Intellectual Property: The New Strategic Weapon

Microsoft has announced one licensing deal with a hardware vendor after another. Hardly unusual for a company that has provided operating system software to manufacturers for years. Just one difference: in these recent licensing deals, Microsoft didn’t wasn’t the software vendor.

Confusing sounding? Hardly surprising, but it’s easy to explain. Microsoft has focused on persuading companies that use Android on their hardware to pay for the privilege. That’s pretty ironic for a mobile operating system that is supposed to be free. But it’s an example of how intellectual property (IP) like patents has become offensive weapons — and how clever people are applying what they learned in their traditionally-granted or business degree online with devastating results. For an offensive IP strategy to work, a company needn’t have gained protection over an entire area of technology. Horacio GutiĆ©rrez, Microsoft’s deputy general counsel in charge of the intellectual property group, explained one aspect of the company’s strategy in an interview with the San Francisco Chronicle:

There are a number of technologies that have to do with really critical features that make smart phones what they are today. For example, the ability to synchronize the content that you have in your phone with the information in the server of your company or in your computer at home. But then there are all these other features that just make the phone much more efficient, things that are embedded deeply in the operating system. Microsoft has invested for decades more money than anyone else in research and development directed toward the efficiency of operating systems. These devices have moved from having a rudimentary phone system to being a full-fledged computer, with a sophisticated, modern operating system.

There’s a lot to learn for this small lesson and other things that GutiĆ©rrez said in the interview:

  • When establishing an IP strategy, look for small and specific but critical features that you introduce to the market and protect them with patents.
  • Build a patent portfolio over time, focusing on your company’s greatest areas of expertise.
  • Every new development brings patent disputes, so stake out ground as early as possible.
  • Patent protection forces your competitors to spend time and money creating their own innovations rather than copying yours. Enforcing patents makes them pay attention.
  • Even what some might see as trivial — a graphic feature that indicates a Web page is loading, which Microsoft is currently suing Barnes & Noble over its alleged use in the NOOK — can be enough to offer leverage.

Patent enforcement offers a number of advantages to the patent holder. One company can block what would otherwise be easy challenges in a market. The holder can, as Microsoft has, license technology and benefit both from the additional revenue and increasing the competitor’s costs of doing business. Companies can also cross-license technologies to ensure that they have the freedom to innovate and bring new products to market. It’s a different way of looking at patents, but one that will only become increasingly important over the years.

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