To patent or not to patent? Do companies need an IP strategy?

When enterprise leaders approach the subject of intellectual proper-ty (IP) for the first time, it is typically with the question: “Should we file a patent?”. This is a very important question but it is not usually the right place to start as it can overly limit the IP focus of the company. Also, it often arises reactively in response to pressure from the external environment such as investor interest, a cease-and-desist letter, entering a new market, and so on. By the time events like this arise it is commonly too late to patent and it can be very expensive to remediate the situation.
A better, more proactive question is: “Do we need an IP strategy?” This is better because a) the answer is always yes b) it widens the focus to include a broader range of IP assets - which may or may not include patents c) it frames IP in the context of the business strategy and d) it changes the emphasis from resolving a short-term issue to developing a long-term plan. So why do all companies need an IP Strategy?
There is no company nor industry in the world today that is not impacted by the forces of technological innovation and digitalisation. As a result, the most value-creating assets in business today are intangible (non-physical) and underpinned by knowledge - in other words, they are ‘intellectual capital’. It is estimated that about 85% of the value of to-day's leading global corporations is based on intangibles. For start-ups and SMEs, it is likely to be >95%. A 2019 study, commissioned by Aon Insurance plc , sought to assess the insurance of risks of an estimated $21 Trillion of intangible value in the S&P500 corporations. The study identified that the assets underlying this value are, largely, various forms of IP (patents, designs, trademarks, copyright, trade secrets) and commercial rights (e.g. license agreements) that are protected by the IP.
Other studies, on start-ups and SMEs specifically, by the European Patent Office (EPO) and the EU IP Office (EUIPO) have shown that SMEs that own registered IP, generate on average, 68% more revenue per employee than those with no IP. Furthermore, companies that adopt a broadly based IP strategy, early in their lifecycle, are 33% more likely to achieve future high growth than those that put IP on the long finger .
Therefore, in a world where innovation is so fundamental to enterprise success, IP is the cornerstone of Innovation and technology-led enterprises. It is the currency of many innovation-related third party engagements including collaboration, open innovation, innovation financing, M&A as well as being a key source of competitive advantage. In this context, a broadly based IP strategy is necessary to ensure that this critical store of value is appropriately identified, protected, managed, and deployed for the benefit of the business. There is a saying in the IP world that “innovation without protection is philanthropy”, but unfortunately, the EPO/EUIPO studies also show that only a minority (<10%) of SMEs protect their IP . Considering that a much higher proportion are innovating, a large portion of intangible value must remain uncaptured and potentially lost as spill-overs to competitors [...]