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Benchmarking Research Report – IP Management in the Engineering and Defence Sectors

Benchmarking Research Report – IP Management in the Engineering and Defence Sectors

In 2005, IP Solutions, now Coller IP, commissioned research into the Engineering and Defence industry sectors.  
The purpose of commissioning this market research was to achieve a deeper understanding of how the Engineering and Defence sectors approach the subject of IP, and specifically to identify:
  • Current awareness and interest levels in the subject of IP and intellectual assets;
  • The range of activities being undertaken, and the motivations to action;
  • The strategies and activities associated with Best Practice; and
  • The obstacles and blockages faced by those aspiring to do more in this area.
This research confirmed that corporate awareness of IP was at a relatively low level, in both the Engineering and the Defence/Aerospace sectors. Even amongst a sample that had chosen to participate in an IP survey, there were over 40% of respondents who said that their company was either not very, or not at all aware of the issues surrounding the protection and commercialisation of IP. Not surprisingly the individual awareness levels were at higher levels.
The level of interest in the subject varied substantially. IP specialists, the opinion-leaders, and the more invention-minded companies were generally enthusiastic about the subject, and perceive it as being of great significance to competitiveness. However there were many other companies and organisations who did not recognise this, and for whom the subject is dry, technically complex, and delivers limited commercial value. We found 3 broad camps of understanding and focus:
  • Those with their attention directed specifically to patents and trademarks only [the IP term did not seem to be utilised];
  • Those with a traditional IP focus, covering all aspects of the left hand oval in the schematic shown below; and
  • Those focussed primarily on the IP zone, but with some additional awareness of the wider potential inherent in the intellectual assets and capital areas.
Attitudes and motivations
There was a spectrum of attitudes (and resultant behaviour) to the subject of IP. 
Only a small minority of the Phase 3 sample said the issue was not significant for their company. This was either because they were not involved in a manufacturing/engineering process, or because they were sceptical about the feasibility of protecting their inventions:
“It is seen as extremely difficult to identify, ring fence and protect ‘knowhow’
The biggest group were adopting what we might term a pragmatic but constrained approach to IP management. The number of people at the advanced end of the spectrum is quite small: 8% claim to be in the Best Practice zone, and a further 28% are in the more proactive group. This indicated significant scope for the UK’s engineering and defence sectors to improve their IP and IA practices.
As regards motivation, we asked “What drives companies to undertake their IP protection and exploitation activities in the first place?” The following were the main reasons put forward:
  • Create space between company and competition [e.g. time or performancebased];
  • Make life difficult for the competition [products harder to copy, customers less prone to switch etc];
  • Build stronger company positions to assist negotiations with customers;
  • Defend price premia (and therefore margins);
It can be seen that these perceived drivers are predominantly based on either strengthening the company’s competitive situation, or improving the company’s financial performance.
We also asked “what drives companies to pursue better practice?”  The introductory motivations still applied, but in addition companies become aware that they need to manage their portfolio of intellectual property more efficiently, i.e. come up with better processes. Also, success breeds success, and exposure to positive IP experiences reinforces belief, and encourages people to look for further wins.
Activities profile
Although trademarking and patenting are mentioned most frequently, we were encouraged by the number of companies saying they were investigating the potential for wider commercialisation, and for conducting licensing activities.
Best Practice
We used the Phase 2 qualitative research to build up a picture of Best Practice, and cross-checked this with previously published literature/surveys. This gave rise to a number of common themes, which we have analysed and evaluated under the four broad headings of: Knowledge, Strategy, Processes, and Resources.
For each of these dimensions, we have identified activities and signals that indicate how far a company has progressed towards achieving Best Practice.
From our assessment of the companies in our sample, no single company achieved a complete ‘best practice’ scoring, although one did come very close [3 out of 4 boxes].
It is also worth pointing out that company size does not automatically correlate with better practice, although there was a slight tendency for the bigger companies to be more organised and pro-active; the main drivers of Best Practice seem instead to be a more complex combination of stance towards IP (as described in the earlier section) and sector/market dynamics. To illustrate what this means in reality, one of the medium-sized companies in the sample arguably comes second closest to Best Practice, despite the fact that four or five of the others are much bigger organisations in terms of revenue, patent and employee numbers. This is because the company sets much greater store by IP issues, and this is a function of the top management mentality and the highly competitive dynamics of their industry.
Obstacles and blockages
We asked respondents to say whether they felt their company should be doing more in this area of IP or not. Three out of four companies said ‘yes’! We then asked “what are the main things that stop your company doing more to protect and manage its IP?”.
Spontaneous answers were the problems that companies mentioned very largely echoed the comments made by opinion-leaders in the first phase of our research:
Respondents often mentioned more than one problem. The verbatim quotations below give a flavour of their answers, and some of the emotions involved:
  • “Awareness of how to go about it . Recognit ion of its importance.
  • Skills to deal with it.”
  • “Management want the benefits that IP can bring without the costs.
  • Managing IP port folio in an aerospace company can be a challenge.
  • Training engineers to identify IP so it can be protected.”
  • “Knowledge of IP rights and the resources needed to implement the
  • protection and management regime.”
  • “Lack of understanding across the business and its operat ing units.
  • Lack of key skills, t ime of the small resource who do possess the
  • understanding.”
All the above answers were given spontaneously without any prompting by the questionnaire. We then went on to ask which of a list of possible problems and barriers applied in their case.   Interestingly the problems now mentioned by the largest number were the technical and complex nature of the subject, the focus on short-term performance, and not thinking of the business as being IP-based.
The engineering companies showed a stronger attention to cost constraints than the DMA/SBAC members, and also are more sensitive.
For the DMA/SBAC respondents, technical complexity is the number one problem, followed by short-term focus, and then insufficient support from Government and its agencies – this last problem probably reflecting the often tense relationship with the MOD as main customer. Costs only come in at fifth and sixth position.
Overall awareness and interest levels in IP were poor in these sectors. Understanding of the subject is patchy, and the benefits of investing in this area are not widely known. However there are examples of good, better and best practice, and much more could be done to share these around the industry.  This is a subject where profile needs to be raised, and which must be communicated in a more positive and easy-to-understand manner.
Click here to download the full market research results on IP Management in the Engineering and Defence Sectors

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