Managing the protection of innovations in knowledge-intensive business services

Abstract

How do knowledge-intensive business services (KIBS) protect their inventions from imitation by rival firms when choosing among various protection mechanisms? Data from the 2003 Statistics Canada Innovation Survey on services are used to investigate this issue by looking into complementarities, substitution and independence among eight protection mechanisms. A Multivariate Probit (MVP) model is estimated to take into account the fact that KIBS simultaneously consider many alternative intellectual property (IP) protection methods when they attempt to protect their innovations. Results show that patents, registration of design patterns, trademarks, secrecy and lead-time advantages over competitors constitute legal and informal methods that are used jointly. These complementarities suggest that IP protection mechanisms that are interdependent and reinforce each other to protect innovations from imitation by rival firms constitute a pattern on which firms rely to protect their innovations from imitation. A second pattern is based on the fact that KIBS rely on patents and complexity of designs as substitutes, and tend to use registration of design patterns and complexity of designs as substitutes in protecting their innovations from imitation. A third emerging pattern concerns protection mechanisms that are independent from each other and exhibit no synergy, and do not reinforce each other to protect innovations from imitation by other firms.