SME Patent Strategies

SME Patent Strategies For IoT-Based

Business Models
By Alexander Wurzer, Theo Grünewald, Wolfgang Fischer and Axel Karl

Abstract software platforms transforms production units into

The phenomena subsumed under the keywords of Cyber-Physical Systems (CPS) and, in its consistent
“fourth industrial revolution” and “Internet of Things” further development based on smart networked ob-
(IoT) is transforming the industrial landscape. With busi- jects, is making large parts of the manufacturing pro-
ness models in the B2C and B2B segments adapting to cess autonomous.3
these developments, the role of IP—and in particular Another important basic concept in the context of
that of patents—as a competitive instrument is evolving, the Internet of Things is “ubiquitous computing.” This
too. However, especially small and medium-sized com- term refers to the profound penetration of everyday
panies (SME) often underestimate this role. Academics life by computing capacity to the extent that it be-
and practitioners have jointly developed proven methods comes ‘invisible.’ This development permits the use of
and tools to effectively protect digital business models by Cyber-Physical Systems (CPS) in virtually all environ-
means of IP under these new framework conditions. ments, starting with the smart factory, the smart grid
Success factor IP in energy supply, and smart mobility, through to smart

H
aving evolved from mechanization by means of health in the healthcare sector and the smart home.4
water and steam (first industrial revolution) and These developments are jointly referred to as “IoT” or
mass production using conveyor belts (second CPS-based SmartX solutions.5
industrial revolution) to the use of electronics and IT Intellectual property, and patents in particular is
in production automation (third industrial revolution) gaining in importance as a strategic instrument within
and Industry 4.0 and IoT, the latest stage of the indus-
the context of the IoT.6 In 2016, about 30 percent of
trial revolution, has given rise to the following trends:1
patent applications filed at the EPO were directly relat-
• Digitization and networking ed to ICT fields.7 In addition, the EPO estimates that in
• Change in value creation networks recent years up to 50 percent of applications in major
• Individualization of customer requirements non-ICT fields such as medical technologies, automo-
• Ubiquitous availability of embedded systems tive, or aerospace were computer-implemented inven-
Sensors and intelligent controls integrated into ob-
jects enable machines and systems—but also actual
products–to communicate with one another (machine- 3. Schulte, Industrie 4.0 in Deutschland 2014 [Industry 4.0
to-machine (M2M) communication).2 This independ- in Germany 2014], IDC Executive Brief, Frankfurt: 2014, p.4.
ent exchange of information by means of suitable 4. Expertenkommission Forschung und Innovation [Experts
Commission on Research and Innovation], Die neue Hightech-
Strategie—Innovationen für Deutschland [The New High-tech
Strategy—Innovations for Germany], Berlin: 2015.
1. Arndt, Neue Produkte und Geschäftsmodelle durch Indus-
trie 4.0 [New products and business models through Industry 5. Diegner, Plattform Industrie 4.0 [Platform Industry
4.0], “DIFI—Forum für Innovationsmanagement” [Innovation 4.0], Frankfurt/M.: 2014; Botthof et al., Technologische und
Management Convention], Produktentwicklung im Rahmen wirtschaftliche Perspektiven Deutschlands durch die Konver-
von Industrie 4.0 [Product Development Within the Scope of genz der elektronischen Medien [Technological and Economic
Industry 4.0], IPEK—Institute of Product Engineering at Karl- Perspectives for Germany Through the Convergence of Elec-
sruhe Institute of Technology (KIT), Karlsruhe: 24/11/2016; tronic Media], Berlin: 2011.
Botthof et. al., Technologische und wirtschaftliche Perspektiven 6. Cf. Pike, Virtual Monopoly, London: 2001; Mittelstaedt,
Deutschlands durch die Konvergenz der elektronischen Medien Strategisches IP-Management—mehr als nur Paten-te [Strategic
[Technological and Economic Perspectives for Germany as a Re- IP Management—More Than Just Patents], Wiesbaden: 2009;
sult of the Conver-gence of Electronic Media], study by VDI/ Frey/Wurzer, IP-Managers in Strategy Development: Integrat-
VDE Innovation + Technik GmbH in cooperation with the In- ing IP into Business Models, in: Wurzer, [Ed.], IP-Manager, Co-
stitute for Innovation Management and Entrepreneurship at the logne/Munich: 2009, pp.101-117.
University of Potsdam, Berlin: May 2011. 7. EPO Annual report 2016. ICT sectors such as computer
2. Cf. Büllingen/Börnsen, Market organisation and market technology, digital communication, telecommunication or au-
reality of M2M-communication regarding smart industry and dio-visual technology are grouped in the technical field “electri-
the allocation of IPv6 numbers (Full version only available in cal engineering,” which accounted for 29 percent of applica-
German), WIK Discussion Paper No. 400, Bad Honnef 8/2015. tions at the EPO in 2016.

