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The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Managing Intellectual Property Assets

for Enhancing the Competitiveness of

SMEs

Guriqbal Singh Jaiya

Director, SMEs Division


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From Invention to Innovation

While invention depends upon

creativity,

successful technological innovation

requires integrating new knowledgewith multiple business functions.


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InnovationInnovation What is it?What is it?

The creation of new ideas/processes whichThe creation of new ideas/processes which

will lead to change in an enterpriseswill lead to change in an enterpriseseconomic or social potentialeconomic or social potential

[P. Drucker, The Discipline of Innovation,

Harvard Business Review, Nov-Dec, 1998, 149]


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What is Innovative Thinking?

A means of generating innovation to achieve two objectives that areimplicit in any good business strategy:

make best use of and/or improve what we have today

determine what we will need tomorrow and how we can best achieve

it, to avoid the "Dinasaur syndrome

Innovative thinking has, as a prime goal, the object of improvingcompetitiveness through a perceived positive differentiation fromothers in:

Design/Performance Quality

Price

Uniqueness/Novelty


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Obstacles to SuccessfulObstacles to Successful

InnovationInnovation

Competitive positionCompetitive position

Market judgementMarket judgement

Technical performanceTechnical performance

Manufacturing expertiseManufacturing expertise

Financial resourcesFinancial resources


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How to classify newness and degree of

innovation and what to focus on:

New to the firm?

First in the market?

First in the world?

Incremental or radical innovation?

Innovation


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There are several types of new products. Some are new to the

market, some are new to the firm, and some are new to both. Some

are minor modifications of existing products while some are

completely innovative


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Marketing principles .Marketing principles .

Identify opportunities and threatsIdentify opportunities and threats

Identify customer needsIdentify customer needs

React to a competitive environmentReact to a competitive environment

Careful planning to make a New or improved productCareful planning to make a New or improved product

Use the 4 Ps .Use the 4 Ps .

Product serviceProduct service

PricePrice

PromotionPromotion

Place (distribution)Place (distribution)

Retain flexibility to react to changesRetain flexibility to react to changes


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Innovation Process

The adoption of anThe adoption of an

innovation by similar firmsinnovation by similar firms

Usually leads to product orUsually leads to product or

process standardizationprocess standardization

Products based on imitationProducts based on imitation

often are offered at loweroften are offered at lower

prices but with fewerprices but with fewer

featuresfeatures

InventionInvention


ImitationImitation


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The Innovation Process

An innovation starts as an idea/concept that is refined anddeveloped before application.

Innovations may be inspired by reality (known problem).The innovation (new product development) process, whichleads to useful technology, requires:

Research

Development (up-scaling, testing)

Production

Marketing

Use

Experience with a product results in feedback and leads toincrementally or radically improved innovations.


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Translation of a Creative Idea into Useful

Application

Analytical

Planning

OrganizingResources

Implementation CommercialApplication

To Identify:

ProductDesign

Market

Strategy

Financial

Need

To Obtain:

Materials

Technology

Human Resources

Capital

To

Accomplish:

OrganizationProduct Design

Manufacturing

Services

To Provide:

Value to Customers

Rewards to EmployeeRevenue to Investors

Satisfaction of

Founders

The Innovation Process


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The Profitability of Innovation

Legal protection

Complementary

resources

Ease of imitation

of technology

Lead time

Profits

from

Innovation

Value of an

innovation

Innovators

ability to

appropriatevalue from an

innovation


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ValueValue

AppropriationAppropriationfromfrom


Barriers to IntegrationBarriers to IntegrationDifferent TimeDifferent Time

InterpersonalInterpersonal

Different GoalDifferent Goal

Formality ofFormality of

OrientationOrientation



StructureStructure

Facilitators ofFacilitators of

IntegrationIntegrationSharedValuesSharedValues

LeadersVisionLeadersVision

EffectiveEffective

Budget AllocationBudget Allocation

CommunicationCommunication

AppropriatingValue fromAppropriatingValue from


CrossCross--

FunctionalFunctionalIntegration/Integration/

Design TeamsDesign Teams

Time toTime to

MarketMarket

ProductProduct

QualityQuality

Creation ofCreation ofCustomerCustomer

ValueValue


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Product Life CycleProduct Life Cycle

