GENERALLY put, developing a new idea and putting it into practice is referred to as “innovation”.
The term ‘innovation’ is used here to refer to the process of bringing valuable new products (goods and services) to the market i.e., from the idea/concept formulation stage to the successful launch of a new or improved product in the marketplace or to the outcome of that process, so as to meet the explicit or implied needs of current or potential customers.
In other words, through innovation, an SME enterprise seeks to deliver to the market a new product to solve a given problem, to increase efficiency, or to offer unique new value to its customers. Innovation involves economic considerations that relate to market success.
A business needs to innovate not only to gain a competitive advantage, but also to survive as a business.
Firms innovate by staying on the frontiers of their product-consumer and product-competitor advantages — and looking to advance to the next frontier.
The development time for new products — the time to market —is getting increasingly shorter and product life-cycles are also shrinking.
New ideas go through a selection process, and only some of them will lead to innovation.
This means that innovation should be ongoing, especially since the time lag between product expansion and decline is getting smaller and smaller. A leading company within a given market will, therefore, be increasingly quickly “dispossessed” of its leadership at the moment it stops innovating.
Innovation thrives in an environment where it is encouraged and does not occur in a vacuum; it requires a workable structure of incentives as well as enabling conditions that allow entrepreneurship and markets to flourish in the process providing a climate that encourages economic growth.
One of innovation’s core enabling conditions is intellectual property protection. The core conditions that foster innovation and encourage economic growth are:
– vigorous competition and viable markets;
– strong and sustainable fundamental research and development infrastructure;
– sound policies and mechanisms to promote the science-innovation interface;
– efficient and transparent regulatory systems; and
– a strong emphasis on education at all levels.
IP strategies to protect innovation
It is imperative that an innovative idea be treated as a secret if an SME business wishes to appropriate potential commercial benefits from the idea (i.e. the information surrounding the creation of the idea must be protected carefully as a trade secret).
It should be noted that not all commercially viable ideas can be or will be patented, hence the importance of treating ideas as trade secret, in particular at the inception stage, to prevent the erosion of a competitive advantage.
All the tools of the IP system must be used to capture the benefits of innovation.
Many players are involved in facilitating the market success of innovation, and the effective use of Intellectual Property therefore plays an important role in reducing risk for the players involved.
Players are able to reap acceptable returns for their participation in the process if Intellectual Property is used effectively. Intellectual Property plays an important role in facilitating the process of taking innovative technologies to the marketplace.
At the same time, Intellectual Property plays a major role in enhancing the competitiveness of technology-based small and medium enterprises, whether such enterprises are commercialising new or improved products or providing service on the basis of a new or improved technology.
Types of innovation
The competitive edge that an SME business may gain with a radical or disruptive innovation is likely to be longer lasting than that obtained merely from an incremental innovation and a sustaining innovation, assuming that the technological barriers to competitors taking advantage of similar innovations are approximately equivalent.
Radical or fundamental innovation establishes a new class of product or service.
Entry of competition requires that the opportunity provided by that class is recognised by a potential competitor before it attempts to enter the market.
In the case of an incremental innovation, not only are competitors for the class of product already in place, but since the incremental innovation typically amounts to a better, faster, or cheaper way to build the product, its advantages are far more quickly understood and replicated.
Generally, there is a need for devising:
– an offensive IP strategy for a radical innovation;
– an offensive IP strategy for a disruptive innovation;
– a defensive IP strategy for an incremental innovation; and
– a defensive IP strategy for a sustaining innovation.
IP asset identification
Effective IP protection of innovation depends on IP asset identification. One of the most crucial roles of the IP manager is to identify new forms of IP that qualify for protection and to take the necessary steps to secure protection. The core elements to identify patents are:
– technical brightness
– legal strength
– economic potential
Does the new technology which is protected by the patent provide a variation of an established technical solution? Is it a technical solution, which could help a licensee establish a market leadership in business?
Does the patent protect a technology that can be addressed to a big market both nationally, regionally or worldwide or are there only a few around the world who are interested in it?
Is the patent strong enough that the costs to destroy or to design around the patent are higher than the royalty for the potential licensee?
Patent filing is the preferred tool for the protection of inventions, namely innovative products and processes. However, patent filing cannot be viewed as the sole measuring instrument for innovative activity, as trade secret protection is preferred by SMEs for a variety of reasons. Trade secret protection, the protection of know-how as well as the design protection, is an important vehicle for the protection of innovative products and processes.
In the next write up, I will focus on two frameworks that can assist SMEs in the decision making process when it comes to IP protection the IP Atom and the IP Continuum.
-Aleck Ncube is an intellectual property scholar based in Bulawayo. He can be contacted on Mobile: +263712374408 Skype: Matintas1 Twitter: @aleckncube Alternative E-mail: [email protected]