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CHAPTER 1. INTRODUCTION
1.1 Background
More and more companies profit from their service nowadays. Comparing with the past business models of just gaining from selling products, enterprises either combine the service and product, or turn to be a service-oriented enterprise now. Service is known a value co-creation that takes place when different entities interact, and it will produce a valuable outcome. Furthermore, value arises in an intricate situation which is aware of value constellations (Normann and Ramírez 1993), so it could not be explained comprehensively in traditional circumscription value chain or a simple sequential chain. Value constellation uses interactive knowledge flow to reinforce static knowledge stock. In value constellation, to reach the goal, enterprises involve their tangible and intangible exchanges.
Especially in the knowledge-based economic, intangible assets are more and more important for enterprises. Intellectual property right is regarded as an intangible asset. It includes patents, trademarks, copy rights, trade secrets, and industrial design rights.
International Chamber of Commerce reveals that today’s economic trend is toward more investment in intangible asset early on 2005(International Chamber of Commerce 2005). Even OECD talked about government measures of different countries to encourage SMEs to develop IP(OECD Conference 2004). For those enterprises, how to manage theses intangible assets and get the profit from these assets will be the top issue (OECD Conference 2004). Therefore most companies have their own intellectual property strategy, especially patent strategy. Patent Strategy is a process of patent portfolios. The difference between patent strategy and patent portfolio is that patent
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strategy is always a set of patents with a goal or some purposes, and patent portfolio can be a set of patents of technology, technologic domain, time, or region (STPI 2012).Many enterprises use patent transaction, patents granting, or cross -licensing to enhance their patent strategy.
However, even though enterprises regard as important the IP development and they are encouraged to apply patents. But the plenty of patents doesn’t show the high level of quality. The World Economic Forum published a report showing that Taiwan was the top one on the number of the US utility patents per million population, better than United State (The Global Competitiveness Report 2010–2011). But most of key patents, valuable patents do not belong to Taiwan. On the other hand, using evaluated methods to measure a patent might get high value, but patent with high value might not actually be used in real world.“Patent quality is the premise of the patent value, and the patent value is the practice of patent quality” (Jou 2006). If patent could not be used in the real world, the patent could not really be called valuable. The actually utilization could embody the really value of patent.
Len Smith (2009) generalized basic methods of patent evaluation, cost method, market method, and income method, for instance. Except these key methods, there are a lot of methods to evaluate a patent, just in order to improve the evaluating way, provide more details, and make patent valuation more precise. For example Collan and Heikkilä (2011) proposed 'pay-off' method. Pay-off method is often used with the three methods, based on value scenarios, and creates a distribution. The pay-off method offers a graphical comparison, and helps calculate the real option valuation. Although all of the evaluated methods are generally used in patent evaluation, but most of them rely on expert's opinions and experiences. It will be a huge cost for companies in patent strategy, if we need expert to help us evaluate the patent. Evaluating the patent need company's
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internal information, even the secret financial data, it's not easily available. Furthermore, the calculated value of patent is difficult to be precise. Therefore the step of evaluation will be an obstacle for enterprise.
1.2 Research Motivation and Questions
Recently, there have been more and more patent litigations between enterprises.
The patent litigation becomes a key factor to affect patent strategy. Patent litigation generally occurs when infringing other’s patent rights. But enterprises increasingly use patent litigation to challenge and compete with their rivals (Jean and Mark 2000).
Enterprise would utilize litigation to get the crucial patent or technology to make their service or product better. Jean and Mark stated that high litigation rate would cause reputation effects, and gain attentions (2000).It would make the patent prized, and then expose the company to public. Enterprise could also avoid being sued and fulfill their patent strategy by analyzing the litigation relations between companies. Hence, litigation plays an important role in making patent strategy.
On the other hand, although patent litigation is gradually emphasized, most of researches don’t attach much weight to the relationships within litigations. Most of recent researches focus on the connection between litigation and specific technology or industry (Ziedonis 2003), but litigation among enterprises sometimes is the master key factor nowadays and it could determine the way of developing, lead to evolution of a company or it might bankrupt a company (Fenwick & West LLP 2005). So research of the relations among enterprises based on litigations will be the gap need to be filled.
