Developing Effective Intellectual Property Partnerships

As business becomes increasingly global and technology-driven, companies everywhere are facing pressures to be on the cutting edge. Innovation and intellectual property (IP) — long vital for traditional multinational corporations — are now just as important to the strategy of growing companies in dynamic, fast-changing markets in China, India, the Middle East, Africa and elsewhere.

In this context, most forward-thinking companies recognize the need to forge partnerships to grow and gain access to new technologies, capabilities and markets. Although partnerships between mature multinational companies and growing companies can be challenging, they can also be mutually beneficial. Multinationals can gain market access and technology, while growing companies can leapfrog their competition and gain a foothold on the global stage.

Sadly, the reality is that would-be partners frequently talk past each other when discussing IP collaborations. Often, executives lack a common framework to discuss these collaborations. They do not understand the prevalent choices and models, and often hold narrow views of portfolio management and IP strategy.

In our experience facilitating and studying hundreds of global IP partnerships, we have observed that there are five viable and valuable models for IP management and monetization. By understanding these models and their trade-offs, potential partners are better able to strengthen their own IP strategies and gain greater access to the innovations of other companies.

The Five Models for IP Collaboration

1. IP Licensing

The most common form of IP collaboration is the traditional patent license, which is a stand-alone contract or grant of legal rights. Licenses can also be established for the use of copyright, trademarks, service marks and trade secrets. Licenses can be difficult to enforce in some markets, but many nations that have traditionally had weaker enforcement mechanisms, such as China, have recently been strengthening IP protection. However, even in countries with a long history of robust IP protection, the process of actually enforcing IP can be time-consuming and expensive, and there is no guarantee of a successful outcome to litigation.

Traditionally, licenses established a narrow business relationship that was often difficult to broaden. In return for paying a royalty, licensees would receive the right to use a particular asset (for example, a technology), but the license would often exclude access to any additional process knowledge, technological acumen or expertise.