SalesSales

TimeTime

IntroductionIntroduction

GrowthGrowth

MaturityMaturity

DeclineDecline


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New Product Development

Stages in a New Product Development process:

Idea Generation

Idea Screening Concept Development and Testing

Business Analysis

Beta Testing and Market Testing Technical Implementation

Commercialization


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Technology AdoptionTechnology Adoption Diffusion of InnovationDiffusion of Innovation

EarlyAdopters

InnovatorsLaggards

Early

MajorityLate

Majority

Take up Rate

Time

Innovators:Innovators: venturesome; greatest needventuresome; greatest needEarly adopters:Early adopters: opinion leaders; needs drivenopinion leaders; needs driven

Early majority:Early majority: deliberatedeliberate

Late majority:Late majority: skepticsskeptics

Laggards:Laggards: traditionalists; suspicioustraditionalists; suspicious


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New Business Models Emerge

Then

One IntegratedCompany

Now

Many DistributedCompanies

ProductDevelopment

Cycle

ProductDevelopment

ToolCompanies

TestingServices

CROs CRMs


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New Regional Model Emerge

Then

Manufacturing

Research

Development

Trials/Testing

Services

Self-containedregional clusters

Region A

Region E

Region B

Region F

Region D

Region C

Region G

Now

Specialized,networked regions


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Commercialization Model Strategic Investment is the Foundation of a

Successful Commercialization Model


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What Investors Look for?What Investors Look for?

Novelty; worldNovelty; world--class; evidence of commercialclass; evidence of commercial

interest; clear path to marketinterest; clear path to market

Unencumbered, or encumbered by reasonableUnencumbered, or encumbered by reasonable

conditions (Equity, royalties)conditions (Equity, royalties)

Protection (NonProtection (Non--disclosure agreements,disclosure agreements,

Patents, Designs, Brands, Copyright)Patents, Designs, Brands, Copyright)

IP protected by one or more Patents is the IPIP protected by one or more Patents is the IPrequired to implement the business planrequired to implement the business plan

Freedom to OperateFreedom to Operate


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Innovation, Intellectual Property

and Poverty Reduction

Critical Ingredients for Innovation:

Intellectual Capital

Human Capital

Financial Capital

Proximity

Social Network Capital


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Complementary Resources

Bargaining power of owners of complementaryresources depends upon whether complementaryresources are genericorspecialized.

Manufacturing Distribution

Service

Complementary

technologies

OtherOther

Marketing

FinanceCore

technologicalknow-how


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Risk &Return

Competing

Resources

Examples

LicensingOutsourcing

certain

functions

Strategic

Alliance

Joint

Venture

Internal

Commercialization

Small risk, but

limited returnsalso (unless

patent position

very strong

Limits

investment, butdependence on

suppliers &

partners

Benefits of

flexibility;risks of

informal

structure

Shares

investment &risk. Risk of

partner

conflict &

culture clash

Biggest risks &

benefits.Allows complete

control

Few Allows outside

resources &

capabilities

To be accessed

Permits pooling of the

resources/capabilities of

more than one firm

Substantial

resource

requirements

Konica

licensing its

digital

camera to

HP

Pixars movies (e.g.

Toy Story)

marketed &

distributed by

Disney.

Apple and

Sharp build

the

Newton

PDA

Microsoft

and NBC

formed

MSNBC

TIs

development of

Digital Signal

Processing

Chips

Alternative Strategies for Exploiting Innovation


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Uncertainty & Risk Management in Tech-based Industries

Sources of

uncertainty

Technologicaluncertainty

Selection process for standards and

dominant designs emerge is complexand difficult to predict, e.g. future of 3G

Customer acceptance and adoption rates

of innovations notoriously difficult to

predict, e.g. PC, Xerox copier, Walkman

Market

uncertainty

Strategies for

managing risk

Cooperating with lead users

early identification of customer requirements

assistance in new product development

Flexibililitykeep options open

use speed of response to adapt

quickly to new information

learn from mistakes

Limiting risk exposureavoid major capital commitments

(e.g. lease dont buy)outsource

alliances to access other firms

resources & capabilities

keep debt low


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Innovation riskInnovation risk

RISKSRISKSCOSTSCOSTS

RESEARCHRESEARCH DEVELOPMENTDEVELOPMENT COMMERCIALISATIONCOMMERCIALISATION


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Mortality of New Product IdeasMortality of New Product Ideas


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The Right Innovative Product?

