Deloitte U: Wizards and Trolls – Accelerating technologies, patent reform, and the new era of IP

ATN-300InsightaaS: Deloitte University Press is a source of deep, thought-provoking material on a wide range of technology and management issues. The site’s mandate is to publish “original articles, reports and periodicals…to draw upon research and experience from throughout our professional services organization, and that of coauthors in academia and business, to advance the conversation on a broad spectrum of topics of interest to executives and government leaders.”

Today’s feature provides an excellent illustration of how this approach benefits readers. It begins with the assertion that, while IP protection was once primarily the concern of technology and pharmaceutical firms, the expansion of technology into core business activities across the economy means that organizations in industries like banking, healthcare and retail are coming to understand that IP protection is essential to their operations as well. At the same time, new legislation like the America Invents Act and the Innovation Act are changing the ways in which IP is “managed and monetized.” The convergence of these two trends, the authors say, “has created an urgent need for business leaders to reassess their IP strategies” – especially in industries “that have not traditionally thought of themselves as technology companies and often do not possess the requisite IP knowledge or expertise required to effectively utilize IP in both offensive and defensive strategies.” The authors provide examples of industries that are being transformed by new digital options, such as payments, where PayPal has carved out a foothold, and other technology companies (AT&T, Verizon, T-Mobile, Google, Apple, Ericsson, Microsoft, and many smaller firms) are attempting to stake claims as well, often with patents as an important aspect of their competitive strategy. The authors also point to the now-ubiquitous example of the taxi and limousine industry which is under pressure from Internet-based entities like Uber and Lyft.

From here, the authors delve into the patent landscape itself, highlighting trends in filings (China has surpassed the US), looking at the role of non-practicing entities (NPEs, also known in some quarters as ‘trolls’), and discussing reasons for and key attributes of patent reform legislation. the piece closes with some well-positioned advice, including an examination of the link between innovation and IP management, and a very good graphic illustrating nine dimensions of IP management. These are critical issues for all senior executives: as the report says, “The importance of proper IP management strategies cuts across all industries and geographies.”

It wasn’t that long ago that protecting intellectual property or IP (trademarks, trade secrets, and other intangibles afforded legal protection and, in particular, patents) was primarily the purview of technology and pharmaceutical companies. But because of accelerating technological advancement, patent activity and the patent wars are expanding their domain into previously untouched sectors. Industries in the path of these accelerating technologies now find themselves grappling with an urgent need for IP fluency. According to David Kappos of Cravath, Swaine and Moore and an authority on intellectual property management, “IP has become too important to just leave to the lawyers (and I can say that as a lawyer myself). The C-suite needs to have a baseline understanding and at least one senior executive at the CEO’s table–a non-lawyer–who must understand it in depth.”In a September 2011 special call with analysts, the newly appointed CEO of MasterCard, Ajay Banga, said that MasterCard “is a technology company that’s in the payments space.” The assertion surely raised a few eyebrows. After all, MasterCard was broadly considered a B2B payments company or a financial services company, but it was certainly not a technology company in the traditional sense. Banga wanted to establish his vision for electronic payments and a cashless world–one where technology would play the central and pivotal role in payments and commerce and would form the core of MasterCard’s business.

From banking to health care to retail, technology is enabling a fundamental change of value propositions, business models, supply chains, and business operations. It has recently become so pervasive across industries that it is barely noteworthy to suggest that almost every company is, to some extent, a technology company…

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