Intellectual Property Protection in Software Enterprises

Intellectual Property Protection in Software Enterprises

Juha Kettunen (Turku University of Applied Sciences, Finland)
DOI: 10.4018/978-1-60566-014-1.ch094
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Enterprises are facing challenges in protecting their intellectual property (IP) due to the rapid technological changes, shortened lifecycles, and the intangibility of products. The IP protection granted by the national intellectual property rights (IPRs) legislation does not correspond very well with the needs of enterprises operating in a rapidly changing business environment (Andersen & Striukova, 2001; Bechina, 2006). The most valuable assets of knowledge intensive enterprises are the knowledge and skills embodied in human capital, which cannot be protected using the traditional and formal IP protection (Coleman & Fishlock, 1999; Kitching & Blackburn, 1998; Miles, Andersen, Boden, & Howells, 2000). The challenges for IP protection in the context of knowledge intensive small enterprises lie in creating business environments that support the knowledge sharing and creation, innovativeness, and IP protection. In particular, the challenges are related to the identification of such formal and informal protection methods which improve the business process. The aim of knowledge management is to stimulate innovation and create knowledge. Knowledge management allows knowledge with critical and strategic characteristics in an enterprise to be located, formalised, shared, enhanced, and developed. The purpose of this study on information security management is to explore how small and medium-sized enterprises (SMEs) protect their IP in software business. This study investigates how strategic IP protection supports the knowledge sharing and innovation creation and explores the critical phases of IP protection in small software enterprises. This study also describes and develops management, using the approach of knowledge management and applying the spiral of knowledge creation in software development. The article is organised as follows. The IP protection of enterprises operating in software development is introduced in the background section. The main attention of the article concentrates on IP protection, which is analysed using the framework of knowledge management. IP protection is investigated in the various phases of knowledge creation in software development. Thereafter some future trends are described. Finally, the results of the study are summarised and discussed in the concluding section.
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This article investigates IP protection in the software business from the perspective of an entrepreneur or a manager who wants to maximise the profits of the enterprise. The empirical data of the study consists of 17 independent owner-managed software enterprises in Finland and the UK located in the metropolitan regions of Helsinki and London. Multimedia technology is an essential target market of these networked enterprises. The data was collected using a sampling technique by which the sample was collected by using one respondent to suggest other suitable respondents. The chosen design for interviews was the semistructured and open-ended format to avoid variation in the responses and to facilitate the comparability of the information.

Although the importance of informal IP protection methods and strategies has been acknowledged in several studies (Coleman & Fishlock, 1999; Kitching & Blackburn, 1998; Miles et al., 2000), only a small number of empirical studies have been done in this particular area. The main finding of earlier studies is the importance of skills embodied in human capital that cannot be protected using the traditional methods of IP protection. A substantial part of the creative activity is not patentable, because of its intangible nature. This implies new challenges to those responsible for IP protection.

Key Terms in this Chapter

Combination Phase: The new knowledge is combined with the other explicit knowledge of the organisation in the combination phase of knowledge creation.

Socialisation Phase: Socialisation is a process of sharing experiences and creating tacit knowledge as shared mental models and technical skills.

Explicit Knowledge: Explicit knowledge is easy to communicate. It can be described, for example, in written documents, tapes, and databases.

Internalisation Phase: The explicit knowledge created in an organisation is internalised in this phase. Learning by doing characterises the emergence of tacit knowledge in this phase.

Tacit Knowledge: Tacit knowledge consists of the culture of an organisation and in the skills, habits, and informal decisions of individuals.

Knowledge Management: Knowledge management is a term applied to techniques used for the systematic collection, transfer, security, and management of information within organisations, along with systems designed to assist the optimal use of that knowledge.

Intellectual Property Rights (IPRs): IPRs are assets that are protected by legal mechanism. IPRs provide protection that is granted by national intellectual property rights legislation.

Externalisation Phase: The externalisation phase transforms the tacit knowledge into explicit knowledge so that it can be communicated.

Intellectual Property Protection: Intellectual property (IP) comprises the knowledge, skills, and other intangible assets which can be converted to a competitive advantage. Because intellectual property can take diverse forms, SMEs adopts different, formal, and/or informal methods to protect it.

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