Innovate or Perish: Managing the Enduring Technology Company in the Global Market

The Second Rule of Value: Rational People Don’t Sue Themselves

Companies often build IP portfolios by protecting IP in their own products. Such a strategy runs the risk of missing the mark. Often, more value can be generated with patents on competitors’ products. After all, there is likely more to be gained by suing a competitor than suing oneself.

For those companies that select inventions to patent based on whether the patents cover technology being actively utilized in their products, the strategy is not entirely irrational—it just reflects a narrow view of value. The objective in building a patent portfolio should be to get patents on inventions that are valuable. In practice, companies are limited to patenting things they know about. Therefore, businesses are limited to patenting things at the intersection of what they know and what they believe has value. Product development efforts at many companies will be focused at this same intersection of knowledge and value. In addition, many companies are unlikely to assert their patents unless goaded into action by a competitor who has copied their products. Thus, the technology used in a company’s own products is a good starting point for building a valuable patent portfolio.

But a broader view of value is required to maximize value from IP. A vibrant business should generate IP beyond what is reflected as features in its own products. A business cannot turn every valuable idea conceived by its employees into a product it makes. ...