Business Question

‫المملكة العربية السعودية‬‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 3
Management of Technology (MGT 325)
Deadline: 04/05/2024 @ 23:59
Course Name: Management of
Technology
Course Code: MGT325
Student’s Name:
Semester: 2nd
CRN:
Student’s ID Number:
Academic Year:2023-24
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
•
Assignments submitted through email will not be accepted.
•
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
•
Students must mention question number clearly in their answer.
•
Late submission will NOT be accepted.
•
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
•
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
•
Submissions without this cover page will NOT be accepted.
Course Learning Outcomes-Covered
✓ Recognize the dynamics and the importance of managing technological innovation
strategically. (LO-1)
✓ Explain of the concepts, models for formulating strategies, defining the organizational
strategic directions and crafting a deployment strategy.(LO-3)
Assignment
Marks: 10
Students are requested to read chapter 9 “Protecting Innovation” from their book Strategic
Management of Technological Innovation.
Based on the conceptual knowledge and understanding obtained from the readings Section 1: Theoretical Foundations (3 Marks)
Q1. Explain the concept of intellectual property (IP) and its importance in protecting
innovations. (1.5 Mark)
Q2. Differentiate between patents, copyrights, trademarks, and trade secrets, providing an
example of what each might protect in the realm of technological innovation. (2.5 Marks)
Section 2: Scenario Analysis (7 Marks)
Consider a scenario where a small tech startup has developed a revolutionary new type of battery
technology that could significantly extend the battery life of electronic devices. The startup is
concerned about protecting their innovation from competitors.
Q3. Based on the scenario, recommend the most appropriate IP protection mechanisms
the startup should use. Justify your recommendations. (3 Marks)
Q4. Discuss potential challenges the startup might face in protecting its innovation and
how it might overcome them. (3 Marks)
NOTE: It is mandatory for the students to mention their references, sources and support each
answer with at least 2 peer reviewed journal.
STRATEGIC MANAGEMENT OF
Technological
Innovation
Sixth Edition
Melissa A. Schilling
©2020 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Chapter 9
Protecting Innovation
9-2
©2020 McGraw-Hill Education
The Digital Music Distribution
Revolution
1
In 1991, Fraunhofer IIS of Germany invents the MP3 format; by late 1990’s the
format is wildly popular.
In 1999, Shawn Fanning releases Napster, a free software program that allows
users to easily share MP3 files (“peer-to-peer”)
The RIAA starts to worry about illegal trade of copyrighted music. In 2001 it
gets a court ruling against Napster, taking it offline.
However, new peer-to-peer music services began to sprout up to meet the
demand of the large population of “music pirates.”
In 2003, Apple opens its iTunes Music Store – a one-stop-shop for music files
from the five major record labels. Now record industry is earning significant
revenues from MP3s.
In 2006, France pushes Apple to loosen its restrictions on iTunes music and
iPods. Should Apple use a more “open” model?
By 2016 digital music sales exceeded physical music sales in roughly half of the
major music markets of the world. Rapidly growing music streaming services
enabled many users to give up owning music altogether, and instead to pay for
music subscriptions.
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©2020 McGraw-Hill Education
The Digital Music Distribution
Revolution
2
Discussion Questions:
1. What industry conditions lead to the revolution in audio
distribution? Which stakeholders stand to benefit most (or
least) from this revolution?
2. Why did the music stores created by the record labels fail to
attract many subscribers? What, if anything, should the
record labels have done differently?
3. What factors led iTunes to be successful?
4. How do you think a move away from owning music led to
record-setting music revenues?
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©2020 McGraw-Hill Education
Overview
Firms must decide whether and how to protect their
technological innovations.
Protecting innovation helps a firm retain control over it
and appropriate the rents from it.
However, sometimes not protecting a technology is to
the firm’s advantage – it may encourage others to
support the technology and increase its likelihood of
becoming dominant.
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©2020 McGraw-Hill Education
Appropriability
Appropriability: The degree to which a firm is
able to capture the rents from its innovation.
• Appropriability is determined by how easily or
quickly competitors can copy the innovation.
• Some innovations are inherently difficult to copy (tacit,
socially complex, etc.).
• Firms may also attempt to protect innovations through
patents, trademarks, copyrights or trade secrets.