266 les Nouvelles

Electronic copy available at: https://ssrn.com/abstract=3068785
 SME Patent Strategies
tions (CII) that also qualify as “digital patents.”8 This is • Interoperability is often based on communication
due to the following: standards. Companies need their own competen-
• New, digital business models regularly exceed the cies for licensing and standard use.13
scope of traditional value creation stages.9 It is therefore only logical that the targeted use of
• New patent-relevant and patent-active competi- IP is considered a key success factor in competing for
tors from the ICT industry are venturing into val- solutions and new business models in times of digital
ue creation structures, sales markets and custom- transformation.14 However, there is a characteristic re-
er relationships outside the ICT industry. luctance to implement IoT-specific IP strategies.15 Es-
• Due to the central importance of M2M commu- pecially in the area of comput-
nication and the associated data handling across er-implemented inventions
value creation stages,10 patent positions from the and IoT-relevant solutions, ■ Prof. Dr. Alexander J.
ICT sector are increasingly turning into vital gate- European SMEs often feel
Wurzer, Prof. Associé at
keepers.11 that they lack sufficient com-
petence or do not have capac- Centre d’Etudes Internatio-
• Increased risks of patent infringement through ities when it comes to IP. The nales de la Propriété Intel-
cross-product or cross-production digital plat- same applies to the handling lectuelle (CEIPI), Université
forms.12 Product customization by means of such of relevant IP for communica-
platforms can jeopardize entire business models. Strasbourg,
tion standards.16
• IoT-based business processes require interopera- Munich, Germany
While large, multinational
bility, which, in turn, must be secured by means corporations are more flexible E-mail: alexander.wurzer@
of unique IP positions. ceipi.edu
in transforming their business
models and have vast budg-
■ Wolfgang Fischer,
8. Within the context of the European Patent Convention, ets in order to rapidly create
inventions based on software implementation are known as adapted IP portfolios, SMEs Wurzer & Kollegen GmbH,
computer-implemented inventions (CII). An analysis of large traditionally employ business Senior IP Project Manager,
representative samples of European patent applications in auto- models with a rather narrow Munich, Germany
motive, aeronautics and medical technologies showed that the focus and a great level of
share of CII has passed the 50 percent mark in recent years. E-mail: wolfgang.fischer@
Ménière, The EPO Approach to Industry 4.0 and the Internet
detail. Compared to corpora- wurzer-kollegen.de
of Things, Conference: Understanding the new role of IP man- tions, their options for pro-
