Legal Strategy and IP Management

David Orozco, J.D.

Associate Prof. of Legal Studies

FSU College of Business

dorozco@fsu.edu

@ProfessorOrozco

Strategy“the essence of strategy is in the activities—choosing to perform activities differently or to perform different activities than rivals.”

Porter (1996)

This also applies to legal activities.

IP Management (law & strategy)

Intellectual CapitalExperienceKnow-howSkillsCreativityCorporate Memory

Intellectual AssetsPrototypes DocumentsIdeasMemosDrawingsPrograms

Intellectual PropertyTrade SecretsPatentsDesignsCopyrightsTrademarks

Parr and Sullivan (1996)

???

5 Pathways of Legal Strategy

Avoidance Compliance Prevention Value Transformation

Bird and Orozco (2014)

3 Attorney-Manager Collaboration Models:Case 1. The Constrained Model

Manager

Attorney

Orozco (2010)

Avoidance

Case 2. The Repository Model

Orozco (2010)

Compliance

Case 3. The Legal Knowledge Model

Orozco (2010)

Prevention;Value;Transformation

IP AvoidanceZ-teca had to rebrand as Qdoba due to a prior trademark owner’s cease-and-desist letter after the restaurant launch

Poaching key executives/ scientists to replicate similar innovations

Large retailer freezing out small U.S. tool maker and outsourcing manufacturing to China

Retailer selling shirts that copy independent designer

IP Compliance Streaming media companies and venues working with copyright royalty societies like ASCAP and BMI

Training company executives on how to protect company trade secrets and investing in IT capabilities to prevent data breaches

Conducting due diligence/ compliance review in supply chain and mergers

IP Prevention Facebook licensing patents from Microsoft to fend off Yahoo! lawsuit threat prior to ipo.

Large tech. companies licensing patents from RPX to avoid patent troll lawsuits.

Tech. companies designing around their own core technologies to preserve freedom to operate

Starwood Hotels adopting state-of-the-art trade secret management program to fend of Hilton’s attempt to replicate the W Hotel brand

IP Value Creating a business unit with responsibility to monetize dormant IP assets (“Rembrandts in the attic”)

Apple’s tax strategy with intangible assets

Getty Images outsourcing royalty claims to third party law firm/ collection agency that requests smaller royalty fees to induce a quick settlement

IP Transformation Samsung’s strategic non-compliance with Apple’s IP Amazon’s licensing structure with fan fiction authors and copyright owners

Apple’s integration of design rights to achieve shape trademarks and out-licensing marks to 3rd party accessory manufacturers

Tesla open sourcing its battery patents Pharmaceutical companies extending lifetime of chemical compound patents by patent layering

Takeaways Legal strategy can be a source of competitive advantage

IP is a critical asset category for any company in any industry

Attorneys and managers working in teams offer the greatest range of strategic options

Legal strategy cuts across functional areas including: legal, marketing, R&D, human resources, IT, supply chain and compliance

Discussion and Questions

Sources:Bird, Robert C. and David Orozco (2014), Finding the Right Corporate Legal Strategy, MIT Sloan Management Review.

Orozco, David (2010), Legal Knowledge as an Intellectual Property Management Resource, 47 American Business Law Journal.

Parr, L. Russell and Patrick H. Sullivan (1996), Technology Licensing: Corporate Strategies for Maximizing Value.

Porter, E. Michael (1996) What is Strategy? Harvard Business Review.