Relationship between intellectual property and innovation

Role of Intellectual Property in Innovation and New Product Development

relationship between intellectual property and innovation

This paper aims to provide an intellectual basis to think about the relationship between development, intellectual property and innovation; where we currently. Intellectual property (IP) rights, such as patents and copyrights, aim to incentivize Between and , Celera used a contract law-based form of IP to protect The p-value reported in Column (4) is from a t-test for a difference in mean. /Portals/0/NADevEventsImages/_omalley_jpg. The Uneasy Relationship Between Innovation and Intellectual Property Protection.

As not all inventions are commercialized, so it is clear that not all inventions result in innovations. Such an innovation is also described as a radical or disruptive innovation. An improvement innovation also called an incremental, sustaining, sequential or complementary innovation would lead to an improved product over its ancestor in terms of quality, reliability, ease of use, environmental protection, raw material use, labor cost, and so on.

It may also include the application of new and better production processes or techniques that allow old or new products to be made more reliably, of better quality, or simply in larger quantities, or at a lower price. An innovative new or improved product that meets customer expectations offers an existing or new business, new market territory without competition for so long as it retains its innovative advantage.

The IP system plays a significant role in helping a business to gain and retain its innovation-based advantage. As a consequence, the competitive edge that an entrepreneurial business may gain with a basic or disruptive innovation is likely to be longer lasting than that obtained merely from an improvement innovation, assuming that the technological barriers to competitors taking advantage of similar innovations are approximately equivalent, since a basic innovation establishes a new class of product or service, entry of competition requires that the opportunity provided by that class is recognized by a potential competitor before it attempts to enter the market.

In the case of an improvement innovation, not only are competitors for the class of product already in place, but since the improvement innovation typically amounts to a better, faster, or cheaper way to build the product, its advantages are far more quickly understood and replicated.

A survey of economic studies reveals that patents are the most preferred IP rights in relation to technological innovations. This may explain why studies on innovation have, in many cases, treated patents as proxy input for innovation. In addition, patents are also used as a measure of output of innovation. In this article, however, the focus is limited to all IP related actions that must be taken within an enterprise at different stages of the new product development process or cycle for using the different tools in the IP system for market success.

However, for the sake of simplicity, it is assumed in this article that all actions concerning innovation in relation to new product development happen within an enterprise. An enterprise would be well positioned to benefit from innovation if it takes into consideration from the initial stage of the new product development process the full range of IP issues.

relationship between intellectual property and innovation

This is true whether the decision to innovate is taken as part and parcel of the overall business strategy, one-off development of a new idea, or as a reaction to developments in the marketplace.

IP plays an important role in facilitating the process of taking innovative technology to the market place. At the same time, IP plays a major role in enhancing competitiveness of technology-based enterprises, whether such enterprises are commercializing new or improved products or providing service on the basis of a new or improved technology.

For most technology-based enterprises, a successful invention results in a more efficient way of doing things or in a new commercially viable product. The improved profitability of the enterprise is the outcome of added value that underpins a bigger stream of revenue or higher productivity.

It should be noted that not all commercially viable ideas can be or will be patented 10hence the importance of treating ideas as trade secret, in particular at the inception stage. Empirical evidence indicates that generally small and medium-sized enterprises SMEs are more inclined to use trade secrets rather than patents as a form of protecting their inventions to stay competitive.

It also showed that size was an important factor in determining the propensity to patent, i.

relationship between intellectual property and innovation

At that stage, the choice would depend on the nature of the invention, its business potential, the nature of competition, the possibility of its independent creation by competitors and the ability of competitors to reverse engineer it easily from the product developed by using it.

It should, however, be pointed out that whatever the ultimate decision, initially it must be protected as a trade secret so that, later on a part of it may be patented and the rest of it may still remain as the associated trade secret and know-how, or tacit knowledge owned by individuals that are associated with the patent.

It is important for the drawings to be dated so as to establish the date of creation. Technical drawings could also, at a later stage, form an important part of the relevant patent application. The Information contained in existing patent documents patent information plays an important role in the conception, screening and development of an idea.

Such information can provide useful insight into whether an idea is new or not state-of-the art and whether to proceed further in developing an idea. Furthermore, proper analysis of patent information may provide an insight into the strategy of potential competitors and about technology trends. Research and Development Stage Several indicators have been used to measure the efforts of an enterprise in undertaking research on and developing innovative ideas.

