Innovation is the soil from which all successful businesses grow
– not only as start-ups, but even in the mature stage of
their life cycles. Unfortunately, however, businesses often fail to
identify, value, protect and exploit this innovation at the expense
of surging profit and revenue growth. Swaab IP specialist Eric
Ziehlke provides a run-down of the methods business owners should
be employing in order to make the most of their valuable
Innovation in setting business strategy
When a business is setting its business strategy it is generally
aimed at achieving strong and profitable growth. Clearly, if you
can provide a product to your target market which has significant
advantages to those of your competitors, you will have a major
competitive edge in that market.
Innovation in generating profitable growth
It is obvious that if you can provide your target market with a
unique and superior product package, you will generate sales
growth. What is less obvious is that a superior product package
enables you to charge a price premium on your product because it
has a higher perceived value in the marketplace. You will be aware
that the most prominent brands and the most highly sophisticated
technologies are rarely provided at bargain basement prices.
The rapid upsurge in on-line purchasing may actually enhance the
significance of innovation as represented in well-known brands.
Where a product cannot be closely examined by a consumer or does
not have the warranty of a physical retail outlet, the consumer is
likely to become even more reliant on the perceived quality and
innovation of branded products rather than generics.
Innovation as intellectual property
Once the critical connection of innovation to profitable growth
is recognised, it becomes necessary to treat that innovation as
valuable intellectual property to be fully safeguarded.
Intellectual property generally does not appear on the balance
sheet of companies. It is often given a somewhat nebulous status
under the heading of goodwill in the sale of a business. In fact,
intellectual property is an asset which generally appreciates
rather than depreciates in value over time. The true value of
intellectual property should be based on the serious decline in
revenue and profit if that intellectual property is lost. The loss
of a major product brand, a key technology patent or software
copyright can cripple a business.
Safeguarding intellectual property
As a producctive asset, intellectual property needs to be
identified, protected and exploited.
Identification: It is essential to systematically identify all
the intellectual property a business holds in the same way as we
would identify stock, plant and equipment or real property. We need
to identify trade marks, domain names, inventions, designs,
copyright and other proscribed statutory rights. We need to
determine the ownership of these assets and whether they are
encumbered in any way.
Protection: The obvious method of protecting
intellectual property is to register it and to ensure that the
registration covers all relevant rights in all relevant
jurisdictions. Certain intellectual property, such as copyright,
cannot be registered, so it is important to keep meticulous records
on the creation and ownership of that copyright. Rights in
inventions and designs can be lost if they enter the public domain,
so strict procedures need to be put in place to ensure the
confidentiality of those inventions and designs.
Exploitation: Once intellectual property is identified
and protected it can then be fully exploited. One important method
of exploitation is to bring the benefits of the innovation to the
attention of your customers. This promotion of innovative benefits
can not only increase the sales of your products but also justify
charging price premiums on those products.
Innovation is clearly essential for the growth and development
of a start-up business. However, innovation is also critical for
the growth and development of mature businesses as well. Much of
the innovation in a mature business already exists. It merely needs
to be identified, valued, protected and exploited. The result can
be surging profit and revenue growth.
The Ugg boots case revolves around who holds the trade mark rights to the word 'Ugg' in relation to sheepskin boots.
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