Currently the digital transformation is transforming all industries at an enormous speed and while most innovation came not so long ago from engineers and natural scientists in the R&D departments, now programmers in newly established digital departments are providing the digital solutions, which offer the relevant customer benefits and become the value drivers of many companies. This trend causes many new challenges for companies and their established ways how they deal with IP management. For example, it can be observed that digital development teams are often submitting substantially less invention disclosures compared to classical development teams. Reasons may be manyfold, from the assumption among programmers that their innovations cannot be protected up to a general aversion of intellectual property among open source enthusiast. To overcome this companies need to understand the differences in digital product development and find ways to adapt their IP management to the digital era.

Digital product development is different then product development which manufacturing companies from all other sectors are used to. The main difference in digital product development stems from the key feature of digital products, namely that they use digital touchpoints to deliver the customer benefit. This makes the interaction with the customer a lot closer compared to non-digital products. So, customers want to interact more with the seller of the product or service and also demand a more individualized service from the seller.

This challenge to offer tailored digital products to customers can be achieved in many ways. One way is the use of data analytics and machine learning or AI tools to develop digital products and services. At the development stage these tools can be used to analyse the market environment and model product or customer behaviour. This way future market trends can be foreseen and also individualization and personalization of products and services can be developed in a predictive way. But also, after the market launch the user behaviour and interaction with the launched product can be monitored and analysed to further constantly improve the product even after the launch.

Also another important aspect of digital product development should be highlighted. Digital product development does not use an iterative development approach, which is called waterfall model, but an agile development approach. The agile model fosters a team-based and iterative approach with more flexibility and a continuous improvement in the development process. This is also possible because previous stages of the product development process can always be repeated when it is necessary. So, when a prototype is found to not deliver the needed customer benefit the team can return to an earlier stage and develop new ideas. This repetition of stages can also be formalized within so-called sprints. During these sprints, all stages of the agile development are run through with the aim to provide a working product at the end. At the end of each sprint, all stakeholders in the product development process are reviewing the development and checking if the project is still aligned which the customer needs and company goals. Finally, the functionality of the product is then tested with the customers and a new sprint for the improvement may be planned or if the product is good enough it may be released to the market. An advantage of this agile method is also the constant feedback within the team, where everyone is informed about the current state of the project and the goals.

How this new mode of digital work is affecting IP management practice and calls for new approaches to IP strategies is best described in the LesNouvelle paper “Why Digitalization Needs Value-Driven Intellectual Property Strategies” by Beat Weibel and Rudolf Freytag of Siemens. There they compare the classical IP strategy from non-digital times: “In a traditional, invention-driven IP strategy, the starting point is that an inventor within the company believes he or she has invented something innovative that is of interest to the company and eligible for protection. Whether an intellectual property right is applied for, and how it is drafted, depends not so much on what the inventor and the patent attorney know about the company’s current and future planned business model, but rather on the desire to apply for as many patents as possible, or it may be driven by considerations of the inventor’s rights.” with the needed value-driven IP strategy of the digital era: “And precisely this is the core difference to a value-driven IP strategy, where the goal is to selectively protect the prioritized business model that has been coordinated across function boundaries. Thus, IP is selectively and actively procured with a focus on whether an idea is worth protecting, rather than simply eligible for protection. Moreover, an invention-driven IP strategy generally does not include the early, selective safeguarding of freedom to operate as does a value-driven IP strategy…”.