Mr. Kari Sipilä, Executive Director, Licensing Technology, Foundation for
Finnish Inventions, Espoo, Finland.
1. Constant Renewal is Vital to
Demand is a central prerequisite for business and
for new products and methods. Consumers demand and buy
new products, and
industries require better and more efficient equipment
to keep up with domestic
and international competition. To make a product succeed, enterprises need
product development and
aggressive marketing. New products also have
a great impact on employment, particularly in small and medium-sized
enterprises, as they secure existing jobs and create new ones. Preparing for the
future and for global markets is a long-term project.
New technologies change the fabric of the economy
and facilitate an improved standard of living and the creation of new jobs.
Growth of the economy is largely based on know-how and jobs requiring expertise
are multiplying. This has a great bearing on education as well.
Services account for over two-thirds of the output and jobs in OECD countries.
The world is going through a period of fundamental change due to the rapid
development of information technology and its ever-increasing utilization and
proliferation to most fields of technology.
New technologies support a
The success of businesses in founded in their
capacity for renewal and innovation.
and intellectual property rights are related in many ways. These include:
The intellectual capital of an enterprise and its
Intellectual property and
innovation strategies as
parts of overall business strategy
Vision regarding the importance of intellectual
property rights as a basis for business success
Preparedness for intellectual and financial
investment into product development and innovation
Strong contacts with
customers and stakeholders
Need for new products, competitiveness,
international expansion and successful business operations.
2. Patent Strategy and Policy
Technological and economic development world wide leans heavily on new and
competitive products. They can be classified on the basis of their
significance at different levels of sophistication and in different sectors of
the economy, from high-tech to mundane everyday products. Some reach
international success, while others are noted within their home region or
country. Technology and inventions promote general welfare and also play
an important role in the production of services.
In most industries, intellectual property rights,
especially patents and their exploitation, hold key significance in the
development and commercialization of new products. Businesses should have
an intellectual property strategy as part of their
corporate planning and
An intellectual property strategy defines the
principles that intellectual property rights are designed to serve and how
patent matters and other intellectual property matters are handled within the
enterprise. The purpose of patent policy is to support the business
operations of an enterprise. Neglecting patent matters may turn into a
threat to development in an internationally expanding business.
The patent and intellectual property policy of a
business should include, among others, a definition of intellectual property
rights, the organization of corporate activity designed to protect intellectual
property rights (or just patents), making and acquisition of inventions and
available sources, instructions on how to secure and maintain adequate patent
protection, instructions on acquiring, tracking and otherwise utilizing patent
information, protecting corporate patents,
licensing behavior and publication
Corporate patent policies may be divided, for
example, into low and high profile policies, aggressive patent policies of
businesses involved in international markets, and patent policies followed by
businesses engaged in the commercial exploitation of intellectual property
rights or transfer technology.
The patent policies of diversified businesses can be
classified as follows:
Build a patent portfolio
commensurate with the scope of your operations and technological sophistication
and exploit it in your business.
Respect and avoid
infringing on the patents and intellectual property rights of others.
Enforce and protect your
own intellectual property rights.
Seek to enter into
liberal cross-licensing arrangements and/or find an ally.
Even a simple patent policy is vital for smaller
companies since their business is often based on only a few key products.
3. Benefits of Patenting
A patent gives the
inventor the right to decide the fate of his or her invention. The
inventor may manufacture and sell the product himself or may assign his rights
to someone else. A trademark, on the other hand, is a fanciful name given
by a business to its product(s) in order to distinguish them from other
manufacturers’ goods. International recognition of rights is also a common
denominator for intellectual property rights. All international property
rights are subject to international agreements.
The legal protection afforded to intellectual
property has commercial significance to the owner since the owner may, for
instance, preclude others from taking advantage of the protected intellectual
property in their business. Businesses – manufacturers, merchants, etc. –
need to, in fact, establish a name or brand for their products so that customers
tell them apart from other products. Likewise, an inventor must secure
an exclusive right to his invention, a patent, so that not just anyone can
exploit the invention in his or her business.
In a Finnish research study, businesses gave the
following reasons as the most important rationales for their patent interest:
Securing the basis for
continued manufacturing operations.
publications in product development.
Using a patent in
Monitoring competitors by
following patent publications.
infringements and disputes.
Evaluating the level of
technology in an industry.
Using patents as a medium
Components of the benefit – usually economic –
derived from important patents include:
Pricing flexibility with
Quick payback period for
Patent ownership as an
advantageous negotiating tool.
Breathing space afforded
by patent protection.
The protection afforded to the inventor or inventing
organization by a patent is an indisputable advantage, which does, however,
require some expenditures. A patent provides a head start on the
competition; even from the secrecy point of view 18 months. Filed patent
applications can also be used to intimidate competitors through, for instance,
corporate communications. Patents serve as flexible instruments of trade
through licensing and sublicensing and thereby open opportunities to earn
substantial income and to expand internationally. However, in cases of
dispute patents must be vigorously defended.