The right product is one that becomes available at

the right time (i.e., when the market needs it), and is

better and/or less expensive that its competition.

To have the right product, therefore, one must:

Predict a market need

Envisage a product whose performance and

capability will meet that need

Develop the product to the appropriate timescale and produce it.

Sell the product at the right price


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TimelyTimely

Difficult forDifficult forcompetitors to imitatecompetitors to imitate

Commercially exploitableCommercially exploitablewith present capabilitieswith present capabilities

Innovation and CompetitiveInnovation and Competitive

AdvantageAdvantage

CompetitiveCompetitiveAdvantageAdvantage

Provides significantProvides significant

value to customersvalue to customers


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Strategic Entrepreneurship and

Innovation Entrepreneurship is concerned with:

The discovery of profitable opportunities

The exploitation of profitable opportunities

Firms that encourage entrepreneurship are:

Risk takers

Committed to innovation Proactive in creating opportunities rather than

waiting to respond to opportunities created by others


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Entrepreneurship

Creativity is at the heart of entrepreneurship, enabling entirely new ways

of thinking and working.

Entrepreneurs identify opportunities, large or small, that no one else has

noticed.

Good entrepreneurs also have the ability to apply that creativitythey

can effectively marshal resources to a single end.

They have drivea fervent belief in their ability to change the way things

are done, and the force of will and the passion to achieve success.

They have a focus on creating valuet

hey want to do t

hings better,faster, cheaper.

And they take risksbreaking rules, cutting across accepted boundaries,

and going against the status quo.


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EntrepreneurshipDefining entrepreneurship is difficultbecause there is no

universal, clear-cut definition of the term. In its most basic

sense, entrepreneurship is manifest in a business venture when

an individual is able to turn a novel idea into a profitable reality.

In practice, however, entrepreneurship is more multifaceted,ranging from operating a small business in ones own home, to

bringing a national franchise to a small town, to turning a new

and unique idea into a high-growth company. Entrepreneurship

can involve starting a business th

at brings a new store to mainstreet, offering a product or service previously unavailable to a

community, or acquiring an existing business that has had a

long-standing presence in a community and helping it evolve to

reflect ones own vision and personality.


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Entrepreneurship

The word entrepreneurship literally means, "to take or carry

between" in the sense of an economic transaction; to be a

market-maker. It does not literally convey the notion of

innovation that we commonly associate with the term.

Joseph Schumpeter (1883-1950), one of the more well

known theorists on entrepreneurship, defined an

entrepreneur as one who reorganizes economic activity in an

innovative and valuable way.That is, an entrepreneur is onewho engages in a new economic activity that was previously

unknown. An entrepreneur is a risk taker because being

innovative means there are few rules orhistory for guidance.


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Entrepreneurship

Entrepreneurship is the process of

creating or seizing an opportunity, and

pursuing it regardless of the resourcescurrently controlled.

The Websters Third New International

Dictionary defines an entrepreneur to be

one who organizes, owns, manages, and

assumes the risks of a business


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Entrepreneurship

The entrepreneurshifts resources out of an area of lower and

into an area ofhigher productivity and greater yield.

[J. B. Say, French economist, circa 1800]

Entrepreneurship is creative destruction. Dynamic

disequilibrium brought on by the innovating entrepreneur,

rather than equilibrium and optimization, is the norm of a

healthy economy and the central reality of economic theory

and practice.[Joseph Schumpeter, Austrian economist, 1911]

The entrepreneursearches for change, responds to it, andexploits it as an opportunity.Innovation is the specific tool of

entrepreneurs, the means by which they exploit change as an

opportunity for a different business or a different service

[Peter Drucker, 1985]


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Entrepreneurship

Entrepreneurship drives innovation,

competitiveness, job creation and economic

growth.It allows new/innovative ideas to turn into

successful ventures in high-tech sectors

and/or can unlock the personal potential ofdisadvantaged people to create jobs for

themselves and find a better place in society.