agement within the digital transformation in industry and com- ducing and using IP are often ■ Theo Grünewald,
merce, 3rd panel: Patentability of technical software solutions limited to the existing portfo- Wurzer & Kollegen GmbH,
and the exploitation model for digital innovation, Strasbourg: lios they have developed over Senior IP Project Manager,
04/05/2015: www.ipforbusiness.org. time—not least because of Munich, Germany
9. Emmerich et al., Geschäftsmodell-Innovation durch Indus- limited financial and human
trie 4.0 [Business model innovation through In-dustry 4.0], Dr. resources. E-mail: theo.gruenewald@
Wieselhuber & Partner, Fraunhofer IPA, Study, Munich 2015; wurzer-kollegen.de
Wurzer/Grünewald, Aktuelles aus der IP-Ökonomie: industrie However, a change of per-
4.0 [Current Developments in the IP Economy: Industry 4.0], spective from the physical to ■ Axel Karl,
Mitt. 5 (2017) 205-211; Kagermann, Chancen von Industrie the digital/virtual world also Maiwald Patentanwalts
4.0 nutzen [Seizing the Opportunities Provided by In-dustry offers tremendous opportuni-
4.0], in: Vogel-Heuser/Bauernhansl/Hompel [Eds.], Handbuch GmbH,
ties for businesses. Entire in-
Industrie 4.0 [Industry 4.0 Manual], Vol. 4, 2nd edition, Berlin:
dustries are currently under- Patent Attorney,
2017. Munich, Germany
going radical change in this
10. Sattler, Schutz von maschinengenerierten Daten [Protec-
tion of Machine-generated Data], in Sassen-berg/Sattler [Eds.],
respect. Old market leaders E-mail: [email protected]
Rechtshandbuch Industrie 4.0 und Internet of Things [Legal will have to adapt themselves
Guidelines for Industry 4.0 and the Internet of Things], Mu-
nich: 2017; pp.27 ff.
13. Wurzer/Grünewald (2017) op. cit.
11. Heilmann/Eickemeyer/Kleibrink, Industrie 4.0 in inter-
14. Wee/Kelly/Cattell/Breunig, Industry 4.0 How to navigate
nationalen Vergleich [An International Comparison of Industry
digitization of the manufacturing sector, McKinsey Digital, Mu-
4.0], Düsseldorf: 2016, p. 13; Konrad/Zloczsti, Normung und
nich: 2015.
Innovation sind keine Gegensätze [Standardization and Innova-
tion Are No Paradox], DIW Wochenbericht [Weekly report of the 15. Wurzer/Grünewald (2017) op. cit.; Grünewald/Wurzer,
German Institute for Economic Research] 77/40 (2010) 10-15. Empirische Studie: Patentposition in der Indu-strie 4.0—Verli-
ert die deutsche Industrie den Anschluss? [Empirical Study: Pat-
12. Kornmeier, IP und Industrie 4.0 [IP and Industry 4.0],
ent Position in Industry 4.0—Is the German Industry Lagging
presentation at the Industrial IP Day, Tag der gewerblichen
Behind?], Innovation Management Support, 1 (2016) 45-57.
Schutzrechte [Industrial IP Day], Informationszentrum Patente
[Patent Information Centre], Stuttgart: 05/07/2016. 16. Wurzer/Grünewald (2017) op. cit.

