IP-Enforcement Programs: Growing Future Market Share Through Proactive IP Strategy

October 11, 2022 Darin M. Klemchuk

Growing Future Market Share Through Proactive IP Strategy

This is the seventh and final installment of a 7-part blog series providing comprehensive analysis of designing, implementing, and optimizing an intellectual property (IP) enforcement program that stops loss of market share and profits due to knockoffs, piracy, and other forms of IP infringement. This program stresses the importance of intellectual property rights. In this post, we discuss how to grow market share through a proactive intellectual property strategy.

In previous posts, we discussed quantifying the harm (monetary or otherwise) currently being suffered to establish a baseline against which the IP-enforcement program can be measured (Step 1), marshaled all the IP assets and possibly registered new ones (Step 2), designed and implemented the program (Steps 3 and 4), and optimized the program based on metrics and experience (Step 5). In Step 6, we shift our focus to the future to determine how to expand market share by eliminating future knockoffs and creating “moats” to exclude competitors. This requires critical thinking and likely proactive registration of additional IP assets.

Before we discuss how to expand the program, here’s a short summary of the entire series, which provides step-by-step guidance on developing and implementing an IP-enforcement program:

Step 1: Identifying and Quantifying Losses Caused by Knockoffs and Infringement

Step 2: Marshaling Intellectual Property Assets to Combat Knockoffs and Infringement

Step 3: Designing the IP-Enforcement Program to Increase Market Share by Stopping Knockoffs and Infringement

Step 4: Implementing the IP-Enforcement Program

Step 5: Optimizing the IP-Enforcement Program with Metrics

Step 6: Growing Future Market Share through Proactive IP Strategy

See our initial post, Importance of Intellectual Property Rights: Increasing Market Share Through Stopping Knockoffs and Infringements for a complete overview of the series.

Next Steps After Optimizing an IP-Enforcement Program

At this point, we have an optimized IP-enforcement program running while making periodic improvements. We can quantify the program results such as reduced infringement, increased sales, and funds recovered that exceed program costs. The tracked data provides guidance on opportunities for improvement. While bad actors are likely to change their strategies as technology evolves in the future, the current knockoffs have been greatly reduced. The next step is to identify additional opportunities to stake out moats and market share. This can be accomplished by analyzing current and future product and service offerings as well as the competitive landscape. The opportunities uncovered in this analysis drive the future IP strategy to protect the “moats.”

Deterrence Program for Future Infringement

One strategy that helps with future infringers is implementing a deterrence program. For some companies, the infringements are committed by a diffuse group of bad actors that have no relationship with each other. For other companies, there is a specific bad actor or group of bad actors. A victory against this group largely stops the infringement. Deterrence is needed for future infringers. Incorporating a strategy of filing suit against infringers and obtaining injunctions, agreed or contested, can have a strong deterrence effect. These injunctions can also be included in the enforcement program (pre-suit) to signal to infringers that litigation is a real possibility. This will require a company to invest in some lawsuits to obtain the injunctions with the strategy that fewer lawsuits will be needed in the future to stop infringement and obtain favorable settlements. Some businesses shy away from litigation for a variety of reasons, so a candid discussion should occur regarding this strategy.

Another deterrence strategy is publicizing not only injunctions, judgments, and trial wins, but also overall program results. The goal here is to generate sufficient awareness of a company’s enforcement successes that would-be infringers choose to find an easier target for their nefarious activities. Like injunctions and litigation, some companies prefer not to publicize legal actions, so this tool may not be available. In our experience, where outside counsel can send previous injunctions and judgments, infringers and their counsel tend to take the enforcement actions more seriously and quickly, which reduce overall program costs. Another risk of sharing injunctions or even mentioning litigation is the possibility of a declaratory judgment being filed by an infringer. This risk should also be considered by a company and its outside counsel.

As discussed above, sometimes the infringement is committed by one or more related bad actors. In other cases, the infringement can be a widespread problem; I refer to this as “diffuse infringement,” where numerous unrelated third parties are engaging in the infringement. This typically is due to the profit motive coupled with a lack of perceived enforcement risk. Diffuse infringement is sometimes also referred to as a “whack-a-mole” situation: after one infringer is defeated, two more pop up, and so on. Generally, for this situation, a surge in the enforcement program is required to reduce the current load of infringers and communicate that infringement will not be tolerated going forward. Injunctions that can be shared with future infringers and publicity can reduce overall program costs by reducing the number of future “whack-a-moles.” Pursuing each and every infringer can be costly, so investing in an effective deterrence program can have a significant ROI (return on investment).

Staking Out Moats Against Competitors Through Intellectual Property Exclusion Rights

Like infringers, competitors do not sit still either. However, intellectual property law is largely a law of exclusion. Put another way, IP rights can provide the owner with the ability to keep competitors from occupying certain strata of market share. As part of Step 6, time is spent mapping out future products/services, particularly unique features that provide strong competitive advantages. We should also determine answers to important questions like: what features in the future would a competitor need in order to steal market share or take customers? What features do you need to control with exclusivity to take business from your competitors? In marketing, this is often referred to as a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

Based on this analysis, we can determine opportunities to create future moats against competitors. Next, we analyze the specific intellectual property rights that can be developed to protect these moats. The following is a short summary of the primary forms of intellectual property:

Trademarks — Trademarks function as source identifiers such as McDonalds® (products) and Netflix® (services) that connect a product or service to the public through the goodwill associated with the trademark.

Patents — A patent is an intellectual property right that is granted by the USPTO (United States Patent and Trademark Office) to an inventor and protects the inventor’s invention by the right to control who uses, makes, offers for sale, and sells the invention covered by the patent.

Copyrights —Copyrights protect the creative expression of an idea and commonly are used to protect creative works such as photographs, books, website copy, software, novels, and screenplays.

Domain Name Registrations — Domain name registrations provide the registrant with use of a URL (www.mcdonalds.com) to host a website, email server, and other functions. Domain name registrations can be stolen and squatted upon by unscrupulous third parties.

This is not an exhaustive list of the different types of IP. See our post on 11 Different Forms of Intellectual Property for a more detailed discussion.

At this point, a company will benefit from discussing this strategy with experienced intellectual property counsel to advise on the IP assets that can be registered, how to pair IP rights with competitive advantages, ownership of the IP rights, and the tradeoffs of registering IP rights such as the differences between a patent and a trade secret.

Access the E-Book “Increasing Market Share Through Stopping Knockoffs and Infringement”

We have condensed the six steps into a graphical E-Book that provides a summary of developing effective IP Enforcement Programs along with tips, techniques, frequently asked questions, and mistakes to avoid. You can access a complimentary copy of the E-Book by clicking here.

You may also be interested in the following posts on the importance of intellectual property in enforcement programs:

For more information about IP-enforcement and anti-counterfeiting programs, see our Anti-Counterfeiting and Luxury Brand pages. You can access additional information on our Brand Protection Strategies and Resources page.

About the Author

Through prosecuting over 1,000 intellectual property (IP) enforcement actions, Darin M. Klemchuk advises clients on proactive IP and an anti-counterfeiting programs to stop diverted sales, market place erosion, and other harms faced by businesses. You can learn more about Darin’s practice and view his curriculum vitae at his bio page. If you want to send Darin a message, then visit our contact page.

This post has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company. © 2022 Klemchuk LLP