29 Sep 2011  Sharpening Your Skills

Leveraging Intellectual Property

Many companies lack a coherent policy for maximizing the value of their intellectual property. In this collection from our archives, Harvard Business School faculty offer insights on the importance of IP and how best to protect and use it.

 

Sharpening Your Skills dives into the HBS Working Knowledge archives to bring together articles on ways to improve your business skills.

Questions to be Answered

  • What are the keys to monetizing IP?
  • How should I think about file-sharing and copyright protection?
  • Are there established practices for preventing IP theft in other countries?
  • Is my IP threatened by open innovation?

What are the keys to monetizing IP?

Monetizing IP: The Executive's Challenge

Many companies fail to develop a strategy around protecting and monetizing their intellectual property. In this Q&A, Harvard Business School professor Josh Lerner discusses current trends in IP such as the rise of patent pools. Key concepts include:

  • In many cases, firms are ignoring the increased role of intellectual property in today's economy and failing to monetize their holdings.
  • Intellectual property protection must be seen as not a cure-all, but rather as a tool with both strengths and weaknesses.
  • The increasing use of patent pools to share technology is one method for firms to avoid costly litigation arising from overlapping patent awards.

How should I think about file-sharing and copyright protection?

Working Paper: File-Sharing and Copyright

Researchers Felix Oberholzer-Gee and Koleman Strumpf argue that file-sharing technology has not undermined the incentives of artists and entertainment companies to create, market, and distribute new works. Key concepts include:

  • Digital technology has lowered the cost of producing movies and music and allowed artists to reach their audience in novel ways.
  • It's difficult to argue that weaker copyright protection has had a negative impact on artists' incentives to be creative.
  • File-sharing has not discouraged authors and publishers. The publication of new books rose by 66 percent over the 2002-2007 period. Since 2000, the annual release of new albums has more than doubled, and worldwide feature film production since 2003 is up by more than 30 percent.
  • How markets for complementary goods (such as concerts, electronics, and communications infrastructure) have responded to file-sharing remains largely unexplored in academic research.

Are there established practices for preventing IP theft in other countries?

Protecting against the Pirates of Bollywood

Hollywood's earnings in India have largely been disappointing, in part due to piracy. Professor Lakshmi Iyer believes the problem can be curtailed if studios adopt a multipart strategy. Key concepts include:

  • Despite a thriving movie industry in India, Hollywood studios have experienced difficulty making much money there.
  • Researchers discovered a complicated mix of piracy and plagiarism that harm not only Hollywood's efforts, but local Bollywood companies as well.
  • Hollywood's efforts in India are far from a lost cause: all these problems can be addressed if a studio understands India and develops a coherent strategy.

Is my IP threatened by open innovation?

Working Paper: Modularity for Value Appropriation--How to Draw the Boundaries of Intellectual Property

Many companies have adopted models of "open innovation," in which they seek ideas from external sources such as university labs, independent entrepreneurs, customers, and other companies. While such a business model has the potential to create value, the inherent intellectual property issues can be sticky. This paper discusses how firms can address these issues by adopting a system of modularity, wherein innovation in one part of a project will not require changes in all the other parts. Research was conducted by Joachim Henkel of Technische Universität München and Harvard Business School professor Carliss Y. Baldwin. Key concepts include:

  • Controlling too much of the system's intellectual property will deter outside innovation, but controlling too little can prevent a firm from capturing value.
  • A system can use different, incompatible forms of intellectual property and still be IP-modular, provided that the incompatible chunks of knowledge are associated with different modules within the whole system.
  • The optimal modular structure for capturing value is not necessarily the same as the optimal structure for creating value.