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How Precedents in IP Law Influence Business Strategies

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Intellectual Property rights play a pivotal role in the business world, shaping strategic planning and competitive strategies. These rights, encompassing areas such as patents, trademarks, and copyrights, safeguard a company’s intellectual assets and prevent unauthorized use or reproduction. This legal protection promotes innovation and creativity, enabling businesses to maintain a competitive edge by securing exclusive rights to their inventions or distinct brand elements. Furthermore, intellectual property rights can significantly enhance a business’s commercial value, acting as key factors in investment decisions or acquisition discussions. Thus, understanding and effectively leveraging IP rights is integral to a company’s economic growth and success in the digital economy.

Importance of IP Law Precedent

Precedents in intellectual property law serve as a guiding light, informing subsequent rulings and helping to shape the evolution of intellectual property protection and regulations. These precedents, established through landmark court cases, provide clarity on the application and interpretation of intellectual property laws. For instance, the Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014) set a significant precedent in patent law by ruling that abstract ideas implemented using a computer cannot be patented. This decision has had profound implications in the tech industry, particularly for software patents. Similarly, in trademark law, the case of Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159 (1995) established that a color could be registered as a trademark, paving the way for businesses to protect distinctive elements of their brand. These precedents underscore the dynamic nature of IP law, adapting over time to keep pace with technological advancements and changing business practices.

Intellectual Property Rights and Their Influence on Business Strategy

Intellectual Property protection can provide a business owner with a competitive edge in various ways. Firstly, they safeguard a company’s inventions, designs, and distinctive brand elements, allowing them to capitalize on innovative products. Companies can leverage these exclusive rights to monetize their IP assets, either through direct exploitation or licensing to others. For example, a patent owner can charge others for the use of their patented technology or sell the patents outright. Secondly, IP rights enhance a company’s reputation and credibility in the market. Having registered trademarks or patents is often perceived as a mark of quality and innovation, attracting customers and potential investors. Furthermore, in a crowded market, intellectual property rights enable a company to differentiate its products or services, providing a unique selling point. Lastly, IP rights deter competitors from copying or infringing on a company’s IP assets, protecting the company’s market share and the investments made in developing these assets. Therefore, IP rights are a strategic tool that can drive business growth, market position, and economic value.

IP Assets Create Business Value

Intellectual property assets contribute substantially to creating business value, acting as a cornerstone for a company’s economic growth and profitability. They can be seen as valuable, intangible commodities that provide several strategic advantages. Firstly, they offer a source of unique competitive advantage, as patents, copyrights, and trademarks help companies retain exclusive rights to their unique inventions, designs, and brand elements. This exclusivity can lead to monopoly-like market conditions, facilitating higher profit margins. Secondly, IP assets can be licensed or sold, providing businesses with an additional revenue stream. Furthermore, they can significantly enhance a company’s perceived value amongst investors, customers, and potential acquirers, thereby impacting overall company valuation. Lastly, a strong IP portfolio can deter competitors and protect a company’s market share, safeguarding the return on investment made in research and development. Therefore, effective management and utilization of intellectual property assets are crucial for business value creation.

Intangible Assets

Intellectual property rights are indeed intangible assets that are critical to a business’s success and growth. These rights, which include patents, trademarks, copyrights, and trade secrets, represent the legal recognition of a company’s creativity, innovation, and distinct identity. Unlike physical assets, these intangible assets are not tangible or physical in nature, but their value lies in the uniqueness they confer to a company’s products or services. This uniqueness, protected by law, can give a company a substantial competitive edge by preventing competitors from copying or using the company’s inventions, designs, or brand elements without authorization. Therefore, properly managing and protecting these intangible assets is paramount to maintain this competitive advantage and drive business opportunities.

Trade Secrets and Their Commercial Value

Trade secrets represent a unique type of Intellectual Property, distinguished by their confidential nature. Unlike patents or copyrights, which require disclosure and registration, trade secrets are protected as long as they remain undisclosed and offer a competitive advantage. They can encompass a broad array of company-specific information, including manufacturing processes, customer lists, marketing strategies, proprietary software, or unique business methodologies. The value of a trade secret lies in its exclusivity – the competitive advantages it provides as long as it remains confidential. Consequently, businesses often take stringent measures to protect their trade secrets, such as non-disclosure agreements and robust security protocols.

Trade Secrets in the Digital Economy

In the digital economy, trade secrets play a vital role in maintaining a business’s intellectual property. Given the rapid pace of technological innovation, companies often prefer to protect their proprietary technology as trade secrets rather than patents, as patents require disclosure of invention details and have a limited lifespan. Trade secrets, on the other hand, can last indefinitely, provided they remain undisclosed. They can protect critical digital assets such as proprietary algorithms, data sets, software, digital business methods, and more. However, the digital economy’s interconnected nature also poses significant challenges to maintaining the secrecy of these assets, necessitating robust cybersecurity measures and careful legal strategies. Consequently, trade secrets have become an increasingly important tool for sustaining competitive advantage in the dynamic landscape of the digital economy.

Precedents Influencing Business Strategy

Several significant precedents in IP law continue to shape the field today. One of the most notable cases is the Alice Corp. v. CLS Bank International ruling, which established that abstract ideas implemented using a computer are not patentable. This has significantly influenced patent law, especially in the software industry. The Qualitex Co. v. Jacobson Products Co. case established that color could be registered as a trademark, broadening the scope of trademark law. In copyright law, the Feist Publications, Inc., v. Rural Telephone Service Co., 499 U.S. 340 (1991) case set a crucial precedent that facts and ideas are not copyrightable; only the original expression of these facts and ideas is protected. The Eli Lilly and Company v. Medtronic, Inc., 496 U.S. 661 (1990), case defined the parameters for medical device patents, shaping the landscape of patents in the medical field. Each of these cases serves as a foundation for the current state of IP law, impacting how businesses strategize and operate in different industries.


In conclusion, Intellectual Property protections play an instrumental role in business strategies, acting as a catalyst for growth, competitive advantage, and value creation. These intangible assets, encompassing patents, trademarks, copyrights, and trade secrets, serve as legal recognitions of a company’s unique inventions, designs, and identity. They deter competitors from infringing on a company’s intellectual property assets, protecting market share and investment in research and development. Trade secrets, in particular, have risen to prominence in the digital economy, protecting proprietary technology and providing a lasting competitive advantage, provided they remain undisclosed. Notable precedents in IP law continue to shape legal and strategic landscapes, underscoring the importance of effective IP management in business strategies. Thus, large and small businesses alike must prioritize the management and protection of their IP assets to sustain their competitive edge and drive business value.

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About the Author

Mr. Olsen, a former adjunct professor of intellectual property law, has over 25 years of experience in all aspects of intellectual property law. Mr. Olsen is a founding Partner of Schmeiser, Olsen & Watts LLP and a former United States Patent Examiner. Mr. Olsen has prosecuted numerous patents that have been litigated and received damages in excess of $60 million dollars. Additional activities include teaching seminars and appearing as a guest lecturer on intellectual property matters for corporations and educational institutions and evaluating and consulting with clients regarding the scope, enforcement and protection of intellectual property rights.