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Strategic Innovation Management > Lecture 10 > Flashcards

Lecture 10 Flashcards

1
Q

What is the definition of IP and what does it entail

A

IP refers to the output of a creative process

Entails:
Intellectual- product of the mind
Intangible asset- may be represented in physical form but it’s value is not limited by the physical form which it takes
Value is the fact that knowledge could further products or services
Treated the same way in law as tangible property

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2
Q

What is the rationale for IP

A

Claim of immediate position between tangible property and a free resource

IP creates and economic environment in which creative firms have sufficient incentives to undertake high risk inventions

IP should be treated as a property for only a short period of time but after this time, it should be treated as a common good

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3
Q

What are the two main methods for protecting IP

A

Institutional (formal)

Strategic (informal)

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4
Q

What is institutional (formal)

A

Receive official recognition that the invention is the exclusive property of the inventor and it may not be used for commercial advantage by others

Must be a legislative organisation
If someone breaches they can be taken to court to protect

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5
Q

What is strategic (informal) IP protection

A

Keep the innovation secret, at least until the inventor is ready to commercialise or maybe longer

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6
Q

What are patents

A

Gives a monopoly right for the commercial use of a product for a given period of time

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7
Q

What must be disclosed in a patent

A

Have to state who the precursors were

Must describe what is different and unique about your knowledge

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8
Q

What are some drawbacks of patents

A

Heavy cost to this and have to get patents in different markets
Long leborious and costly exercise
Need competent legal skills or you have to outsource again a a high cost
Typically large multinationals use patents
If patent is infringed upon you need resources to protect it

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9
Q

What is a copyright

A

Limits the right to copy a piece of IP
Area of increasing importance
Moving towards knowledge and services economy

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10
Q

What is a registered design

A

Given a monopoly right to use a particular design

Increasing in use
Ergonomics
Shape, visual looks e.g Coca Cola bottle

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11
Q

What is a trademark

A

A distinctive sign, mark or logo which distinguishes the goods and services of one company from another
Increasingly an area to fight over

E.g Apple Corp v Apple computers
Cadbury trademarked their purple colour

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12
Q

What is complexity

A

Used a new and highly complex process that is hard to copy

Tacit knowledge/ difficult to transfer to another person by means of writing it down or verbalising
Secrecy may be a good situation. Could keep it secret longer than a patent
Find alternative ways around if you disclose through a patent

Microsoft does not publish source code and would be impossible for a would be imitator to recreate

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13
Q

What is lead time

A

Use IP quickly before anyone else, first mover advantage - link to Klepper?

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14
Q

What are confidentiality agreements

A

Binds two parties that share the IP to prevent them sharing with a third party
Share risk
E.g airbus consortium

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15
Q

What is the most commonly used approach

A 
Varies by sector 
Manufacturing sees formal
Services informal 
Variation by firm size and resources 
Strategic protection is used overwhelmingly
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16
Q

What are the advantages of formal protection

A

Provides assurance that parent company will be able to capture economic value

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17
Q

What are the disadvantages of formal IP protection

A

Owners of IP can make extraordinary gains
Seeing trend towards pre empire patent to prevent other firms exploiting new opportunities
Patent thickets- people can’t enter
How is this socially optimal

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18
Q

What are the advantages of informal IP protection

A

Do not create public ally protected monopolies

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19
Q

What are the disadvantages of informal IP protection

A

IP remains secret and firms do not learn from each other

Prevents diffusion of new ideas

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20
Q

What are key debates around IP protection

A

Do all the formal support is it achieving be good
Does formal IP have a positive impact on stimulative innovation
If patenting R+D does have a social benefit what is the correct level of reward
- who were the precursors?
Stand on the shoulder of giants
Is it right precursors don’t get a reward

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21
Q

What is licensing

A

Small number of firms who simply create IP then sell it

If there is no buyer then they are going to get commercialised

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22
Q

What are the positives of licensing

A

Inventors do not have to undertake the final stages of innovation
Appropriate for new and small companies that lack financial resources
Firms with innovative capabilities but lack complementary capabilities

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23
Q

What is open source innovation

A

Original source code of software is made open to other developers
Try to create a new market
Need critical mass