December 2017 267

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 SME Patent Strategies
and their business models or clear the way for new, for home and hospital care—all with the aim of mak-
more innovative competitors. ing treatment more comfortable for patients. Ever
IP strategies which are stringently designed to meet since, a key development focus of Micrel has there-
the new framework conditions therefore also offer fore been on miniaturization in order to permit greater
smaller companies an opportunity to transform mar- mobility for patients. To achieve a new dimension in
kets. An approach jointly developed by academics and miniaturization, Micrel took the 100-year-old concept
businesses and already successfully in use across in- of rotary peristaltic pumps and improved it. So far,
dustries aims for the targeted development of such rotary pumps have not been used in medical devices
IP strategies. New strategic concepts and tools help because of problems such as high friction and power
companies to face the challenges of digital transfor- consumption as well as poor accuracy. However, their
mation in IP management and to develop appropriate great advantage is that they can be constructed with a
IP strategies.17 very small footprint. Micrel has recently patented the
The methodology presented below, along with exam- solution to the problems associated with this technol-
ples of industrial implementation, provides an overview ogy. Achieving a very good linearity of flow, reducing
of such approaches drawing from various case studies.18 power consumption and increasing accuracy levels,
Micrel’s solution meets users’ demands.
The Business Model as a Starting Point for
IP Strategy Another of Micrel’s development focuses is drug
safety. As pharmaceutical companies are moving to-
A business model describes the specific way in wards “personalized” medicine, this topic is becoming
which a company seeks to be successful in the market, more and more important. Apart from pharmaceutical
e.g. by means of an innovation.19 The key elements are companies, companies dealing with pharmaceutical
as follows: the value creation architecture and the key packaging are also going to move in this direction, offer-
resources on the cost side of things, and the customer ing pre-filled bags with ready-made drugs and disposable
benefit leveraging the customer’s willingness to pay, as pumps. It is therefore essential to match the right drug
well as the ability to maintain this value proposition in with the right pump and the right patient. To this end,
the long term on the revenue side. Micrel has patented specific RFID and barcode labelling
Business model analysis is generally based on the solutions for drug, people and device identification,
premise of competitive differentiation.20 This involves which are associated with other technologies to avoid
the targeted prevention of customers from compar- medication error.21 This way the patented developments
ing competing products and services purely based on of miniaturizing the pump and medication security
price. In competitive differentiation, unique selling complemented each other very well in the context of
propositions (USPs) perceived as relevant by the cus- ambulant treatment, and allowed Micrel a strong dif-
tomer are positioned against the competition in such ferentiation in the market of medical technology, which
a way that a specific customer benefit is as unique and is usually dominated by a few big and financially strong
incomparable as possible in the eyes of the custom- multi-national corporations.
er. If a company successfully manages to prevent the The fundamental principle of an IP strategy in
competition from offering a similar customer benefit, competitive differentiation also relies on exclusiv-
it is in an exclusive position to leverage the customer’s ity positions which customers willing to pay for the
willingness to pay. corresponding benefits perceive as relevant to their
Micrel Medical Devices, a family-owned SME found- decision making, and which can be defended and en-
ed in Greece in 1980, is a prime example for this. Its forced against the competition. This basic model must
first product, an ambulatory syringe pump, allowed be adapted in order to work in the context of digital
patients suffering from thalassaemia, a rare blood dis- business models.
ease that is prevalent among people of Mediterranean In a similar way to the reference model for network
descent, to be treated at home rather than in hospital. communication between computers, the so-called
Following that success, Micrel developed a full range Open System Interconnection model (OSI model),
of ambulatory volumetric and syringe infusion pumps of the International Organization for Standardiza-
tion (ISO), digital business models are also conceived
17. Wurzer/Grünewald/Berres, Die 360° IP-Strategie [The along different layers.22 As shown in the figure be-
360° IP Strategy], Vahlen, Munich: 2016; pp.50 ff.
18. MILPLM Case Study Series, available from www.ipfor-
business.org 21. See case study about Micrel Medical Devices, Smart infu-
19. Wurzer/Köllner, Wertorientiertes Patent-Design [Value- sion pumps for treating patients at home, in this issue.
oriented Patent Design], Mitt. 8-9 (2015) 350-351. 22. https://www.elektronik-kompendium.de/sites/kom/
20. Wurzer/Grünewald/Berres, op cit., pp.4 ff. 0301201.htm.

268 les Nouvelles

 SME Patent Strategies

Figure 1. Schematic Representation of IoT Layer Model

Schematic representation of the IoT layer model as a basis for generating customer benefits and designing
prohibitive rights in order to create a sphere of exclusivity around the customer benefit offered.24

Sphere of exclusivity
•Based on a clear customer benefit
•Sustainable in the long term
•Defensible (inclumeansding by legal)

Digital Service Digital

Global
Level 5
Digital
world

Analytics
Level 4
The competition
can no longer place
their offerings
Connectivity
Level 3

