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A pigskin perspective on intellectual property and the economy

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Editor's Note: Douglas A. Scholer is a member of the Intellectual Property Practice Group at Ward and Smith, P.A.

After a week of gloomy economic news, I looked forward to a few hours of football refuge watching my favorite team. Things weren't going so well. Going into halftime, there was something familiar about the pain on the coach's face. An eager sideline reporter asked our coach what he was going to do about his "sputtering" offense. Sputtering…that's an unusual word. Where else had I heard it recently? Oh, yeah: sputtering economy. That's where I had seen the coach's expression, too. That unsettling combination of worry and resolve is all over the faces of businessmen these days.

As an intellectual property ("IP") attorney, I hear economic perspectives from both big and small companies. Almost everyone has a different take on the economy. The banking sector is sputtering like my team's running game. But, despite the numbing Wall Street news, positive things are happening. Global demand is up, and the venture community is still going strong. Nearly one-half of the top 20 IP vendors have reported better than expected earnings over the past month. The economy shows encouraging signs, but real problems unquestionably exist. But like the coach, many CEOs are struggling to come up with a game plan to ride out this economy.

What are the coach's plans to handle the team's anemic performance? Is there something an IP business can learn from the way the coach planned to handle his football team during tough times? I turned up the volume to hear the coach's responses to the reporter's question:

"We need to establish an identity."

A football program may be known for its opportunistic defense or ability to run the ball consistently. In business, an identity is tantamount to a trademark. It's what makes a company stand out. A trademark uniquely identifies a company to consumers as the source of products or services. A business's identity literally includes its name, but also relates to branding, quality, and reputation. Trademarks are the industry message a company sends to customers and competitors alike.

It is even more important during tough times for an IP business to distinguish its products and services from those of other companies. Trademarks typically comprise a name, word, phrase, logo, symbol, and/or design. The shape of goods, packaging, and color combinations are all synonymous with a brand. A trademark gives a business a focus around which to rally. A good trademark can generate enthusiasm for products much like a team's identity can generate enthusiasm from its fans.

"We have to find new ways to get it done."

The coach will be searching for overlooked potential, including reevaluating assignments and formations. Similarly, companies need to take a closer look to find untapped resources to compensate for economic woes. In an economy of inches, identifying previously overlooked and developing intellectual property can be a windfall. Companies routinely create new markets by monetizing IP resources.

A company manager may identify new resources by better understanding what aspects of the company constitute unrealized IP. Processes and products developed to solve day to day problems can be patented to protect an important economic advantage. Are there trademarks that could be better valued? Should any software, writing, or artwork be registered as a copyright? After identifying IP that provides some commercial advantage, it's time to protect the ball. Most of the costs associated with the newly identified IP assets already have been paid. Failing to register or otherwise secure protections is a lost opportunity.

"We need a more balanced attack."

Just like a winning football team cannot ignore either its running or its passing game, a solid business plan must include an IP component. Lack of depth in IP can leave a business team one dimensional and vulnerable to exploitation. Winning IP companies leverage and design all of their trademarks and patent portfolios to protect production lines and market niches. Whether IP is fundamental to a company's business strategy or more like a special team whose goal is dictating crucial field position, it must be part of the game plan.

"We let them get away."

Tough times can make the competition desperate. This often translates into knockoffs as competitors muscle in and copy the successes of a company. Worse still, this threat comes at a time when a company needs to distinguish itself most. Ignoring knockoffs is not an option. A company can lose IP rights by choosing not to enforce them. Trademark and patent rights may be compromised. That said, a dicey economy may be the best time to put pressure on the competition. Times may be desperate for some, but nobody wants the threat of a lawsuit. An IP blitz can send a message to other opponents in the industry to back off a company's IP turf.

"We need to be more intimidating."

Once a company gets into the opponent's head, it has a decided advantage. Displayed registration and patent pending information puts competitors on notice that the company values and will enforce its IP rights. Competitors are more hesitant to enter into a market or to copy an aspect of a product that embodies a sales advantage of a well-protected company. A large patent portfolio can intimidate competitors into backing off of certain areas where a company holds a commercial advantage. At a minimum, such notices contribute to the professional and sophisticated appearance of the organization. Moreover, a large patent portfolio acts as a deterrent for another company to pull the trigger on the patent holder.

"We need to reevaluate our coaching methods."

Coaching directly affects the execution of a team, so it stands to reason that a company needs good coaching with regard to IP. Does the company's legal counsel pay attention to all facets of how IP interacts with other aspects of the business? Would the legal counsel appreciate how a statement in a patent could affect the company's product liability? Does coaching by management minimize turnovers? Procedures should be in place to identify IP before it is lost to inadvertent disclosure. Does the company practice using disclosure forms and proper employment agreements concerning inventions, copyrights, trademarks, and trade secrets? Like managing any team, an IP portfolio requires a great deal of planning, discipline, and execution to capitalize on strengths and avoid fumbled opportunities.

"Prayers work best when you have big players."

OK. Knute Rockne wasn't espousing the benefits of a large patent portfolio when he made that statement. But having registered copyrights/trademarks and a family of patents can translate into critical commercial advantages. There is a reason that patent application filings covering software, chemical and biological designs, and methods of doing business are at their all-time high. By enhancing potential damage recovery and procedural benefits, IP can clear the field for big gains. Dominance only increases as a company's war chest is filled from licensing and cross licensing opportunities. Generally, the more IP that can be thrown at a competitor, whether on offense or on defense, the better. Having a large IP portfolio also means a company is better able to audible and otherwise adapt to blitzes by competitors.

As much as I'd like to see these strategies work for my football team, I know they will take time to make a difference. It will take time for the economy to improve as well. In the meantime, there are steps that can be taken to help your business. A down year can be the best time to plan for the next rebuilding year. Forward thinking companies will have patents ready to issue around the time the economy does improve. After all, IP is statistically more productive than the Hail Mary pass.

© 2008, Ward and Smith, P.A.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. Douglas A. Scholer practices in the Intellectual Property Practice Group of Ward and Smith, P.A. Comments or questions may be sent to das@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.