Also, the litigated relations within firms would not involve only two companies, if we take alliance and competition behind companies into consideration, the relationships
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would be complicated. The relation with a third-party company partnering with cooperated firms is not necessarily coadjutant; on the other hand, we might collaborate with a company partnering with a rival firm. In this way, the network built on litigated relations among enterprises is closely related to every company.
Besides, regardless of patent, litigation, patent strategy, or business strategy, they are treated as property, obstacle, planning, and profit model. They seldom are considered as operant resources (Vargo and Lusch 2004);nevertheless, enterprises could create higher benefits from the perspective of operant resources which inlaid abundant knowledge and act in accordance with others resources.
IT technology has been adopted to manage intellectual property efficiently (OECD Conference 2004), or applied to analyze the patent citations (Lee et al. 2010), find strategic partners (Jeon et al. 2011). Some systems rented by patent and law offices, for instance DELPHIN (http://www.delphion.com) and Chemical Abstracts (https://stneasy.cas.org/html/english/login1.html?service=STN), might provide the search function, but the information is connected only to different type of patents, applying patent or approved patent for instance. These systems don’t offer litigations related information and the IP-based enterprises relations are not connected either.
However, it is yet to be explored about how to build a visualizing tool that can manifest the possible value constellation networks based on patent litigations and patent strategy (i.e., value as the integration of owner patents under litigations), how to use the tool to facilitate making patent strategy, or even stimulate formulating business strategy. These issues would then be one of our research questions to investigate.
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1.3 Research Objectives and Contributions
The purpose of this IS research is to integrate operant resources from different companies, considering IP value based on litigation and strategies of patent and business are also included, through the use of an IT supported engine. Many technology company use patent litigation to protect their own patent and remain the value, preventing the development of competitors', or even revoking their patents. All these actions could be a part of patent strategy, and patent strategy is also just a part of business strategy. Thus, this research wants to take advantage of many factors that related to patent, litigation, and company, to build a value constellation network based on these elements, and then users could find the relations around enterprises, litigations and network.
Hence, enterprises can take further actions, for example well arrange their patent strategy, reduce costs, save tax, find cooperated partners, or fight their competitors. The network proposed by this research would visualize possible ways of value constellation which takes objective factors into consideration, quantity, quality, value, and litigation of patent, for instance. Thence, enterprises can well utilize operant resources from different companies, then decrease human resource and budget in exploring the network of actors and their relationships, and do more research and design for gaining new technique, patent, or products, finally achieve the goal of profit maximization. This will create a positive cycle in the company, and inspire the competition between enterprises.
1.4 Research Methods
The goal of this research is to build a visualizing tool which integrates operant resources from different companies and reduces the complexity of decision-making in
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the process concerning to make patent and business strategy.
The first thing we need to do is to find the suitable database, which could provide plentiful patent information and Taiwan relating litigation information. And these databases are open and could be accessed by programming. Except the public database, we also have a system database that stores information of each enterprise.
Second, we provide a visualizing tool that users could understand easily. Enterprise could find detailed information and relations about patent and litigations in this system.
And they could reference these data to make decisions.
Third, we also designed an interactive platform that user could add some records of patents or litigations that have not been found in database yet. After that, the network we provide could be more close to what they need.
Therefore, our system (named IP+) could practically give helps or facilitate the process in the enterprise, and reach the goal and the attempted contributions of this research.
1.5 Content Organizations
This research is followed the framework of Design Science In Information System Research, which was reported by Alan, Salvatore, Jinsoo, and Sudha on 2004 (Figure 1.1). In this framework, we would define the Environment of our research problem, what we did in Chapter 1, and then we discuss researches to build the Knowledge Base in Chapter two Literature Review. After that, in the IS Research part, we will Develop a system to solve the relevant problem, and use the method of case study to Evaluate which also follows the Rigors.
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There are five chapters comprised in the dissertation proposal, the remainder proceeds as follows:
Figure 1.1 Design Science Research Framework (Alan et al. 2004)