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©2020 McGraw-Hill Education
Patents, Trademarks and Copyrights
1
Patents, trademarks and copyrights each protect
different things.
• Patents: rights granted by the government that excludes
others from producing, using, or selling an invention.
• Must be useful, novel, and not be obvious.
• Utility patents protect new and useful processes, machines,
manufactured items or combination of materials.
• Design patents protect original and ornamental designs for
manufactured items.
• Plant patents protect distinct new varieties of plants.
• In 1998, many software algorithms became eligible for
patent protection.
©2020 McGraw-Hill Education
9-7
Patents, Trademarks and Copyrights
2
Patent Laws Around the World.
• Countries have their own laws regarding patent protection.
Some treaties seek to harmonize these laws.
• Paris Convention for the Protection of Industrial Property
• Foreign nationals can apply for the same patent rights in each member
country as that country’s own citizens.
• Provides right of “priority” – once inventor has applied for protection in
one member country, they can (within certain time period) apply for
protection in others and be treated as if they had applied on same date
as first application.
• Patent Cooperation Treaty (PCT)
• Inventor can apply for patent in a single PCT receiving office and reserve
right to apply in more than 100 countries for up to 2 ½ years. Establishes
date of application in all member countries simultaneously. Also makes
results of patent process more uniform.
9-8
©2020 McGraw-Hill Education
Patents, Trademarks and Copyrights
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©2020 McGraw-Hill Education
3
9-9
Patents, Trademarks and Copyrights
4
Patent Strategies.
• It is typical to assume that an inventor seeks a patent
because they desire to make and sell the invention
themselves.
• However, inventors and firms may monetize patents in a
range of different ways, including licensing the technology to
others, or selling the patent rights to another firm that can
better utilize the technology.
• Sometimes firms seek patents just to limit the options of
competitors, or to earn revenues through aggressive patent
lawsuits. These actions are sometimes referred to as “patent
trolling.”
• Apple claims to be the #1 target for patent trolls, having faced nearly
100 lawsuits between 2011 and 2014.
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©2020 McGraw-Hill Education
Patents, Trademarks and Copyrights
5
Dense webs of “patent thickets” can make it hard for firms to
compete, and stifle innovation.
•
Firms sometimes buy bundles of patents just to create a “war chest” to
defend themselves from lawsuits by offering a credible threat of
retaliation.
•
For example, in 2011, the bankrupt Nortel auctioned off its massive
patent portfolio. A consortium called Rockstar Bidco that included
Microsoft, Apple, RIM, Sony, and Ericsson, won the auction for $4.5
billion, beating out Google which bid $4.4 billion. Google subsequently
bought 1,030 IBM patents that covered a range of technologies. These
patents were not necessary for Google’s business directly; rather they
provided a retaliation threat to others that might attack them through
patent suits.
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Patents, Trademarks and Copyrights
6
Trademarks and Service Marks: a word, phrase, symbol, design,
or other indicator that is used to distinguish the source of goods
form one party from goods of another (for example, Nike
“swoosh” symbol).
•
•
•
Rights to trademark are established in legitimate use of mark; do not
require registration.
However, marks must be registered before suit can be brought over use
of the mark.
Registration can also be used to establish international rights over
trademark.
Two treaties simplify registration of trademarks in multiple
countries: Madrid Agreement Concerning the International
Registration of Marks, and the Madrid Protocol. Countries that
adhere to either or both are in Madrid Union (85 members).
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Patents, Trademarks and Copyrights
7
Copyright: a form of protection granted to works of authorship.
•
Copyright prohibits others from:
• Reproducing the work in copies or phonorecords.
• Preparing derivative works based on the work.
• Distributing copies or phonorecords for sale, rental, or lease.
• Performing the work publicly.
• Displaying the work publicly.
•
•
•
•
Work that is not fixed in tangible form is not eligible.
Copyright is established in first legitimate use.
However, “doctrine of fair use” stipulates that others can typically use
copyrighted material for purposes such as criticism, new reporting,
teaching research, etc.
Copyright for works created after 1978 have protection for author’s life
plus 70 years.
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Patents, Trademarks and Copyrights
8
Copyright Protection Around the World.
• Copyright law varies from country to country.