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24
Q

What do jaffe and Lerner say are the dark side of patents

A

Some firms have ceased to see patents as weapons of defence and have started using them as offensive weapons to disrupt and threaten ongoing and future plans of competitors

There has been an escalation is patent litigation, partly due to rises in patenting

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25
Q

What are rememberants in the attic

A

After CAFCs creation firms likelihood of succeeding in court increased and firms began pursuing royalties for patents they hadn’t enforceable
The disruption of dormant patents disrupts the ongoing process of innovation

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26
Q

What is the Texas Instruments example

A

Sought royalties for a patent they held on integrated circuits and made 800m by 1999

Threatened innovation process in the whole sector

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27
Q

What are the implications of cross licensing

A

Many trade rights to use each other’s patents
Restricts competition
Raises questions whether patents have a useful function every company wants the best portfolio
May stifle entry because firms cannot build large enough cross license portfolios or afford royalties particularly smaller firms

28
Q

What is the estimated cost of defending a patent if 25m is at risk

A

2-4.5 m

29
Q

What is jaffe and Lerner’s battlefield assessment of patent

A

Maintenance of a strong patent system is essential in industries
Patent litigation is expensive and risky
May innovative firms are in constant conflict
Increasingly the patent system is a source of uncertainty and cost

30
Q

What are the 3 tests that must be passed when applying for a patent

A

Utility - does the invention really do anything
Novelty- is the invention original
Non obviousness - even if new, would the claimed invention have been obvious to one skilled in th art a the time of the invention

31
Q

What are the 3 choices if someone is accused of infringement

A

Agree to take a license and pay royalty
Stop doing the alleged infringement
Continue and wait for the patentees next move

32
Q

What are the problems with the US patent system

A

Hands out bazookas to anyone who asked for one regardless of novelty and non obviousness
Now have arms race that undermines rather than fosters the crucial process of technological innovation

33
Q

Why do we need a patent system

A

Converts the intangible creation of an inventor into property that can be bought or sold

The development and commercialisation of new technologies creates broad social benefits. It is therefore in our collective interests to have social, cultural and legal institutions that foster technological innovation

34
Q

What are problems with the direct approach of giving the inventor money

A

Would be expensive
How much money would be given
Importance of its discovery is uncertain

35
Q

What did Isaac Newton say

A

If I have seen far it is by standing in the shoulders of giants

36
Q

Why are patents needed schotchner

A

The only way to ensure firms undertake every research project that is efficient is to let the firms collect as revenue all the social value they create

But
Strong patent protection leads to socially inefficient monopoly pricing
Firms in a patent race may overinvest in research if the patent is worth more that the cost of achieving it

37
Q

What does Swann say about IP

A

Refers to the output of a creative process

Must be

Intelectual- product of the mind
Intangible
Treated by law as property

38
Q

What does Swann say about why we need IP

A

Economic perspective
Want a return on the reasonable chance the invention will have commercial value and the fact it gives the inventor a head start

By protecting IP we ensure that the creative firms they will return economic value on their inventions and encourage them to invest in innovative creativity

39
Q

What does Swann say about formal IP

A

Often more effective in the US and UK but may offer weaker protection in other markets

Some companies have suggested it is expensive and time consuming and offers inadequate protection this strategic is more favourable

40
Q

What does Swann say about patents

A

In US they last 23 yrs
Grant exclusive rights to the inventor
Only applies for a fixed term
Must disclose all details of the invention

Once a. Reasonable profit is made it is argued the patent should lapse

41
Q

What does Swann say about the case for and against formal IP protection

A

Formal IP overcomes the free riding problem
They form monopolies
Many may make more returns than required to incentivise
Can provide excessive protection
Pre emotive parenting - economy at large takes no benefit. Especially undesirable In pharma

42
Q

Why is Coca Cola an example of secrecy

A

They maintain that all published attempts to reverse engineer the formula are incorrect

43
Q

What does Swann identify as a risk of lead time

A

Fast second

E.g JVC vhs system more successful than Phillips

44
Q

What are the three things open source mean

A

IP rights are not abandoned, the holders just allow others to use it too
Original source code is made open to other software developers
Software can be freely distributed

45
Q

What does jaffe and Lerner say about cross lisencing

A

If we are confident we will have access to a wide pool of new technology from many cross licensing partners we may not feel as intense pressure to develop a new technology of our own firms can join forces to control markets

E.g summit technology and VISX laser eye surgery

46
Q

What impact does cross licensing have in small firms

A

They may have a narrow technology base and thus will be at a disadvantage in negotiating cross licenses

47
Q

What does a patent give?