Sensor and Actuator Sphere of exclusivity

Level 2 Customer Benefit
Customer Benefit Wilingness
Physical

Offering Offered by the

world

to pay Competition
Physical Product Physical
Level 1 Local

Prohibitive rights prevent

access to the sphere of
exclusivity for the competition

low, these different layers interact with each other in and services. The fundamental principle described
order to generate customer benefits by applying the here is not limited to B2C or B2B markets.25
business model.23 The use of IoT elements does not necessarily have
When developing an IP strategy for digital business to result in novelties in the original sense of the term.
models, it is useful to look at the mechanisms of and in- Both the individual elements and the underlying solu-
teractions between the various layers of IoT approaches. tions applied are usually known. In terms of the tech-
The lowest level consists of the physical product, e.g. a nological elements and underlying solutions used, the
production plant or a device to be operated by the cus- prohibitive rights developed within the scope of IoT
tomer. The layer above includes the sensors and actua- strategies can be characterized as recombinant rather
tors making the plant or device electronically interoper- than revolutionary. Actual novelty is achieved by deriv-
able with the virtual world. The next layer consists of ing technological necessities from the business model
networking capabilities and therefore the possibility of and, in the case of digital business models, by analys-
collecting, transferring and storing data, and controlling ing the individual layers and their interactions. This
the plant or device remotely. These data as well as data systematically leads to a “periodic system of ideas”26
from other sources can subsequently be analysed and and enables a structured analysis of digital business
the insights gained can be used in providing products models, based on which relevant solutions can be pro-
tected by means of patents.
23. Fleisch/Weinberger/Wortmann, Geschäftsmodelle im In-
ternet der Dinge [Business Models in The Internet of Things], 25. Elste, Digitalisierung im Vertrieb [Digitization in Sales],
Zeitschrift für betriebswirtschaftliche Forschung [Journal of Wiesbaden 2016.
Business Research] 12 (1015) 444-464. 26. Küppers, Wissen statt Moral [Knowledge vs Morality], Co-
24. Adapted from Wurzer/Grünewald/Berres, op. cit., p. 42. logne: 2010, pp.172 f.

