Legal Briefing

An approach to IP benchmarking

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TMT | 01 September 2011

A recurring theme in conversations with our clients is how their approach to IP protection, management and enforcement compares with that of other rights holders. If this is a question you have ever considered, you will know that obtaining the information necessary to make the comparison is far from easy.

There are a number of obvious options available: seeking to obtain information internally from staff members who have had relevant experience in other companies; speaking to peers in other companies; or learning what you can from service providers. But, in addition to issues of confidentiality, each of these options has its difficulties.

Also, your IP practitioners may well have access to the necessary information, but they too will be bound by obligations of confidence and unlikely to be in a position to fully share their insights.

Despite the difficulty of obtaining the necessary information for comparison, the adoption of a structured approach to IP benchmarking can produce valuable results. This article discusses some aspects of the process.

THE IP AUDIT

Before effective IP benchmarking can happen, a business must know exactly what IP assets it has, how it is using them, and how well each of them is protected. This can be achieved by a comprehensive IP audit. Such an audit will also aid in the understanding of how various forms of IP can, in future, best be identified, captured and administered. A sound IP audit, undertaken with both an understanding of best IP practice and an awareness of the organisation’s overall business strategy, should form the basis of any IP strategy.

Some preliminaries

For some businesses, there may be a range of issues to consider before moving on to formal IP benchmarking. If, for example, management of IP assets has traditionally not been a particular focus in the business, systems may not be in place or may be outdated and inefficient. Historically, this may have led to the company reacting to IP issues passively rather than actively managing them, which may have, in turn, resulted in loss of value to the business or loss of IP rights completely.

Creative industries are likely to use brands, copyright and design rights, but awareness of how best to protect and enforce such rights varies. For example, few creative people might know who owns copyright in a commissioned work in the absence of assignment, or appreciate that unregistered rights are significantly more costly to enforce than registered rights. What may be obvious to a larger patent-based business, such as the requirement not to publish details of a potentially patentable invention before filing a patent application, or the means of identifying those patents at greatest risk of infringement, may well be unknown to a creative start up with relatively few innovative products. Smaller businesses with limited resources may be more concerned with exploiting their IP, but have less awareness of the appropriate sources to check in order to clear new business or product names. They may, however, make decisions and respond to IP issues more quickly than larger competitors. Thus, a formal analysis of how particular functions operate within an organisation may be an appropriate place to start.

IP knowledge and understanding throughout the business is unlikely to be uniform, with some areas being at different stages of sophistication. Although larger companies tend to be more aware of IP assets and therefore have more systems in place to identify and manage different types of IP, the knowledge might be concentrated within particular departments and the dissemination of information throughout the company may be slow and patchy. Knowledge is also inevitably lost with staff turnover. Considering how best to promote IP awareness more widely within the business in relation to different rights or across different departments, and implementing appropriate procedures (such as a rolling education programme, or the development and distribution of an IP policy) will improve understanding of IP issues and lead to better protection. Focusing on internal procedures and processes in this way may be a cost-efficient way to reveal which areas are in need of attention, and achieve increased awareness throughout the company.

Benchmarking considerations

Having completed the IP audit, and satisfied yourself that you have attended to all preliminaries, you will be in a position to decide whether or not to embark on a formal benchmarking exercise and, if so, what form it should take. Benchmarking can be undertaken for a variety of reasons; for example, to ascertain whether a company’s IP processes or budgetary allocations accord with best industry practice. It may be undertaken in the context of a proposed stock exchange listing, or a particular development project.

The purpose of the exercise will determine the type of data to be acquired, and, in all probability, shared. It will be important, however, to analyse carefully any information gathered: different business models, business cultures and levels of sophistication between businesses will affect the relevance of information.

The nature of information relevant for benchmarking varies. It may include:

  • financial information: figures for overall legal budgets, or spend on particular protection activities such as clearance, filing and prosecution, enforcement activity including litigation, mediation and arbitration and lobbying activity; or
  • non-financial information: types of rights, portfolio size, size and location of IP team, team structure, reporting lines, key performance indicators and processes adopted to capture and manage rights.

Other information could also include matters such as the number of applications/registrations per year, searches per year, oppositions, cancellations and customs detentions.

Appropriate ways to contextualise the information in relation to key variables, such as average spend by number of employees, as a percentage of revenue, or compared to market share for a particular business, might also be considered.

Qualitative benchmarks may be more difficult to measure, but equally useful to have. These might include clearance and filing strategies employed by others, factors that inform such strategies, issues affecting licensing activity, methods of active monitoring for infringements, whether and which activities are dealt with in-house or outsourced (in the traditional sense to external counsel, or to legal process outsourcers) and so on. Practical matters can also be explored, such as what software and databases others use to organise their IP, the benefits and pitfalls associated with each, whether they are accessed more widely by the business and whether such access aids communication of ideas between departments.

Learning from the involvement of others in IP matters in various countries can also be valuable, particularly where official data on disputes and enforcement outcomes is incomplete or lacking. Issues might include strategies for dealing with online infringements, managing external counsel, sources of overseas infringement, costs of administrative actions, how the courts respond and the typical penalties awarded.

BENCHMARKING IN PRACTICE

Formal benchmarking involves both the identification of criteria or reference points in relation to which measurements and comparisons can be made, and the sharing of information.

So, having taken all the preliminary steps, and satisfied yourself that a formal benchmarking exercise might be useful, what is the best way of setting up the necessary arrangements to get the information you want? Professional benchmarking organisations conduct formal and informal surveys, online questionnaires, telephone and face-to-face interviews as methods of gathering information. For some this approach might be prohibitively costly and lack sufficient flexibility. Others, understandably, may be reluctant to offer up information that is confidential or commercially sensitive. For those businesses, a more selective way of participating in benchmarking may be through the use of their legal advisors.

A key component of Rouse’s client development programme is developing a better understanding of our clients’ needs through ongoing conversations. As benchmarking is a recurring theme, we support clients in their aims to harness benchmarking practices and successfully apply them to their businesses. In some instances, clients can be brought together with appropriate benchmarking partners in groups of representatives of the same industry or a range of industries; groups that share a specific interest; or groups of representatives of companies with similar aims, structural characteristics, regulatory considerations, IP problems or brand experience. In some cases, it can be useful to create a partnership of organisations facing similar issues, such as counterfeiting and lookalikes, in a particular region.

Initial discussions should clarify agreement over what kind of information group members are seeking and which content it is appropriate to share, the specific or general parameters of such data, how it should be presented, and appropriate methods of communication (such as using discussion workshops, secure access websites, e-mail groups, Google groups and so on).

With good advice, and the proper controls in place, careful exchange of IP information can yield valuable insights into matters such as budgeting, resource management, IP best practice and effective strategies. When businesses sharing common IP issues are prepared to collaborate and exchange information, they will be better able to maximise the value of their IP and the contribution it makes to the bottom line, and keep themselves ahead of the game.