The Patent System and its Benefits for Business Organizations

1.Explain the concept of patenting and possible motives for the companies involved.

2.Do you see any specific features in the fields of application, which make patenting appear particularly interesting – or less interesting?

3. Explain your understanding of “Open Innovation” and address in particular the question of whether the cooperation of Sony is a form of Open Innovation or whether this term describes new aspects beyond the classical cooperation. 

4.In these two areas of technology, where do you see special potentials for the inclusion of external ideas? Describe relevant forms of Open Innovation beyond the cooperation for the two fields of technology.

5.Concerning the additional readings uploaded. Which of the abilities or capabilities (Ambidexterity, Dynamic Capabilities, Absorptive Capacity, etc.) do you concern as necessary in the two cases? Why? Describe your solution. 

1.Patenting and Possible Motives for the Companies

The patent refers to the exclusive rights, which are essential bestowed upon the inventor or the assignee for a limited period. It is granted by the government or a sovereign state as a form of protection of the intellectual property. The patent is provided in exchange for the detailed disclosure of the invention to the public or the state government. The patent is granted to an invention (OECD, 2011). The invention should be a solution to a particular technical problem and should provide detailed solution to the public-related problem. It should be as product or process.

There are several reasons because of which the business organization engages in patents. The first reason is exclusive rights, which allow the companies to exploit or reap the benefits of invention for the upcoming years. It also assists the companies in achieving strong market position. When an organization is bestowed with the patent, it prevents other companies from using the invention and thereby reducing competition in the market. In such situations, the companies can establish themselves as a strong player. Other than that, patent also provides opportunities to sell the invention (Anderson, 2006). If the company does not exploit the invention itself, it can sell the product or its license to another enterprise, which can commercialize. It can become a source of income for the enterprise. The business organizations invest a considerable amount of money in developing innovative products. With commercialization, the companies can get returns on the considerable amount of time and money invested in the invention. In the first case study, it can be critiqued that Sony was did not made efforts to patent several of its technologies and inventions, which includes liquid color display and Walkman. As a result, several of the competitors entered into the field and exploited the benefits of early invention. However, several of the technologies required high investment, which is only possible through the collaboration of several companies. The production of LCD was only possible in Sakai which was possible with the alliance of the two companies.

Bigpoint is another gaming organization, which is focusing on the development of online games. It is making huge profits due to alliance with several companies. The company is making high profits as its games are played by millions of users all across the globe. However, the company has to operate in scrutiny with other companies and freelancers; therefore, patent of core technology is very important for the organization.

Patent Protection and Commercialization Opportunities

2.In the present case, there are several benefits of patent protection. If a business organization is trying to manufacture and sell the product itself without giving license to another company, patent will be beneficial in future. It can protect the company in terms of its investment in design, production, and marketing. It also increases the assurance that the product is protected by the law and the government protection can be enforced by the government.

However, if the company is trying to give license to another company, patent can be beneficial in creating favorable negotiation terms in future. It can reduce the risk of legal cost to the company. The patent also increases the confidence of the company that they are not intruding the invention of other companies. Patent are also beneficial in the marketing of the products. The patented products hold a high value in the eyes of the customers (Praag & Versloot, 2008). It indicates high quality, technically advanced products and a highly innovative company. It is also an easy way to attract different investors to invest in the research and development division of the company. Patent claims are also beneficial in the tax savings of the company.

Although patent protection is beneficial in several ways, there are also several drawback of patent protection. The patent infringement is enforceable by the company itself. It means that if someone infringes the patent idea, the company has to invest more in terms of time and money to rectify the situation. In addition to it, the patent laws are very specific; therefore, it is not very difficult to design similar products be the competing companies.

3. Open innovation is a term that promotes information age and promotes innovation in the business organizations. It encourages external cooperation in the research and development of the organization. The term open innovation promotes a paradigm, which enhances external and internal ideas, collaboration in terms of market connection and advancements in technology. It is a distributed innovation process, which can manage information flow between different organizations (Chesbrough, 2006). Open innovation is not focused on developing the abilities of customers, but also it should also create creative customers. The separation between a firm and the customers blurs and the innovation can transfer between different firms, between creative firms and it can affect the consumers, industry, and the society.

