Investors are generally looking to secure returns that are above market rates. One way of achieving such returns is to invest in companies that experience a sustainable competitive advantage, who are therefore able to achieve a price premium compared to competitors, or an increased market share.

The question is, how does a company ensure that its competitive advantages are sustainable? This can be achieved by intellectual property and the effective utilisation of intellectual property rights, allowing for a company to form a legally defensible exclusive position around the customer benefits that they offer.

From an external perspective (e.g. as held by an investor), it can be difficult to accurately assess a company’s IP and the protection that it affords, and it can be very time consuming to perform a full IP audit/due diligence. Particularly in the case of venture capital or private equity, which may be considering hundreds of investment opportunities per deal that is closed, such an analysis for all (or even just a number) of companies is impossible.

In addition, certain risks can be hard to fully assess starting from the endpoint (i.e. from a developed product or process). This is particularly the case in industry 4.0 and particularly with digital business models where there is a much wider web of IPRs at play, which can make assessing freedom to operate (FTO) nearly impossible. However, a company can take certain steps in their IP management so as to minimise such risks, and maximise the opportunities provided by their IP.

For companies themselves to proactively develop and manage their IP portfolio and ensure FTO, there exist a number of IP management standards, such as the DIN 77006 and ISO 56005. Many companies do not apply such standards – however, the IP services that they do provide still provide valuable insights into the IP that is held by the company, as well as how the company is geared up to make best use of their IP in future, which may be of significant interest for investors.

Therefore, I have formulated a framework which allows for a company’s ongoing IP management to be assessed. This is achieved by providing a number of questions that indicate best practice under each IP service identified within the DIN standard. The number of “yes” answers to the questions may then be tallied up, providing a quantitative measure where a higher score may indicate a “better” IP management system. In addition, each question has been associated with business risks.

Contrary to typical extensive IP audits and due diligence, the quantitative framework is simpler and may be applied at an earlier stage of the investment timeline. The results also give an indication of a company’s ongoing IP performance, as well as information as to the IP that is already held by the company. This can indicate potential risks (such as whether FTO has been properly considered through development), which may provide guidance for more detailed IP due diligence.

This research project was conducted by MIPLM graduate Jacob Watfa and supervised by Prof. Dr. Alexander Wurzer and Dr. Thibaud Lelong both CEIPI.

Jacob is an UK and European Patent Attorney, and has been an Associate at Dehns in their Munich office since 2022. He works with clients of all sizes in a wide range of industries. In 2023, he completed a Masters in Intellectual Property Law and Management (MIPLM) from CEIPI.



Here is a description of the research project: