Innovation, Change and IP

It is a common refrain from business commentators and government – businesses must become more innovative. ‘Innovation’ can sometimes be a handy piece of jargon, thrown in to any address or policy paper in order to appear modern, up to date with trends and economically responsible.

So what is innovation, and why does it matter?

Innovation is a word which is not in itself well defined, and so it is important to be clear what I mean by innovation. One useful definition of innovation which has been developed by the OECD (the Oslo manual) is:

An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.

That is, innovation is a much broader concept than just product and technological innovation. It extends to business practices, business process and how businesses interact, both within the organisation and external to the organisation. In one sense, it is the adaptive changes that a business makes in order to adapt to the changing markets, technologies and general business environment. It is possible to run a business which has a little or no innovation. However, any such business is vulnerable to the inevitable shifts in the market and changes in competitor behaviour. With few exceptions, businesses which fail to innovate fail to thrive, and often die.

From an overall economic perspective, it is useful to consider the role of innovation in increasing productivity. A variety of studies have indicated that the major component of productivity growth in organisations and in the economy at large is innovation.

What implications does increasing the level of innovation within an organisation have for their IP strategy and risk profile?

Firstly, a simple statement. If you keep doing exactly what you have been doing for the last 20 years, then you have no real IP risks, and you have no IP opportunities. Of course, you are completely vulnerable to all changes in technology, and if you want to change to match the actions of competitors, you may not find the world so simple.

The more complex part is that as any organisation increases its level of innovation, then it also increases both the opportunities for IP protection, and the risks of infringing another party’s IP.

The first part is fairly intuitive – if you are doing something new, you will inevitably be producing new IP. This can range from copyright in new artwork, software, packaging and manuals, through trade marks for new brands, and patent and design protection for new products or processes. If you are investing in innovation, then to ensure you maximise the benefits of it, you need to be able to control the innovation. This can mean making sure that agreements with employees and contractors transfer the IP to your company, that there are effective processes to record and capture IP, and that there are incentives and rewards for those who are doing the innovating in your company. It is never just about the IP in isolation – it is always about how the IP serves and supports your business strategy.

Why do risks increase? Well, if you are doing something new, there is a risk that someone else has already established rights. A competitor may have a trade mark, or sometimes a party in another industry may have a broad trade mark registration which your new product name infringes. If you broaden your product offering, you will have a whole new set of competitors. Competitors may have broad patents over platform technologies that you need for your new product.

Innovation also encompasses doing something new in your business which competitors are already doing, and the risks are fairly clear in that case. Failure to check a competitor’s rights in such a situation is akin to walking into a wall.

The message is that as you innovate more, so your exposure to IP – both as a protection for your business and a potential intrusion into the rights of others – will increase. Asking questions along the way, anticipating possible issues and managing the risk, with the help of your IP advisors, will ensure that innovation is more of an opportunity than a risk.



by Peter Franke