Playing Innovation Catch-up? You Need Bargaining Chips

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With the exponential growth of game-changing technology, it is easy for an incumbent industry player to be caught flat-footed. Suddenly, the business model has evolved dramatically and the incumbent finds themselves playing innovation catch-up. The usual response is to become a ‘fast follower’. This seems like a viable strategy until the incumbent finds out that the new innovators have laid a minefield of patents in their way. In some cases, the incumbent may either be completely blocked or be faced with paying an exorbitant royalty to stay in business. How can an incumbent level the playing field?

To win in the high stakes world of rapid technology advancement, you need to have bargaining chips. The good news is that you may have more chips than you realize, such as:

  • Market access can be a good bargaining chip, at least in the short term, if the new innovator is also a new market entrant.
  • Having access to the next best competitive alternative to the new technology may also improve your negotiating position. This next best competitive alternative may either be proprietary or licensable from a third party.
  • Another way to change the balance of market power is to secure valuable complementary intellectual property rights that the new innovator will want to cross-license to augment their own technology.

Some questions to consider as you assemble your complementary technology portfolio are:

  • Have you done an audit of your existing intellectual property portfolio to see if there are valuable assets you can cross-license with the new innovator?
  • Are there valuable market white spaces relevant to the new technology where no one is pursuing intellectual property protection yet? Do these white spaces line up with your existing innovation programs? Can you obtain intellectual property protection in these white spaces?
  • Are there ancillary technologies, like test methods, research protocols or equipment upgrades for which you can obtain intellectual property rights?
  • Are there portfolios of valuable patents that you can acquire or license from third parties that can be traded with the new innovator?

The new innovators tend to be highly intellectual property savvy and will likely be upping their game to sustain their market advantage at the same time as you are playing catch up. You need act swiftly and invest in a robust intellectual property strategy to get ahead of the game.

Judith McKay is an intellectual property lawyer with McCarthy Tetrault, with a focus on developing intellectual property strategies for clients.


innovation catch-up IP strategy



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