Using IP intelligence to increase corporate value

Effective understanding and analysis of IP information can support strategic decisions on investment, budgeting and growth, explains Shinya Kinuta, managing director of Dennemeyer Japan.

An increasingly globalised world inevitably brings heightened competition alongside its scope for expansion, and it is within this context that Japanese businesses are facing a number of challenges in extracting the greatest advantage from their intellectual property (IP) assets.

Foremost among these are budget constraints and a lack of internal IP resources or expertise.

These troubles are compounded for many companies in the country by problems integrating IP into corporate processes and systems. This is often due to the lack of effective analytics and portfolio reporting and insufficient investment in suitable software, not least artificial intelligence (AI) tools, that promote efficiency, accuracy and quality evaluation.

The result is that, while many Japanese operations have very strong portfolios of IP, including patents, designs, trademarks and unregistered rights, they are frequently not deploying them suitably to drive commercial growth. This means missing out on new opportunities and partnerships and possibly falling behind rivals capable of seizing upon exploitable inactivity.

It follows, then, that by overcoming internal obstacles, triaging to meet cost pressures and aligning analytics with company targets, registered and unregistered IP rights can deliver real monetary value for Japanese businesses.

Getting IP information to decision makers

There are several reasons why IP portfolio data might not reach strategic decision makers.

One barrier arises when IP information is not compiled or arranged appropriately, or is incomplete or outdated. This may be due to poor record-keeping, in turn caused by inadequacies in the procedures or means used. To address this issue, the first step is to employ sophisticated databases and systems that can be viewed by all relevant personnel and updated in real time.

Another impediment commonly seen is that the information is stored but is not in an accessible format, particularly for non-IP specialists. It may be contained within overly complicated software or written in technical language: and intellectual property, with its legal and scientific frameworks, has its own jargon. This is exacerbated when the people in an organisation who most need to understand IP are in different departments and/or different locations.

Careful thought should therefore be given to how to record, present and convey IP data in ways that are clear, available and concise.

However, all these practical challenges can be part of a more fundamental dilemma, namely that the leadership team in a given enterprise might not understand or appreciate the significance of the IP portfolio. This is frequently the case where budgets are tight and investment has been cut.

Why budget pressure makes prioritisation essential

One consequence of the budget strain that has persisted since the COVID-19 pandemic and the economic crises of the past five years is that organisations must be watchful in how they apportion strategic emphasis.

This is particularly true for IP portfolios, which are often viewed as expenses and even as drains on corporate resources in situations where their worth is not being fully recognised.

To demonstrate the value inherent in an IP portfolio, it is vital to be able to make evidence-based assessments about which properties to favour and where to direct funds. For example, certain assets may be suitable for assignment, or they may be appropriate for a patent pool or joint licensing arrangement. Other IP rights may make the biggest financial contribution (especially in the short term) if they are sold to another party.

In some cases, the best course of action may be to allow an IP right to lapse in certain jurisdictions, or, in the case of a trademark, for certain goods or services, if the cost of maintaining it outweighs its commercial importance.

How better IP analytics can change thought processes

Effective prioritisation can only be carried out based on true, timely and relevant data about the IP portfolio. That is why it is crucial to maintain comprehensive records covering not only the business’s own registered and unregistered IP assets (including details of pending and lapsed rights) but also agreements such as licenses.

Where available, knowledge of competitors’ portfolios should also be recorded, along with other relevant facts such as public judgments, IP office decisions and corporate announcements.

Large organisations are likely to have substantial amounts of IP-related detail logged. However, this is only useful internally if it informs activity. That means ensuring that output data are read, not exclusively, with respect to the company’s objectives and that they contribute to profitability.

IP intelligence driving future growth

There are several ways in which IP intelligence can yield tangible benefits to businesses in Japan.

First, IP rights can help bring about new or improved products and services to meet customers’ needs. Thus, patents in the portfolio might protect inventions or manufacturing processes that give an advantage over competitors. Meanwhile, design rights and 3D trademarks can be deployed to protect certain features of products that appeal to consumers and are distinctive in their markets.

Second, analysis of the IP portfolio can advance expansion plans into new markets. For example, an enterprise may own patents relating to a technology that it is not currently commercialising. This could open up new revenue streams that will further supply the business without jeopardising existing income.

Third, an internal review of a portfolio vis-à-vis those of competitors can identify products that may be infringing IP rights. The organisation can then assess whether to take action against those rivals that could lead to a financial settlement and/or ongoing royalties. Such proceedings are most likely to be effective where the claim is legally robust and based on detailed insights into both the scope and strength of the relevant IP rights and of the competitors' products and IP position.

Fourth, the IP portfolio may include “hidden treasures” that are not being fully utilised, possibly because they do not map to the company’s current product offering or corporate strategy. However, these assets may be ripe for licensing to third parties. For example, a company may own patents for inventions in one industry sector that also have applications in other sectors: Licensing those patents can turn them from costs to revenue-generating properties.

Finally, understanding the IP portfolio can guide research and development priorities. Existing patents may suggest fruitful fields in which to invest, innovation gaps and future technology prospects. This can, in turn, offer long-term sustainable income that builds on and develops existing technology strengths.

Making best use of what is already owned

Corporations, universities and research institutes are under more stress than ever to manage resources and improve profitability. IP portfolios can play a critical role in helping to realise these goals by indicating where to direct investment, where spending can be cut and where new opportunities may lie. This, accordingly, produces positive results for investors, customers, commercial partners and other stakeholders.

But for an IP portfolio to contribute meaningfully to earnings and strategic positioning, it must be consolidated, inspected and understood across departments and management levels. Only then can Japan’s innovators and entrepreneurs turn IP latency into measurable capital.

Takeaways
•  Challenge in extracting value from IP assets
•  Evidence-based assessments are key
•  Intelligence can yield tangible benefits for Japanese businesses

Shinya Kinuta leads the Dennemeyer Group in Japan as managing director, responsible for driving client success and business growth in the region. He can be contacted at skinuta@dennemeyer.com