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Entrepreneurship

Entrepreneurship, in small business or

large, focuses on "what may be" or"what

can be".One is practicing entrepreneurship by

looking for what is needed, what is

missing, what is changing, and what

consumers will buy during the coming

years.


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Entrepreneurship

Entrepreneurs have:

A passion for what they do

The creativity and ability to innovate

A sense ofindependence and self- reliance

(Usually) a high level ofself confidence

A willingness and capability (though notnecessarily capacity or preference) fortakingrisks


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Entrepreneurship

Entrepreneurs do not (usually) have:

A tolerance for organizational bureaucracies

A penchant for following rules

A structured approach to developing andimplementing ideas

The foresight to plan a course of action oncethe idea is implemented and established


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Entrepreneurial Success

1. People (Entrepreneur /Entrepreneurial

Team)

2. Opportunity (Marriage of Market andProduct/Service)

3. Access to Resources (Land. Labor,

Capital, Knowledge)

And the fit amongst these three elements


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Major factors determining success of a

new product in the market

The product provides functionaladvantages

Lower price for comparable product More attractive design (look)

Reputation ofbrand

Easy access

:

Available in the main retailshops

Consistentproduct quality

Excellent after-sales services


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Competitive AdvantageCompetitive Advantage

CriteriaCriteria

Low cost producerLow cost producer

Product differentiationProduct differentiation

Niche marketNiche market


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New ProductDevelopment

BreakthroughBreakthrough


Need two

processes:

NPD andNB(usiness)D

InnovativeInnovative

New ProductsNew Products

NewNew

BusinessesBusinesses

New Business

Development

An opportunity

driven path to

market-

a different

business design


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Protection of IPProtection of IP

IdeasIdeas

ResearchResearch

TechnologiesTechnologies

ProductsProducts

Utility models, Patents

Collaborative ResearchAgreement

Confidentiality or Nondisclosure

Agreements (Trade Secrets)

Technology LicensingAgreement, Branding

ValueValue addingadding


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Intellectual Property Questions

Intellectual Property (IP) Issues/questions during New Product

Development (NPD):

Can the innovation be legally protected? For how long?

How does one protect an innovation from imitators?

How much will itcost? When to protect? Do you need to rely on an IP expert?

The answers are complicated by the fact that one or more types of

legal frameworks may be used to protect a particular innovation,

product, process, or creative work. These include trade secrets,

trademarks, designs, patents, and copyright.

It is necessary to know which are applicable and when each is

appropriate. This varies somewhat from jurisdiction to jurisdiction.

The advice of a lawyer that specializes in these matters is essential


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Intellectual Property Questions

It is necessary to know which types of

intellectual property rights (IPRs) are

applicable and when is each type of IPRappropriate.This varies somewhat from

one country to another.

The advice of an IP lawyer is desirableif not essential.


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Background In September 2000, the WIPO Assemblies

approved the creation of a substantial new

program of activities, focusing on the IP-related needs of SMEs worldwide

SMEs Division established in October 2000

Nine professionals and three administrativestaff in the SMEs Division of WIPO


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Strategy 1. Demystification

2. New audience

3. New Areas

4. Proactive

5. E-Services

6. Partnership


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(1) Demystification Studies

Guides

Events and expert missions

Website and newsletter

CD-ROM

Magazine articles


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(1) Demystification (Studies)

National Studies (on IP and SMEs) completed

or under way in Argentina, Bhutan, Mongolia,

Nepal, Ph

ilippines, SriL

anka,T

anzania, SierraLeone, Romania, Chile, Colombia, Costa Rica, El

Salvador, Honduras and Paraguay, Egypt,

Morocco, Lebanon

WIPO Survey of IP Services to Tenants ofEuropean Technology Incubators

Norwegian SMEs and the IPR system


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(1) Demystification (Guides) WIPO/ITC Guide on Marketing of Crafts and Visual

