The Importance of Intellectual Property in the Industry

For manufacturers in this industry today, protection of new ideas and innovations by way of patents, copyrights and trademarks (collectively, “intellectual property,” or “IP”) is critical for survival. Smaller companies, in particular, must protect their new ideas and innovations to increase their financial worth and, hopefully, compete with larger manufacturers.

Many smaller manufacturers in this industry are initially able to find a niche in the market as a result of new, innovative concepts or technologies. If left unprotected, however, these innovations (which often comprise the largest assets of a smaller company) quickly lose their competitive value as larger, established companies freely incorporate these ideas and technologies into their own products as was explained in theĀ article. Consequently, even if founded upon wonderfully inventive ideas, smaller companies often struggle to stay afloat if they can not protect the fruits of their R&D innovations.

The increasing importance of IP in the industry has manifested itself in many different ways, such as the proliferation of patent infringement lawsuits between manufacturers, the frequency of cross-licensing and patent pooling arrangements, and, in particular, the sheer number of patents issued to the industry. In the last 25 years, for instance, the number of industry patents has increased nearly fifteen-fold, and the percentage of industry patents issued during that timeframe relative to overall patents issued has increased nearly eight-fold. There is no question but that IP is a key economic component in this industry. That being said, however, in recent years the top industry companies (in terms of patents issued) still account for well less than one-half of the overall number of industry patents issued, suggesting that there is plenty of room for smaller companies to innovate, protect and, therefore, compete.

Intellectual Property generally falls into three common categories: patents (new or incrementally improved devices, designs, processes or methods), trademarks (slogans, logos, product names), and copyrights (songs, graphics, text). Certain ideas (such as software) may be protected in more than one way (copyright and patent). as explained in The processes, costs, difficulties and benefits associated with each type of protection vary from relatively simple and inexpensive (copyrights) to more complex and costly (patents). Whatever its form, however, protecting IP can provide game manufacturers with several competitive advantages, advantages which frequently take on disproportionately increased importance for smaller businesses.

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