December 2017 269

 SME Patent Strategies
The SAILS Approach for Business Model Analysis of IoT solutions. Inter-operability is achieved through
and IP Strategy Development technology standards defining compatible Interfaces,
The SAILS approach was originally developed as a data transmission protocols and data formats. Typical
road-mapping tool for analysing disruptive threats to a standard definitions, such as WLAN, Bluetooth, LTE
etc., are usually developed by a cooperation of differ-
company’s business model.27 SAILS is an acronym and
ent vendors or research institutes. The related key fea-
stands for the initials of the individual methodological tures and processes are backed with patents. Thus, an
building blocks: (S) Standards, (A) Architectures, (I) implementation of a standard technology automatically
Integration, (L) Linkages, (S) Substitutions. The SAILS leads to a usage of third party IP.
approach is based on the underlying idea of empirical
Due to a common interest in a wide application of
observation of technological developments and change
those standards, licenses are offered at fair, reasona-
mechanisms. These can be traced back to the five gener- ble and non-discriminatory conditions (FRAND). SMEs
al, abstract and generic principles mentioned above. The should therefore identify relevant standards used in
special charm of this approach is that it can basically be their products and value creation chain and apply for li-
applied to any technology and industry. censes. If no sufficiently qualified internal resources are
• Standards available, SMEs can engage external service providers
Interoperability is a key success factor for IoT busi- to support the identification of relevant standard tech-
ness models. The exchange of data or energy, for ex- nologies and acquisition of the necessary licenses. In
ample, takes place via standards. Objects which are recent times especially certain Non-Practicing Entities
capable of using the same standard are classified as (NPEs), known as patent trolls, start approaching SMEs
compatible. Famous examples include communication with missing standards licenses, which may cause high
systems such as Field Bus or LTE. Depending on the cost for legal disputes and therefore creates a high risk
to the current and future business of the company.
reach of a standard, we speak of a proprietary (compa-
ny-specific) or industrial standard. Regardless of wheth- • Architecture
er they are de facto or formally protected, performance The SAILS logic uses the term “architecture” in its
and implementation specifications define parts of the general sense, i.e. the planned design and development
industrial superstructure, which typically exceeds the of systems. It therefore speaks of a “value creation ar-
immediate sphere of influence of an individual com- chitecture”30 when referring to more complex value
pany.28 Standards are therefore an important strategic creation structures than Porter’s value chain.31 Chang-
tool for the implementation of IoT business models. es in architecture must be analysed at different system
Patent protection can be achieved for various aspects levels: subsystems, systems or super systems. When
of standards, including interfaces, transmission types, speaking of IoT and CPS-based SmartX solutions such
as the above-mentioned smart factory, smart product
the processing of data for controlling device reactions,
or smart home, the ubiquitous smartness leads to al-
etc. Complex standards can be composed of hundreds
terations in value creation structures32 and traditional
of individual patent applications.29
As IoT solutions typically rely on an exchange and 29. The number of patents essential for the LTE standard
processing of data, interoperability between the differ- (fourth generation of mobile communication: 4G) is estimat-
ent components is key factor for proper functioning ed at 1,941, cf. Stasik, Royalty Rates And Licensing Strate-
gies For Essential Patents On LTE (4G) Tele-communication
Standards, les Nouvelles 9 (2010) 116 and reference to data
27. Vojak/Chambers, Road-Mapping Disruptive Technical
from ETSI 2010.
Threats and Opportunities in Complex, Technology-Based Sub-
systems: The SAILS Methodology, Technological Forecasting and 30. Cf. Bach/Brehm/Buchholz/Petry, Wertschöpfungsorienti-
Social Change 71 (2004) 121-139; Kind/Hartmann/Bovenschul- erte Organisation: Architekturen—Prozesse—Struk-turen [Val-
te, Die Visual-Roadmapping-Methode für die Trendanalyse [The ue-oriented Organization: Architectures—Processes—Struc-
Visual Road-mapping Method for Trend Analysis], Roadmapping tures], Wiesbaden: 2012; Gass-mann/Friesike/Cisk, Change a
und Visualisierung von Expertenwissen [Road-mapping and Vi- Running System—Konstruktionsmethodik für Geschäftsmodel-
sualization of Expert Knowledge], Working Paper of the Institute linnovationen, in: Gassmann/Sutter [Eds.], Praxiswissen Innova-
of Innovation and Technology at VDI/VDE-IT GmhH, No. 4, Ber- tionsmanagement: von der Idee zum Markterfolg [Innova-tion
lin: February 2011. Management in Practice: From the Idea to Market Success],
Munich: 2011, pp. 197-214.
28. Blind/Thumm, Interrelation between patenting and
standardization strategies: empirical evidence and pol-icy im- 31. Porter, Competitive Advantage: Creating and Sustaining
plications, Research Policy 33/10 (2004) 1583-1598; Picht, Superior Performance, 1st edition, NYC: 1998.
Strategisches Verhalten bei der Nutzung von Patenten in Stan- 32. Wischmann/Wangler/Botthof, Autonomik für Indust-
dardisierungsverfahren aus der Sicht des europäischen Kartel- rie 4.0 [Autonomics for Industry 4.0], iit-Berlin, BMWi [Ed.],
lrechts [Strategic Behaviour for Using Patents in Standardization Berlin: 2015; Bauer/Schlund/Ganschar, Industrie 4.0—Volk-
Processes From the Perspective of European Competition Law], swirtschaftliches Potenzial für Deutschland, Bitkom-Studie,
Heidelberg: 2013; pp.167 ff. Berlin: 2014.

