According to Europe Patent Office’s annual report in 2015, Philips has become NO 1 (2402 units) who has the most submitter of patents application ahead of Samsung (2366 units) and LG (2091 units). These included a number of patents application of 721, 483 and 195 in medical technology, digital communication and computer technology respectively. There is powerful evidence to show a firm’s innovation capability that a company possesses. Therefore, large companies such as Philips have been found to utilize their brand image to gain customer patronage. By delivering further, they develop more positive image. Besides, patents can be licensed to other partners for a profit margin. For instance, Philips launched ‘LED licensing program’ for its portfolio of patents related to LEDs and SSL. In this paradigm, more than 230 companies around the world signed up for this licensing program and this contributes to more patents licensing fee obtained by Philips (Whitaker, 2012).
In this schema, enterprises exploit advantages that patents create and develop huge value. This is followed by ensuring that the requirement must protect the patents. Patents application must be published and ensured that the rights remain to the parent company that had originally developed the product. Infringement is increasingly becoming common. Philips took litigation against Nintendo Co.’s Wii motion controller technology in 2014; it alleged that Nintendo replicated technology that emulated user’s real-life actions in-game. The second infringement is user interfaces aimed to be navigated by utilization of a pointing device such as Wii Remote. Philips has been pursuing litigation against Nintendo in UK, France, Germany and US consecutively between the years of 2012 and 2014. However, on 2nd December, they both published a statement that reaches an accommodation to cross-license portions of each other’s patent portfolios. This statement did not refer to other clause and compensation fund. Even though Philips obtain some compensation privately from Nintendo, spending more than 2 years in litigation for them is time-consuming and in the process of taking action against Nitendo is also consuming amount of money. Therefore, the risk of applying patents is not ignored by enterprises. There is wastage of resources that can be prevented by the company.
In 1980s, most of large enterprises were not willing to share R&D with other competitors. They implemented complete control for innovation. They developed products internally for intellectual property and retained within the firm until they released these new products on the market. This process can be regard as the closed innovation paradigm (Almirall and Masanell, 2010). It led the fact that large firms’ core research division monopolized industry innovation activities, and it also established that the number of America large enterprises received 64% of the total number of patents in the US in 1964. However, this schema of over-emphasis on self-research and strict control by closed innovation is leading to barriers faced by firms that relying on internal resources to implement high cost innovation activities is difficult to adapt rapid development of market demand and increasingly fierce competition among enterprises. Companies cannot be closed and expect to grow. According to this system, open innovation gradually becomes predominant model to enterprises innovation. This is to ensure that there is a healthy balance.
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