The Apple versus Samsung legal battle has highlighted the importance of protecting intellectual property. When Apple won a landmark case against Samsung recently by an overwhelming jury vote, it opened up a debate, showing why and how to manage intellectual property strategically in the current business environment.
Samsung was found to be infringing on most of the patents in question and Apple was awarded over one billion US dollars in damages, making it one of the largest patent verdicts in history.
The iPhone maker’s response to the win was that their lawsuits were about much more than patents or money. Apple spokesperson Katie Cotton told the New York Times: “At Apple, we value originality and innovation and pour our lives into making the best products on earth. We make these products to delight our customers, not for our competitors to flagrantly copy. We applaud the court for… sending a loud and clear message that stealing isn’t right.”
On the other hand, Samsung responded saying that the verdict wasn’t so much a win for Apple as a loss for consumers. Samsung said in a statement: “It will lead to fewer choices, less innovation, and potentially higher prices.”
Consumers who are unwilling to pay more for Android phones from several manufacturers who will now have to, either create and patent their own feature inventions, or pay license fees, will simply leave and go Apple picking.
The impact to Samsung is potentially devastating; and the legal events of the past months have served as a wake-up call for businesses not only within the ITC sector, but in a diversity of fields.
“In today’s business environment, a failure by executives and lawyers to tightly integrate their company approach to IP with broader strategic considerations can be detrimental or even catastrophic,” says Karen Lee Rata, head of the executive programme at the World Intellectual Property Organisation (WIPO) Academy in Geneva, Switzerland.
WIPO is a specialised agency of the United Nations dedicated to developing a balanced and accessible international IP system, which rewards creativity, stimulates innovation and contributes to economic development while safeguarding the public interest.
IP touches not only high technology sectors, but also agriculture, industrial production, medical, fashion, film, arts, literature, and other sectors, says Rata, and includes both industrial property (inventions, patents, trademarks, designs) and Copyright (literary and artistic works).
“The question today is not whether businesses use IP, but how to maximise the use of IP for competitiveness, and for this, effective IP management is very important,” says Rata.
Skilling up in IP management is not only imperative for global businesses, but here at home on the continent too.
“A strategic approach to intellectual property (IP) management for sub-Saharan Africa, as well as emerging economies, is pertinent because more IP is generated by these economies,” says Rata.
“IP also allows such economies to jumpstart and take advantage of the benefits of IP without waiting for the economies to become more developed,” says Rata, who will be in Cape Town to facilitate the Strategic Intellectual Property Management course, organised by WIPO and hosted by the University of Cape Town Graduate School of Business, from 17 to 19 December 2012.
Managing exclusive rights is not just a way to lock out competitors, it can also be a means to generate income. IP systems are becoming increasingly globalised as stronger intellectual property rights regimes grow around the world. This has stimulated greater cross-border trade in knowledge assets, but developing nations are still paying much more in licensing and royalty fees to third parties than they receive, says a recent World Bank report.
For example, IMF records show that SA received less than US$48 million in royalty/ license fees but paid nearly US$1.7 billion; compared to the USA, which received US$90 trillion spent US$25 trillion.
Investors are attracted to businesses supported by strong IP systems, and companies are worth more in a rights-protected environment. Currently the top ten countries where property rights are most secure are: Finland, Sweden, Norway, Singapore, Switzerland, Denmark, Luxembourg, New Zealand, the Netherlands, and Canada. South Africa is ranked 21 out of 133 countries on the International Property Rights Index, and first of 24 in the region. Africa is ranked the lowest of the seven regions in the world rankings.
In a relatively secure environment, and with the levels of IP generated in South Africa, the data suggests that local companies should be better equipped to capitalise on their IP, yet most businesses do not have a coherent IP strategy.
Unleveraged IP assets have no direct value to enterprises. And in some cases, they end up being seen as costly to maintain when there is no knowledge or capacity to develop and monetise them. If strategically managed, IP assets often turn out to be dependable and reliable sources of revenue. IP assets can generate income from the sale of the asset or protected products and services or through collaborations based on another type of licensing agreement, such as franchising, merchandising, joint ventures, strategic alliances, and so on.
IP assets can also play a significant role in informing business strategy, influencing future plans for new product development, diversification, acquisition and growth strategies.
South Africans have the ideas, inventions and innovations, and sound IP systems, the next step is to use business intelligence to maximise returns on the fruits of their labours.
Note: The UCT Graduate School of Business is hosting a Strategic Intellectual Property programme from 17-19 December.
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