270 les Nouvelles

 SME Patent Strategies
separations and hierarchies of systems.33 As demon- • Substitution
strated by the smart home example, for instance, there Substitution is one of the core aspects of Porter’s
has been a heated debate on where the control centre classic strategic approaches37 as well as an integral
for this domestic control, regulation and communica- component of market-oriented IP-based prohibition
tion intelligence should be located—in the TV unit, strategies.38 The methods of substitution are diverse
in the kitchen, in the PC or in the control unit for the and can be applied to IoT-based business models at
heating system—and who should have access to the various levels, as well across levels. Functions, com-
corresponding data, and for what purpose.34 ponents, products, hardware for software, and in-
• Integration deed entire types of devices can be substituted, as
This term subsumes all forms of combining elements well as value creation and work steps from manual
and functions in order to design new systems of en- data collection to machine operation, and entire
hanced functionality, as well as disintegration, i.e. the business models. Substitution can be step by step
deliberate separation of elements from elements previ- or radical, for example stepwise from product sale
ously combined within a system, and the reintegration to operator models.39 Materials, stocks and motion
of separated parts.35 Thinking in terms of integration is sequences, for instance, can be replaced by real-time
typically applied to IoT business models to overcome production.40 Also think of the functional integration
various barriers of the existing value creation architec- by today’s smartphones and the substitution of entire
ture. Thinking in terms of integration can be directed device classes that comes along with it.
against suppliers (backward integration), against cus- Once the basic approaches for protecting the digital
tomers (forward integration) or against former unre- business model have been identified, the fine-tuning
lated industries and competitors (lateral integration). for the development of prohibitive rights as part of the
The IoT layer model is primarily about the integration IP design process begins.
of levels 2 and 3—including computing capacity—into IP Design in Cyber-Physical Systems
the physical level. The layer model therefore provides
In order to protect digital business models, it is nec-
an explanation of the increasing ubiquitousness of
essary to identify those components which must be
computing capacity from a technology perspective.
protected against imitation, as well as those compo-
The sensors, actuators and computing capacity inte-
nents which are of particular importance for a compa-
grated across a full spectrum of products and systems,
ny’s market position, and therefore enable and merit
subsequently permit the creation of new customer
protection.41 Relevant methods have been developed in
benefits on levels 4 and 5, including the development
order to analyse cyber-physical systems and to actively
of business models adapted for these means.36
derive prohibitive rights from such analysis.42
• Linking
In analogy to the design thinking process, the static
The full capacity for the creation of customer bene- perspective of business model and system descriptions
fits is usually not achieved before the different levels must be abandoned in order to find the central com-
of the IoT layer model are skilfully linked. Links can ponents relevant for detailed analysis and synthetic
exist on all system levels or between individual levels. inventing within a CPS. A dynamic perspective on sce-
These links can be communication paths but also in- narios is crucial in IP design. The principles of scenario
tegrations for value creation. An example for the crea- analysis are shown in Figure 2.
tion of such links is the production of spectacle lenses.
An example encompassing several value creation stag- 37. Cf. Porter op. cit.
es is that of switchgear and control system production 38. Wurzer/Grünewald/Reinhardt, Valuation of Patents, Al-
described below. phen aan den Rijn: 2012, pp.37 ff., see also the literature refer-
enced there. (2015) p.15.
33. Botthof et al., Technologische und wirtschaftliche Perspe- 39. Emmerich et al., Geschäftsmodell-Innovation durch In-
ktiven Deutschlands durch die Konvergenz der elektronischen dustrie 4.0 [Business Model Innovation Through Industry 4.0],
Medien [Technological and Economic Perspectives of Germany Dr. Wieselhuber & Partner, Fraunhofer Institute for Manufac-
Through the Convergence of Electronic Media], VDI-VDE turing Engineering and Automation, Munich: 2015, p.25.
Innovation+Technik, Institut für Gründung und Innovation 40. Wolter et al., Industrie 4.0 und die Folgen für Arbeits-
Universität Potsdam [Institute of Innovation and Technology of markt und Wirtschaft [Industry 4.0 and the Conse-quences for
the University of Potsdam], Berlin: 2011. the Labour Market and the Economy], IAB research report 8
34. Cf. Sattler, op. cit., on the protection of machine-gener- 41. Cf. Wurzer/Grünewald/Berres op. cit., pp.51 ff. for the
ated data. distinction between the different strategic tasks of IP in the
35. Vojak/Chambers, op. cit. p.126. context of a differentiation strategy.
36. Bischoff et al., Erschließung der Potenziale der Anwend- 42. The most important considerations regarding the on-
ung von Industrie 4.0 im Mittelstand [Unlocking the Potentials demand design of prohibitive rights are summarized in Wurzer/
of Applying Industry 4.0 in SMEs], BMWi [Eds.], Berlin: 2015, Köllner op. cit., as well as in Wurzer/Grünewald/Berres op. cit.
pp.75 ff. pp.143 ff.

