There were some good (all reactions are good!) reactions to the blog post on the problems of using patent counts to measure innovation so I thought I would follow up with some evidence on patents and intellectual property (IP) strategy.
Conventional thinking is that any IP generated within an organization should be carefully guarded by secrecy agreements, trademarks, patents or a combination of these things. As many universities become more commercially focused, researchers and students are now encouraged to safeguard their IP as well. In fact, I taught a Masters course in technology management last year where several grad students could not discuss their projects in class because they has signed confidentiality agreements.
Many years ago when I was doing biochemistry research my laboratory director took on a project in the aquaculture industry. After early results the director thought that he had made a breakthrough in aquaculture nutrition and consulted the commercialization office of the university. Secrecy agreements were signed by him and the research assistant, who was instructed not to talk to anyone in the laboratory about the project.
One day the research assistant asked me for some technical advice on processing samples and I was more than happy to give it, but what followed next was a very nasty surprise. Within an hour I had the director screaming at me and accusing me of industrial espionage. The closest thing I can compare it to is the scene from the Lord of the Rings where an aging Bilbo sees Frodo wearing his old ring and turns into Gollum with his desperate obsession over “my precious”.
So much for academics and IP protection but what happens to businesses when they get obsessed by IP?
The best study of the relationship between IP protection and innovation is by Keld Laursen (Copenhagen Business School) and Ammon Salter (Imperial College London). They are world class researchers and if you disagree with their results then its worth reading the original paper.
Using a dataset of 2700 UK manufacturing firms, Laursen and Salter looked at the relationship between different IP protection strategies and innovation outcomes. While they looked at formal protection such as patents, trademarks and designs, they also looked at informal protection tactics such as secrecy agreements, complexity of design and lead times over competitors. What they found, for both types of IP protection was that moderate rates of IP protection correlated with increased innovation but intensive IP protection resulted in poor innovation performance. They explain this result as follows….
There are several possible interpretations of this finding. We suggested that firms
might develop a myopia of protectiveness, being overly protective of their new
innovations. They focus their managerial resources and attention towards the
acquisition of legal protection to the detriment of other activities, such as the
mobilization of complementary assets. They may become obsessed with secrecy,
limiting their opportunities to work with others, such as lead users, or to trade
knowledge informally with suppliers, customers and competitors. In this respect,
firms may suffer from a “Gollum effect”, locking themselves away from the rest of
society in the vain pursuit of full protection.
Next time someone tells you that you should be protecting all of your IP, ask yourself why they are telling you this. IP is a means to an end and not an end in itself.