Auditing patent portfolio for strategic exploitation. A decision support framework for intellectual property managers
| Pages | 272-293 |
| Published date | 12 March 2018 |
| Date | 12 March 2018 |
| DOI | https://doi.org/10.1108/JIC-01-2017-0019 |
| Author | Michele Grimaldi,Livio Cricelli,Francesco Rogo |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Auditing patent portfolio for
strategic exploitation
A decision support framework for intellectual
property managers
Michele Grimaldi and Livio Cricelli
University of Cassino and Southern Lazio, Cassino, Italy, and
Francesco Rogo
Leonardo Company, Rome, Italy
Abstract
Purpose –Several causes may induce firm managers to analyze the actual technology condition of patent
portfolios, among which is the need of exploiting patents strategically. In this paper, the question of how
to support intellectual property (IP) managers of large high technology companies in their strategic
decision-making process of evaluating patents is examined. The purpose of this paper is to provide a decision
support framework that suggests the suitable exploitation strategy for patents.
Design/methodology/approach –The paper proposes an audit framework able to point out whether
patents are aligned to the overall business strategy, to select those that are not aligned, and to identify the
most appropriate exploitation strategy for each patent of the portfolio. The framework is structured into two
phases: in the first one, patents are selected through the analysis of four dimensions that characterize the
value of patents effectively; in the second one, a questionnaire is distributed to IP managers in order to
support their decision on patents. The paper illustrates case-based applications of the framework.
Findings –Results of applications show that the framework is able to suggest IP managers the suitable
exploitation strategy on four possible alternatives (maintaining, licensing, selling, abandoning) for each
patent of their portfolios.
Originality/value –The framework is an innovative and valuable tool to IP managers, and besides its
structural formulation, it is appreciable in terms of application expedition and efficiency of performance.
Keywords Decision making, Patents, Strategic planning, Intellectual property, Patent management
Paper type Research paper
Introduction
The quick transformations in the world economy have required firms to open to new ideas
and acknowledge the importance of intellectual property (IP) to achieve a competitive
advantage andprofit from its commercial use (Halland Ziedonis, 2001; Gans and Stern,2010).
The acquisition of advantage from knowledge and its transformation into IP rights
(Yoon et al., 2008) has resulted in several economic benefits for firms: getting a powerful
market positioning, increasingtheir market, and conveying an imageof high-level innovation.
These targets cannot be pursued unless a strategic use of IP is adopted (Pitkethly, 2007;
Somaya, 2012).
Patents, similarly to the other forms of IP, represent value assets and, as such, their
proper strategic management can affect firm value creation (Klaila and Hall, 2000;
Teece, 2000). As is usual with all value assets, firms should understand the actual
contribution of the patents to reach the objectives and, consequently, take on to manage
patents in a strategic way by assessing their technological and monetary value ( Jeong and
Yoon, 2015; Ponomarev et al., 2014). It is well known that highly technological firms,
not only large ones, but also SMEs, benefit from patenting and own a multitude of patents in
Journal of Intellectual Capital
Vol. 19 No. 2, 2018
pp. 272-293
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-01-2017-0019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
The authors would like to thank the editor and the anonymous reviewers for their helpful comments on
draft(s) of this paper.
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JIC
19,2
the result of the acceleration in the growth of their trend of patenting. This is because, often,
firms’patenting answers the need for maintaining the strategic positioning in a given
technology, or for expanding their activity in a different technological area from the core
one, or for protecting or blocking their technological inventions from other competitors.
For these reasons, we can say that several factors lead firm managers to analyze the actual
technology condition of patent portfolios. First of al l, the frequently changeable
technological context that requires a continual refresh of patent congruence with the firm
goals. Second, the obsolescence, over time, of patents that end up losing their core quality to
the company for many of which it could be devised a better purpose. Third, the firm
budgetary adjustments that could inspire patent exploitation actions.
Consequently, it is necessary to help managers in exploiting their patent portfolio to
extract value from it, by performing its accurate audit (Holgersson, 2013). From the analysis
of the literature about devices that IP managers utilize to audit patent features, we have
ascertained the lack of a framework that can help scrutinize patents by applying
appropriate indicators to select the most suitable patent exploitation strategy. More
precisely, an approach should be devised that, by reducing the complexity of the analysis,
usually carried out by the help of several indicators and complex variables (Reitzig, 2004a),
allows firms’managers to perform an evaluation process. The selection of patents can be
therefore carried out for their characteristics of strategic relevance, technological and
innovation advancement, and profitability (Ziegler et al., 2013). Thus, we have recognized
the necessity of a framework able to audit patents by relating the decision process to
strategy, business models, citations and technological features (Wirtz et al., 2016). The study
poses two research questions:
RQ1. How to investigate a patent portfolio in order to draw out the more advantageous
strategies of its exploitation?
RQ2. How to assist IP managers in selecting those patents which are worthy of exploitation?
In this paper, we address the problem of supporting managers of large high technology
companies in their strategic decision-making process aimed to select out of a significant
number of patents those suitable for strategic exploitation. Our main contribution is to
advance an audit framework that, by making use of ad hoc indicators, can sort patents by
purpose, as well as merge complexity, applicability, and reiteration tasks. In particular,
we propose a decision support framework that enables IP managers to inspect their portfolio
of patented technologies along their decisional process and classify them into four groups:
most valuable patent related to high growth business; patents that had no present or
planned use but are still of value to the firm; patents unlikely to be used; patents to be
abandoned. The proposed framework allows IP managers to grasp whether patents are all
aligned to the overall business model and to select the most appropriate exploitation
strategy for each patent.
The remainder of the paper is structured as follows. The second section provides the
theoretical background of our work and highlights the newness of our framework. In the
third section, we describe the framework, while, in the fourth section, we illustrate practical
applications carried out in three companies operating in the aerospace and defense sector.
Finally, the fifth section discusses the implications of our work and concludes the paper.
Literature background
The strategic management of the knowledge enclosed in IP is among the accomplishments
necessary to preserve the competitive advantage of firms (Lang, 2001; Pitkethly, 2001).
By focusing on IP firm resources, it was observed that IP intellectual assets share the same
characteristics with all other resources: they have to be exploited to seek the best advantage
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