Patent databases also function as a vast source of
information for inventors and businesses who wish to find the latest technology
in their field or are trying not to infringe on competitors’ patents.
Aside from databases available in most Patent offices, a considerable amount of
patent information may be found also on the Internet, for instance at
However, in some fields
the intellectual property rights are problematic. Information and
communications industries as well as biotechnology are examples of fields which
have developed very strongly in recent years. Consequently, the ground
rules for intellectual property rights and their exploitation have not kept pace
with this development in many countries. Particular attention should be
paid to rapid development of necessary legal protections in fields such as
4. Businesses Invest in Patents
An individual, research team, corporate employee or
a product development team may come up with an invention. Generally, an
individual owns his or her invention personally, whereas a corporation owns an
invention made by its employee if it is related to the employer’s business.
Ownership of the inventions of university researchers varies by country, but
often they are the property of the university. Inventions, however, are
always made by humans.
Successful businesses know
how to invest in research and
development. Although individuals and small and medium-sized companies
suffer from lack of resources, know-how and innovation can still produce
inventions and patents. The result is evident in the form of new products,
improved competitiveness and success. In a recent research, made by Statistics
Finland, the profitability in firms which are active in research and development
is clearly on a higher level than in the non-R&D firms.
Further in Finland, the world’s largest mobile phone
manufacturer, Nokia, invests annually approximately 1 billion U.S. dollars and
the labor of several thousand employees into research and product development.
Nokia files some 500 patent applications each year. IBM is the leading
U.S. patent applicant with its 2,657 filings. Next in line in the U.S. are
Canon, NEC, Motorola and Sony. Each day, two thousand patent applications
are filed around the world. A patent alone, however, is not enough.
The invention must be developed into a marketable product.
5. Earmarks of a Good Invention
innovative, successful and competitive, an enterprise must continually make or
acquire new inventions. Simplistically, one could say that an idea or
invention has established its worth when it has offered a novel solution, has
turned into a product, and has also been an economic success. Successful
inventions are innovations. Success is always more easily recognized in
retrospect and the real difficulty lies often in evaluating an idea’s or
invention’s chances for success,
planning its execution, and the execution
A good idea,
invention or innovation and related products may be recognized in advance by the
The product is market driven; it is in demand.
The product is inventive, novel, and patentable.
The product is significant to the business and to employment.
The product is functional, capable of being produced and economical.
The product can be launched quickly.
There is organizational commitment behind the development project and the
Investors are interested in the venture.
It is easier to
raise development financing for a good, promising invention because public or
private backing or investment is required if the venture is to succeed.
In many cases,
several stages are involved in the development of an idea or technological
invention into a marketable product, such as:
Planning, evaluation and preliminary technical and commercial studies.
Patenting or other intellectual property protection domestically and
Product development and related planning,
experimentation and testing.
Business planning or
licensing of invention.
Pilot production runs and
An idea that
seemed good may fail at nearly any one of these stages and the venture may end
there. Terminating development in time is sometimes a better economic
decision than battling the odds and continuing to develop an idea that is likely
to fail. This, however, is often emotionally a difficult decision.
6. Characteristics of an Innovative Enterprise
characteristics of innovative organizations include the following:
Innovation and intellectual property strategies are established, and followed.
Corporate culture is
Teams are created for tasks.
Creativity is rehearsed.
Creativity and innovation are
New opportunities are actively created.
principles and observations mainly relate to the evaluation and promotion of
technical ideas, inventions or innovations, they can also be carried over, where
applicable, to other innovations and business ideas.
and creativity are excellent qualities in people and businesses. However,
an invention needs a home – in practice a business enterprise – where it will be
developed. Corporate management skills often play a key role in the
success of products. When evaluating the competitiveness and likelihood of
success of a business, especially a startup business, one focuses on factors
entrepreneurship and commitment.
Demand for products, market conditions, and potential for increased production.
Patents on innovative products, development resources, quality and significance
of patents, and potential for increased production.
Finances and business operations.
evaluation and business planning stages are designed to identify the realities
faced by and chances of success for the
The chances of
an inventive product should be examined from a
business viewpoint by finding and
evaluating answers to the following questions:
Who are your customers and what are your channels of distribution?
Does your profitability analysis look promising?
How important is the product to your business and your image?
Do you have the requisite intellectual and economic resources for product
How will the product impact your operations and bottom line?
Continually assessing the
product’s commercial potential throughout the development process is of key
importance. Marketing and commercialization measures take on added import
as the project approaches the commercialization phase. The business idea
itself is usually evaluated in the light of factors external to the organization
on the one hand and internal factors on the other.
stemming from inventions and related intellectual property rights have, despite
their many development stages and difficulties, a great impact on businesses and
their competitiveness, success, development, and also employment.
Businesses must undertake
new product idea generation, acquisition and
development timely and with a long-term view, not only after troubles start to
Finally, perhaps the most significant competitive
tool in this decade is timing: you have to
hit the market at the right time and
with the right products. Due to advanced communications services and
extensive international cooperation, gathering and effectively utilizing
information is more important now than ever before.