can make more profit with fewer patents by focusing on securing only the essential protections they need to exploit their innovations. They round out their intellectual property portfolios by negotiating licenses for other key technologies.

Most businesses, though, continue to pursue the old “more is better” strategy. In effect, they’re flying blind when it comes to managing their IP portfolio. They can’t even articulate their strategy, let alone measure its effectiveness. It’s a situation reminiscent of where information technology strategy was 10 years ago — nowhere near the chief executive officer’s agenda. The results can be costly. Unfocused R&D programs can erode returns on investments in innovation, and overlooked patents can lead to lost revenues. Companies can end up outspending their competitors yet still find themselves stymied in key markets.

Worst of all, companies that lack a precise understanding of their IP portfolio can end up fighting off claims that a technology... To read the complete article, login or sign-up using the form below.

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