A

The holder of a patent had the right to prevent anyone else from making, using, selling or importing an object or device that incorporates any features covered by the specified claims

48
Q

What does jaffe and Lerner say about big pharma

A

If they weren’t granted patent protect then competition would drive down the price however of this is the case no drugs would be developed at all because it becomes a game of heads younlose big, tails you lose a little

49
Q

What does jaffe and Lerner say about broad patent protection

A

Gives maximum incentive but may discourage improvements

Edison lightbulb- rate of innovation slowed
Monopoly temporarily inhibited subsequent improvement and development of the industry more. Broadly

50
Q

What does scotchmer say about social value

A

If later innovation couldn’t be developed without the first then the social slur of the first included social surplus
If the first reduces cost of achieveing the 2nd then the cost reduction is part of social value
If 1st accelerated development of the second then the value includes getting the second innovation sooner

51
Q

What does stockmen say about broad protection

A

Leads to deficient incentives to develop second generation products
Inflate incentives for the first
Requiring every later innovator to license will give deficient incentives for later innovations

52
Q

What does soctchmer say about prior agreements

A

The initial patent holder can agree to share both the cost and proceeds of the second innovation and will do so when benefits exceed costs

Prior agreements lead to more efficient investment firms by second generation products

53
Q

What does hall and van teen Em argue and how can r+D effectiveness be measured

A

Can tax be used to stimulate R+D?
Ask does the level of good supplied after implementation of the policy is such that the social return is equal to the societal cost

Compare the amount of incremental r+d and the loss in tax revenue

Typically the cost of research is based on cost benefit analysis
The amount is of R+D induced v loss in tax

54
Q

What evaluation methods do hall and van reenen identity

A

Event and case study
- ask managers how their r and d spending has been effected
Compare behaviour before and after a surprise event

Natural experiments

Quasi experiments

55
Q

How successful in incentivising with tax credits

A

Evaluation of US system revealed a dollar for dollar increase a

56
Q

What are the concluding remarks of van Helen and hall

A

Tax treatment of R+D is increasingly becoming more lenient and increasingly countries will turn to the tax system away from direct grants
Tax has an effect on R+D performed

57
Q

What does stochmer say about prior agreements

A

With a prior agreement the initial patent holder could be approached by a second innovator whom may have an improvement and suggest they share both the costs and proceeds of research

Gets around divestment incentives of second innovators

It is not necessarily optimal to protect the first innovation so broadly that every derivative generation product is infringed

58
Q

What did Martin skreli

A

Bought the rights to AiDS drug darapim and raised the price from 13.50 to 750

59
Q

Why does Netscape reveal the complexity of patents

A

US department of justice found Microsoft infringed upon Netscape in her browser wars but it took 8-10 years to get a settlement by which time Netscape was bankrupt

60
Q

What is the example of Apple Corp v Apple computers?

A

Apple Corp let Apple computer use name but not allowed to go into music industry

Apple launched iTunes

61
Q

Why does cross licensing restrict competition

A

Every company wants to have the best portfolio
Companies might be better off if they just stopped patenting but there is no way to achieve simultaneous change
For small design firms, patent protection is critical
New firms that have small portfolios may be significantly disadvantaged
Lexar media and samdisk

62
Q

What does Swann identify as the most attractive method of protecting IP

A 
Lead time 
CA
Secrecy 
Complexity of design 
Trademark
Copyright 
Patent 
Registered design
63
Q

What do jaffe and Lerner say about controlling risk in big pharma

A

Must earn a return on research and cost of failures

5,000-10,000 tested, 250 pre testes, 5 commercially viable

64
Q

What is the problem with low quality patents

A

When the patent office falls down on the job, then the quality of the patents issued deteriorates e.g amazon one click

65
Q

How is Tesla an example of open source

A

Sustainable transport
Enforcing patents would inhibit others
Need to create a new market and need critical mass

Strategic Innovation Management (5 decks)

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