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 SME Patent Strategies
be found which form the basis for the
Figure 2. An Integrative IP Design Method For Structuring subsequent elaboration of the compa-
Synthetic Inventing In Application Scenarios. ny’s own exclusivity positions derived
from patents.
An analysis of the points within the
value chain at which data are creat-
ed, documented, processed and ma-
chines are controlled on the basis of
these data is required in order to fur-
ther substantiate the problem-solu-
tion approaches found. A simplified
excerpt from the analysis of a value
chain in electric control cabinet man-
ufacturing is shown in Figure 4.
The identified invention environ-
ments (as specified by IPC classes, for
instance) must then be translated into
technologies, bearing in mind their in-
tended benefit within the value chain
Scenario analysis is applied to usage or application
and the intended customer benefit. In other words,
scenarios, for example, in order to describe a sequence
in time (Figure 2—storyline with activities). In the the delivery must be translated into technological chal-
case of CPS solutions, it is important to distinguish be- lenges and solutions.43 Potentially successful invention
tween the sequences taking place in the physical world environments in terms of their contribution to the
and those in the virtual world. Precisely this distinction business model and potential patentability and en-
and systematic description of the interactions between forceability, must be identified and evaluated. The
these two worlds lead to potential inventions and thus invention core is isolated from these invention en-
to exclusivity potentials. vironments by discarding comparable or disruptive
solutions described in the patent literature, and must
The entire CPS is analysed along the value chain in
subsequently be developed into patent applications.
order to precisely extract the decisive positions at which
it is important to develop proprietary exclusivity posi- This ultimately leads to a patent portfolio which is
tions for the implementation of a digital business model. closely aligned with the basic requirements for the IP
Figure 3 shows an excerpt from the analysis along a cy- strategy for the company’s digital IoT business model.
ber-physical business process in switchgear and control Conclusion
system production. The developments related to IoT solutions described
These analyses provide indications of points at which above are due to the fact that companies are looking
non-trivial technological challenges and solutions can for new products and services which provide added

Figure 3. Schematic Representation Of The Coordination Of A Cyber-Physical System

43. Wurzer/Köllner, op. cit.

272 les Nouvelles

 SME Patent Strategies

Figure 4. Schematic Representation Of A Data And Information Flow Analysis

Schematic representation of a data and information flow analysis performed in order to identify
patent-relevant problem/solution combinations in the concrete implementation of the concrete imple-
mentation of the value chain for electric control cabinets.

value for their customers. The activities presented • This transformation not only affects customer
here result from the need for legally enforceable added requirements and customer relationships, prod-
value positions and the protection of digital business ucts and value propositions, but also established
models. The data generated within the scope of these value creation structures, competitive situations and
business models can help to improve development ac- business models, which are changing at a rapid pace.
tivities, accelerate innovation and enforce premium
prices through added value. Due to the exclusivity of • As a consequence of these developments, the
value added positions achieved through IP, the price role of IP—and especially that of patents—as a
premium is therefore also ultimately protected by IP. competitive instrument in IoT business models
Key success factors for the approach presented above is changing, too.
include thinking in terms of business models and un- • The IoT layer model shows a basic pattern of
derstanding added value. Beyond technological consid- technological levels IoT business models are
erations, the interdisciplinary approach of IP design composed of.
permits the integration of a market perspective into
the design of enforceable added value positions which • The SAILS method is a tried and tested practical
allow us to leverage the customer’s willingness to pay. aid for describing the necessary exclusivities in
To this end, IP must be integrated into the business order to identify the required proprietary IP po-
model development process at an early stage and its ef- sitions in future solution spaces for a company’s
fects must be anticipated. The case studies document business models from an early stage.
the significant relevance of IP for the commercial suc- • Targeted IP positions can be designed with the help
cess of IoT-based business models. of methods from industrial design and design think-
Summary ing in combination with synthetic inventing. ■
• The changes subsumed under the term Internet of Available at Social Science Research Network (SSRN):
Things are driven by a sustainable transformation https://ssrn.com/abstract=3068785
through digital technologies.

December 2017 273