Innovate or Perish: Managing the Enduring Technology Company in the Global Market

The First Rule of Value: Intellectual Property Doesn’t Do Anything (on Its Own)

IP owners must take action to turn their IP into value. An IP strategy that ends with acquiring patents or other IP, without accounting for how the IP will be used, is unlikely to be successful. There are two facets to action. First, IP is merely a right to exclude others. Action is needed for the IP rights to have any practical significance. Second, exercising the right to exclude—standing alone—harms others but does not generate value for the IP owner. There is more that needs to be done to capture a benefit to the IP owner from the exercise of the right to exclude.

The Nature of IP Rights

There are multiple types of IP “tools” that a business can use. Each tool has different characteristics, but they have in common that each can be used to exclude others from some action. They differ in the precise actions that can be excluded.

Patents are often the most valuable tool in the IP tool kit. A utility patent is a grant from the government of the legal right to exclude others from making, using, officering for sale, selling, or importing an invention. An invention can broadly be considered anything under the sun made by humans, including traditional machines, chemical compositions, industrial processes, and less traditional inventions, such as software, business methods, and genetically altered nonhuman life forms. Copyrights are another tool, providing their owners the right to exclude others from copying ...