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Factors affecting Intellectual Property Strategies in SME’s

By Aditya KochharM.Sc. In Innovative Technology

Msc in Innovative Technology Engineering,

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• To understand various factors that affect the development of intellectual property strategies with reference to SME’s.

Objective


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• Teece, D.J. “Capturing Value from Technological Innovation: Integration, Strategic Partnering, and Licensing Decisions” Interfaces, Vol. 18, No. 3. (1988), pp. 46-61.

• Thomä, J. and K. Bizer "To protect or not to protect? Modes of appropriability in the small enterprise sector." Research Policy(2012), http://dx.doi.org.ezproxy.wit.ie:2048/10.1016/j.respol.2012.04.019.

Papers researched


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• Introduction

• Paper 1 – Fundamental building blocks of rent distribution that play key role

in defining intellectual property strategies.

• Paper 2- Empirical analysis of factors within one of the blocks in an SME

environment.

• Combining Paper 1 and Paper 2

• Conclusions

Overview


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• Intellectual Property Strategy is an important aspect of today’s business.

• Small to Medium Enterprises are a backbone of a nation's economy.

• The factors affecting intellectual property strategy are constantly evolving with time.

Introduction


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Paper 1“Myriads of would-be

innovators have discovered that technical success is

necessary but not sufficient for establishing economic

utility and commercial acceptance.” – David J. Teece


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Economic rents are always shared.


Customers

Suppliers

Innovators

Imitators

Benefits from Innovation

• Economic Rents/ Profits/Benefits of Innovation are always shared.

• A large part of the benefits of the innovation are distributed amongst Customers, suppliers and imitators

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Examples of success and failure.


•Pilkington (Float Glass)•G.D. Searle (NutraSweet)•Dupont (Teflon)

•IBM (Personal Computer)•Matsushita (VHS Video Recorders)•Seiko (Quartz Watch)

•RC Cola (diet cola)•EMI (scanner)•Bowmar(pocket calculator)

•Kodak (instant photography)•Northrup (F20)•DEC (personal computer)

Innovator Imitator

Win

Lose

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The fundamental building blocks.


•Appropriability Regime

•Complimentary Assets

•Dominant Design Paradigm

Capturing the Rent Stream from Innovation:

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Appropriability regime


• Strong

• Weak

Modes of Appropriability (examples)

Patents

Trade Secrets

Copyrights

Trademark

Lead Time Advantage

Secrecy

Complexity of Design

*efficacyNature of technology

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Dominant design paradigm


*Thomas Kuhn (1970)

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Complementary assets


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Types of complementary assets


• Generic

• Specialized

• Co-Specialized

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Channel selection for complementary assets


• Contractual Mode

• Integration Mode

• Mixed Mode

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Interpretations

Open for improvements.


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Distribution of economic rents: 1 of 3


Post ParadigmaticPre Paradigmatic

Wea

k Ap

prop

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Stro

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ppro

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yGeneric complementary assets dominant

Innovators

Imitators

Innovators

Distributed

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Msc in Innovative Technology Engineering


Wea

k Ap

prop

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Stro

ng A

ppro

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bilit

ySpecialized Complementary Assets Dominant

Innovators & Suppliers

Imitators & Suppliers

Suppliers

Distributed

*Integrate

*Godfrey Houndsfield with EMI Scanner

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18



Wea

k Ap

prop

riabi

lity

Stro

ng A

ppro

pria

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yCo-Specialized complementary assets dominant


Imitators & Suppliers


Distributed

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The Link between paper 1 and paper 2


•Appropriability Regime

•Complimentary Assets

•Dominant Design Paradigm

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Paper 2“Small companies adopt IPR's only

under highly selective circumstances.” – Thoma and Bizer


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The survey of German SME’s


Cluster 1 Cluster 2 Cluster 3 Cluster 4Secrecy Patent Trademark No Usage of

protection Mechanisms

Complexity of Design

Utility Model Copyright

Lead Time Advantage

Trademark Secrecy

Secrecy Complexity of Design

Lead Time Advantage

Lead Time Advantage

Survey of 1251 German SME’s to identify their intellectual property management strategies

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Percentage distribution


Percentage per cluster

Secrecy, complexity ofdesign, lead timePatent, utility model,trademark, secrecy,lead timeTrademark, copyright,secrecy, complexity ofdesign, lead timeNo usage of innovationprotection mechanisms

64%

19%

11%

6%

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Environmental factors


Factors Cluster 1 Cluster 2 Cluster 3 Cluster 4Industry Sector Knowledge-

intensive manufacturing and service firms

Knowledge-intensive manufacturing firms

Well represented in all sectors apart from non-knowledge intensive services

Non-knowledge intensive manufacturing and service firms

Geographical markets

Intermediate position

Strong international orientation

Intermediate position

Strong regional business focus

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Type of competitors and competition


Factors Cluster 1 Cluster 2 Cluster 3 Cluster 4Main competitors

Smaller number of main competitors Main competitors often larger in size



Larger number of main competitors Main competitors often similar in size

Type of competition

Non-price competition Technological edge

Non-price competition Technological edge Relatively low relevance of customer service and flexibility

Non-price competition Relatively low relevance of customer service and flexibility

Price competition

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Features of competition


Factors Cluster 1 Cluster 2 Cluster 3 Cluster 4Features of competition

Difficult of substitution Shorter product life cycles Faster pace of technology

Difficult substitution Intermediate position in terms of market dynamism

Difficult substitution Intermediate position in terms of market dynamism

Easy substitution Longer product life cycles Slower pace of technology

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Types of innovation


Factors Cluster 1 Cluster 2 Cluster 3 Cluster 4Type of innovator

Comprehensive innovators Product-only innovators

Comprehensive innovators Product-only innovators

All types of innovators

Process-only innovators Nascent innovators

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Effects of innovation


Factors Cluster 1 Cluster 2 Cluster 3 Cluster 4Degree and effects of innovation

Quality innovations

New-to-market innovations New-to-firm innovations Relatively low relevance of most effects related to process innovations

No specificities Lower engagement in significant product innovation Lower relevance of product-oriented innovation effects

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Combining Paper 1 and 2


IP Strategies

Appropriability Regime

Dominant Design Paradigm

Pre Paradigmatic Stage

Post Paradigmatic Stage

Complementary Assets

Generic

Specialized

Co Specialized

AM

Effects of Inn.

PrpertiesOf Innov.

Compet.

Environ.

* Interpretation

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• Of the three fundamental blocks affecting distribution of economic rents, appropriability regime is most controllable.

• SME’s tend to choose appropriability modes that best suit their environment and the nature of innovation.

Conclusions


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Thank You.

~ Questions Please ~
