« WSJ interviews Carly Fiorina   |   Main   |   Doomed pay-by-cellphone scheme discussed in The Wall Street Journal »

Use strategy to help protect IP

Guest columnists Bharat Anand and Alexander Galetovic write in The Wall Street journal yesterday that it’s important to remember that protecting IP is not all and only about legal mechanisms and recourses. He argues that:

A number of resourceful companies, however, have figured out how to use their competitive strengths to accomplish what patent and copyright laws cannot. These market-based strategies may begin by preventing a would-be competitor from misappropriating a company’s core assets. They may integrate their products with ones that are less vulnerable. Or, ultimately, they may discover, salvation lies in moving into the very businesses that put those assets in danger.

The strategies he presents are:

• Act pre-emptively: “Some companies combat infringement by acting before competitors can catch their breath.”
• Create bundles that include secure products: “While Microsoft’s stand-alone applications like Excel or Word can be easily copied, its operating systems, on which these programs run, cannot, allowing the company to do business even in the Chinese market, where, it is estimated, 92% of all software installed last year was counterfeit.” And this Forbes piece, Kill Bill, from back in June talks about how IBM is following this strategy to trounce Microsoft.
• Transform the game: “When the threat to their core assets is overwhelming, companies must take more extreme action — sometimes expanding into related businesses….Alternatively, these companies could have acquired outright the businesses that were facilitating the erosion of their core assets — or been acquired by them.”

This article is adapted from an piece that appears in December’s Harvard Business Review.