The open innovation is based on the fundamental that in the world of distributed knowledge, different companies, and business organizations should collaborate with each other for innovation. The open innovation extends to the external sources of innovation such as customers, rival companies and other institutions. There are several benefits of open innovation such as lesser cost for research and development, increase in productivity, customer awareness, and increase in the market research accuracy.

The collaboration of Sony with medium and small enterprises can be considered as open innovation as the firm is collaborating for the research and development of the new product and technologies. There are several models of open innovation including government collaboration and product platforming. The collaboration of Sony with other small firms can be considered under the model of product platform. Under this model, the firms collaborate to develop a new product. It requires collaboration for the development of partially complete or new product.

The Drawbacks of Patent Protection

4.In the present competitive area, the companies need to collaborate in different areas to foster innovation. In the case of Sony, the company needs to collaborate in different phases of the product development. The company deals with high-end technology and requires extensive investment in terms of finances and other resources. It can be critiqued that novel techniques can be developed with the support and collaboration of different business organizations. However, the firm should also consider other strategies to foster innovation. The company should also collaborate with other leading organizations for the innovation. The firms of same size and resourcefulness should come together to develop new products and services (Sloane, 2011). Sony can make alliance with its suppliers and other business partners to invest in research and development.

Beyond cooperation in terms of technology, the companies can also seek alliance for market research and customer base development. Today, the companies are creating new customer base as per the product. It uses marketing to create new customer needs and offer products to address these needs.

Similarly, bigpoint is another video game programming company, which is based on innovative business model and product development. The company is tapping on the new customer base of online gamers. The company developed a lucrative business model in which it did not create a new server, but made the customers pay some money some money as rent. There are several benefits of online games such as users do not have to buy new consoles, they can test online games free and can pay if they like the game. The company has to collaborate with the retailers such as Mediamarkt and Nintendo for the promotion and distribution of the online games. The game manufacturing companies have to pay a fee for using the service of the online server. With open innovation, the companies can collaborate for the distribution of the games.

The company also has to concentrate on making alliance with the translating companies, which can translate the computer games in different languages. It is called localization in which the computer game is adapted according to the local language.

5.Currently, the firms categorize themselves in different categories to define their innovation capabilities. The business organizations can be categorized as ambidextrous organizations, focused on the dynamic capabilities and absorptive capability organization. The ambidextrous organizations are those organizations, which can efficiently manage their daily operations along with coping with the future demands of the organization (Kortmann, 2012). These organizations focus on both exploration and exploitation techniques to be successful. The concept of dynamic capabilities is associated with both resource-based and action-based view for creating an environment related to knowledge and innovation. The dynamic capabilities are focused on integrating, building, and reconfiguring the capabilities of an organization to address the changing environment. It includes the identification and adaptation to internal and external competencies (Giniuniene & Jurksiene, 2015).

The term absorptive capacity refers to the ability of the firm to identify new value both internal and external, assimilate the information, and apply it so that the innovation capabilities can be increased. The application of different capabilities in the innovation capacity is considered as absorptive capacity of the firm (Pedro, 2010). In the present case, the companies should focus on the dynamic capabilities of the organization so that they can innovate not only for the present but also expand their capabilities in the future.

References

Giniuniene, J., & Jurksiene, L. (2015). Dynamic Capabilities, Innovation, and Organizational Learning: Interrelations and Impact on Firm Performance. Social and Behavioral Sciences 213, 985-991.

Kortmann, S. (2012). The Relationship between Organizational Structure and Organizational Ambidexterity: A Comparison between Manufacturing and Service Firms. Springer Science & Business Media.

Pedro, L.S. (2010). Intellectual Capital and Technological Innovation: Knowledge-Based Theory and Practice: Knowledge-Based Theory and Practice. Idea Group Inc (IGI).

Chesbrough, H.W. (2006). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business Press.

Sloane, P. (2011). A Guide to Open Innovation and Crowdsourcing: Advice from Leading Experts in the Field. Kogan Page Publishers.

OECD. (2011). OECD Studies on SMEs and Entrepreneurship Intellectual Assets and Innovation The SME Dimension: The SME Dimension. OECD Publishing.

Anderson, B. (2006). Intellectual Property Rights: Innovation, Governance and the Institutional Environment. Edward Elgar Publishing.

Praag, C.M. & Versloot, P.H. (2008). The Economic Benefits and Costs of Entrepreneurship: A Review of the Research. Now Publishers Inc.