• However, the Berne Union for the Protection of Literary and
Artistic Property (“Berne Convention”) specifies a minimum
level of protection for member countries.
• Berne convention also eliminates differential rights to
citizens versus foreign nationals.
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Trade Secrets
Trade Secret: information that belongs to a business
that is generally unknown to others.
• Firm can protect proprietary product or process as trade
secret without disclosing detailed information that would be
required in patent.
• Enables broad class of assets and activities to be protectable.
• To qualify:
• Information must not be generally known or ascertainable.
• Information must offer a distinctive advantage to the firm that is
contingent upon its secrecy.
• Trade secret holder must exercise reasonable measures to protect its
secrecy.
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©2020 McGraw-Hill Education
The Effectiveness and Use of
Protection Mechanisms
In some industries, legal protection mechanisms are
more effective than others.
• For example, in pharmaceutical patents are powerful; in
electronics they might be easily invented around.
It is notoriously difficult to protect manufacturing
processes and techniques.
In some situations, diffusing a technology may be more
valuable than protecting it.
However, once control is relinquished it is difficult to
reclaim.
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Theory In Action
IBM and the Attack of the Clones.
• In 1980, IBM was in a hurry to introduce a personal computer
(PC). It used off-the-shelf components such as Intel
microprocessors an operating system from Microsoft, MS DOS.
• It believed that its proprietary basic input/output system
(BIOS) would protect the computer from being copied.
• However, Compaq reverse engineered the BIOS in a matter of
months without violating the copyright, and quickly
introduced a computer that behaved like an IBM computer in
every way. Compaq sold a record-breaking 47,000 IBMcompatible computers its first year, and other clones were
quick to follow.
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The Effectiveness and Use of
Protection Mechanisms
1
Wholly Proprietary Systems versus Wholly Open Systems.
•
•
•
Wholly proprietary systems may be legally produced or augmented only
by their developers.
Wholly open system may be freely accessed, augmented and distributed
by anyone.
Many technologies lie somewhere between these extremes.
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9-18
The Effectiveness and Use of
Protection Mechanisms
2
Advantages of Protection.
• Proprietary systems offer greater rent appropriability.
• Rents can be used to invest in further development,
promotion, and distribution.
• Give the firm control over the evolution of the technology
and complements.
Advantages of Diffusion.
• May accrue more rapid adoptions if produced and promoted
by multiple firms.
• Technology might be improved by other firms (though
external development poses its own risks).
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The Effectiveness and Use of
Protection Mechanisms
3
Production Capabilities, Marketing Capabilities, and
Capital.
• Factors influencing benefits of protection versus diffusion.
1. Can firm produce the technology at sufficient volume or quality levels?
2. Are complements important? Are they available in sufficient range and
quality? Can the firm afford to develop and produce them itself?
3. Is there industry opposition against sole source technology?
4. Can the firm improve the technology well enough and fast enough to
compete with others?
5. How important is it to prevent the technology from being altered in
ways that fragment it as a standard?
6. How valuable is architectural control to the firm? Does it have a major
stake in complements for the technology?
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©2020 McGraw-Hill Education
Discussion Questions
1.
What are the differences between patents, copyrights, and trademarks?
2.
Consider a firm that is considering marketing its innovation in multiple
countries. What factors should this firm consider in formulating its
protection strategy?
3.
When will trade secrets be more useful than patents, copyrights or
trademarks?
4.
Can you identify a situation in which none of the legal protection
mechanisms discussed (patents, copyrights, trademarks, trade secrets)
will prove useful?
5.
Describe a technological innovation not discussed in the chapter, and
identify where you think it lies on the control continuum between wholly
proprietary and wholly open.
6.
What factors do you believe influenced the choice of protection strategy
used for the innovation identified above? Do you think the strategy was a
good choice?
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Part Three: Implementing
Technological Innovation Strategy
Structuring the firm to improve its likelihood of innovating, its
effectiveness at new product development, and its speed of new
product development,
Managing new product development processes to maximize fit
with customer needs, while simultaneously minimizing
development cycle time and controlling development costs,
Composing, structuring, and managing new product
development teams to maximize new product development
effectiveness,
Crafting a strategy for effectively deploying the innovation into
the marketplace, including timing, licensing strategies, pricing
strategies, distribution, and marketing.
9-22
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