By Kelce Wilson*
*Capital University Law School graduate, 2005; also holding an MBA and a PhD in Electrical Engineering.
Excerpted from The Four Phases of Business IP, 40 Cap. U.L. Rev. 679 (Summer, 2012)
A common trend is observable in consumer, high-technology
industries: many companies tend to follow a predictable, four-phase path in
their usage of patented intellectual property (IP). The author denominates
these phases as "Incubation," "Defense,"
"Saturation," and "Depletion." They are typically
sequential and largely correspond with four stages of a business lifecycle:
start-up, growth, maintenance, and decline. 1 Criteria are provided for
identifying, within the context of patents, the particular phase in which a
company may find itself. Transitions between phases--for example, a
pre-Depletion transition period--are also described. Other forms of IP, such as
copyrights and trademarks, may require an entirely different analysis than is
presented here. 2
The first three phases--Incubation, Defense, and
Saturation--are associated with manufacturing, while the Depletion phase is
often defined by a company's status as a non-practicing entity (NPE). It should
be noted that NPE status may be obtained by multiple routes, including the
following: choice, when intentionally bypassing the first three phases;
short-circuit, perhaps due to financial failure or because a new product lacks
sufficient marketability to support successful completion of the manufacturer's
Incubation phase; and obsolescence, when a manufacturer's product line ages to
the point that it can no longer sustain the Defense or Saturation phase. 3
As a preview, the widely-touted purpose of the patent
system, which is "to promote innovation," 4 is most likely to be
fulfilled to its full potential in the Incubation phase, often somewhat less
likely in the ...
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