Arts; Role of Intellectual Property; A practical guide

WIPO/ITC Guide on Secrets of Intellectual Property:Guide for Small and Medium Sized Exporters

WIPO/ITC Guide on Exchanging Value: Negotiating

Technology Licensing Agreements - A Training

Manual

ITC Guide on Exporting Automotive Components

ITC Guide on Pharmaceutical SMEs (Forthcoming)


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(1) Demystification (Guides)

Published

Making a Mark(Trademarks)

Looking Good

(Designs)

Inventing the

Future (Patents)


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(1) Demystification (Guides) Translation and/or customization: Under

way, with funding from several sources, in the

following countries:Algeria, Argentina,

Australia, Canada, Czech Republic, Egypt,

Estonia,Hungary, Italy, India, Israel,

Kenya, Lebanon, Malaysia, Malta,

Mongolia, Morocco, New Zealand,

Philippines, Poland, Slovakia, Spain,

Tanzania, Tunisia, Vietnam

16 Countries members of the OAPI


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(1) Demystification (Events) Special programs, seminar and

workshops organized by the SMEs

Division in Geneva in partnership withselected associations and organizations

(IASP, INSME, IPI, MOST, WASME)

Annual WIPOForum on IP and SMEsfor IP Offices ofOECD Countries


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(1) Demystification (Events) WIPO-Italy Forum on Textileand Clothing Industries of the

Mediterranean Basin

Countries (Prato, Italy -December 2003)

Participants from Algeria,

Cyprus, Egypt, Jordan, Israel,

Lebanon, Malta, Morocco,Palestine, Syria, Tunisia,

Turkey


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(1) Demystification

(Website) The Website of the SMEs Division is in six UN

languages (English, French, Spanish, Arabic,

Russian and Chinese) More than 60,000 pages viewed every month in

2004

Contents include sections such as IP for

Business, IP and E-Commerce, Activities, Best

Practices, Case Studies and Documents


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(1) Demystification (Website)


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(1) Demystification (Newsletter)

Monthly e-newsletter in the 6 UN

languages (Free)

Content includes articles, updates

with information, links and

documents

Launched in August 2001

Total number of subscribers: >19,000


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(1) Demystification (CD-ROM)

50,000 copies of the SMEs Division CD-

ROM distributed to SME support

institutions, IP Offices and othersworldwide

Marketing and customization

E-learning CD ROM (in partnershipwith KIPO: IP Panorama)

SAARC CD-ROM (in preparation)


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(1) Demystification (Articles) Some articles recently published:

What to do if you are accused of copyright

infringement

Tapping into Patent Information: a buried treasure

International trade in technology licensing of

know-how and trade secrets

Intellectual Property and E-commerce: how to take

care of your business website

Offshore outsourcing and IP

Savvy marketing: merchandising of IP rights


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(2) New Audience

Bringing IP issues to SME events

Bringing new business perspective to IP

events New partnership:Open door policy

IGOs, government focal points, SME support,

training and financial institutions, chambers

of commerce and industry, SME associations,SME research institutions, private sector

institutions, universities, etc...


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(3) New Areas Creative Industries

IP for financing (venture capital, securitization)

Accounting and valuation of IP assets

IP Asset Management, IP Due Diligence and IP Audit

Fiscal policies and IP (tax incentives for R&D activities,

patenting, licensing etc.)

IP services to SMEs by incubators, technology parks,

chambers of commerce and SME associations

IP needs of SMEs in agriculture, biotechnology,

handicrafts, software, textiles, etc


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(4) Being Proactive

Original Content

Links

Best Practices

Case Studies


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(5) E-Services

Web site content

SME mail

E-mail newsletter

Distance learning (proposed)

Discussion forum (proposed)


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(6) Partnership National and Regional IP Offices

National SME focal points in government, private

sector

Chambers of Commerce and Industry

SME Associations; Cooperatives

Incubators, Science Parks, Technology Parks

Universities; R & D Institutes

Private Sector Consultants SME Finance Institutions (including venture

capitalists)

Other UN Agencies (ITC, ILO, UNIDO, AfDB)


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Thank You

Guriqbal Singh Jaiya

[email protected]

www.wipo.int/sme/en/index.html

www.wipo.org