Thus, trade secret continues to be relevant, especially if the enterprise is yet to decide on whether to file a patent application. If used by such competitors it would result in the erosion of a competitive advantage, derived from the final product. During this period, researchers should periodically consult several sources of information that would provide input for the success of their project. Patent documents continue to be a relevant source of information that is often grossly underutilized.

Unfortunately, for their business needs, many SMEs do not use patent documents as a source of competitive intelligence. SMEs, particular in developing and least developed countries, should be made aware of and be equipped to use business, legal, and technical information contained in patent documents, which is in the public domain to come up with innovative product, which have been adapted to local conditions.

Once an enterprise decides to rely on a utility model or a patent to protect its output of research and development, it must initiate the required process, e. Such a move would facilitate the establishment of filing date for determining the priority date and for claiming exclusive rights over the output even before a patent is granted unless on absolute or relative grounds the patent office refuses to grant a patent.

SMEs and other small technology-based innovative enterprises may not have the technical resources and facilities to undertake such development, for example, for the development and testing of prototypes.

Innovation and Intellectual Property

Both parties would also avoid potential future conflicts if ownership of IP issues were resolved initially with clarity. Inventors, be they independent or employed, are not necessarily skillful marketers or manufacturers; furthermore, even the best products need the best marketing skills to succeed in the marketplace.

This is the period where most inventions collapse due to the absence of external support or are found to be not commercially viable. As an example, take a look at the invention of Xerography. InChester Carlson invented Xerography, which he patented in It took almost eight years for Carlson to find an investor who was willing to invest in the invention. Finally, the Haloid company which later became the Xerox Corporation successfully made the invention commercially available in Most potentially innovative ideas end up in the valley of death.

Role of Intellectual Property in Innovation and New Product Development

Those ideas, which are protected by IP, stand a greater chance of surviving through the valley of death. In practice, this means that if a technology has limited commercial value, the patent holder may decide to abandon the patent, at which point the technology falls into the public domain and may be freely used.

Patent information In addition to recognizing and rewarding inventors for their commercially successful technologies, patents also tell the world about inventions. In order to gain patent protection for their invention, the inventor must provide a detailed explanation of how it works. In fact, every time a patent is granted, the amount of technological information that is freely available to the general public expands see Using and Exploiting Patent Information tutorial.

WIPO is making this and other IP-related information freely available to the public through its global databases. It contains over 50 million patent applications that can be searched free of charge. The aim in making this information widely available is to spark new ideas and promote more innovation, and also to help narrow the knowledge gap which exists in developing and least developed countries.

Innovation and Intellectual Property

It only has a legal effect in the country or region in which it is granted. So inventors or companies that want to protect their technology in foreign markets need to seek patent protection for their new technologies in those countries. Within a year of filing for patent protection in their own country, inventors can set in motion the process of obtaining patent protection in each of the markets in which they wish to sell their technology by filing a single international application via the PCT.

This offers many potential advantages: Any rights granted using the PCT flow from the initial filing date of the national patent application. Users benefit from a common set of rules and regulations which have been agreed upon and are followed by all members of the Treaty.

This means there is a high level of legal certainty and no nasty surprises. The full cost of obtaining patents in multiple countries — which can be quite high — are deferred by up to 18 months. This means that applicants have an opportunity to test the market or to attract new business partners. Users of the PCT automatically benefit from an assessment which gives informal non-binding feedback on the patentability of their technology.

Want to learn more and for free? Successful participants earn an electronic certificate upon completion of the course. How patents can support inventors and improve lives Patents recognize and reward inventors for their commercially-successful inventions.

relationship between intellectual property and innovation

As such they serve as an incentive for inventors to invent. With a patent, an inventor or small business knows there is a good chance that they will get a return on the time, effort and money they invested in developing a technology.

In sum, it means they can earn a living from their work.

relationship between intellectual property and innovation

When a new technology comes onto the market, society as a whole stands to benefit — both directly, because it may enable us to do something that was previously not possible, and indirectly in terms of the economic opportunities business development and employment that can flow from it. Holding a patent also makes a small business more attractive to investors who play a key role in enabling the commercialization of a technology.