Thursday, 2 July 2009

Trademarks and the Company Organizational Chart

One of the outcomes of my every-increasing interest with the "MBA" side of IP is the way that IP is handled by the company at the organizational level. By this I mean that the question to be asked is where, in the organizational chart, does responsibility lie? With respect to IP, articles on the topic tend to identify a job category described as "patent counsel" or "IP counsel".

When one drills down further to learn more about this job category, more often than not it turns out that this position has a patent registration/prosecution focus. Sometimes the job category includes a patent strategy function, sometimes that task is either shared with or is the responsibility of another person within the organization. Be that as it may, trade marks trends to get "second chair" (or no chair) status under the patent counsel or IP counsel job category. Thus, while patent counsel interfaces with engineers, product development managers, and the like, in-house trade mark counsel will interface with a quite separate and distinct part of the company, such as marketing, advertising and corporate communication.

This second chair is unoccupied

Two quite different situations result. The first is the phenomenon of the brand manager. Brands are variously defined, but all of the definitions have the common denominator that brands cover a broader swathe of company activity than do trade marks. For a trade mark attorney seeking to get out the second chair status, a promotion to the brand manager position is a relatively natural projection, even if it remains uncertain to what extent trade mark experience per se is the main prerequisite for the position. Because of this, a brand manager need not necessarily come from the IP prosecution world and, indeed, need not be an IP person at all.

The second is the staffing of trade mark matters in a start-up situation. There, where the organizational structure tends to be flatter, we find a particularly interesting combination of functions that are brought together to deal with trade mark matters: a person from marketing or corporate communication together with the company's CFO or the equivalent. This combination makes for a particular challenging environment for the company's outside legal counsel, particularly outside trade mark counsel, in trying to manage the application and registration process.

This is so because it is the CFO, and not the marketing person, who usually has the last corporate word on the subject vis-à-vis outside counsel. The main driver for the CFO is, not surprisingly, usually the expense dimension of the process. This puts the marketing person in a delicate position. On the one hand, the CFO's preoccupation with the expense side means that the marketing person will have to toe the line on expenses as well. On the other hand, the marketing person will want to carve out her own identify in the process, particularly vis a vis outside counsel. A certain tension follows, particularly if the marketing person is unschooled in the trade mark registation.

But does he know trade marks?

Both in the brand manager situation and the corporate communication/CFO situation, one common denomonitor stands out. Both positions tend to be ignored when discussing how IP is organized and managed within the company (unless, of course, one is talking about a Dior-like company). Why this is true is less clear (perhaps it is a simple as the old adage that "real men do patents"). Whatever, the handling of trade marks within a company poses its own distinct organizational characteristics.

1 comment:

Ron Laurie said...

This topic is very relevant to the emerging discussion among IP professionals in the U.S. as to whether mid-size and large technology and life science companies ought to have a single C-level executive in charge of all types of IP, including patents, know-how, trademarks and copyrights. Such a person would have overall organizational responsibility for the generation, protection, acquisition and value extraction (note that I said value-extraction and not merely "monetization") for all of these forms of IP.

One of the real hot buttons in the current "CIPO" debate is whether the corporate intellectual asset management function is so bound up with mitigating legal risk (primarily third party infringement claims) that it has to be embedded in the law department as has traditionally been the case -- with the head of IP reporting to the General Counsel or VP-Law -- or whether it should be spun-out into a separate profit center, or, as in the case of Philips and AT&T, into a free standing subsidiary.

Those who advocate for the latter model argue that as long as IP is viewed by top management and the board as a purely legal function, it will continue to be treated solely as a risk factor and not as a value driver.

A related issue has to do with the primitive state of IP valuation methodologies. The argument here is that until IP value shows up on the balance sheet, senior management, boards of directors and financial markets will not give it the attention (in terms of enterprise value) that it deserves.

PS - IAM Magazine is currently doing an in-depth study of the CIPO issue.