The Economics and Management of Intellectual Property – Towards Intellectual Capitalism

This unique book – informed by ten years research – focuses on intellectual property and charts the global transition towards intellectual capitalism with technology-based corporations as prime movers. The book gives a comprehensive overview of the history and fundamentals of intellectual property as well as a textbook introduction to the field.

The book sheds new light on the economics and management of intellectual property in large corporations in Europe, Japan and the US. Special emphasis is given to strategies for the acquisition and commercialization of new technologies, patent strategies and strategies for secrecy and trademark, technology intelligence and corporate management of intellectual property. It includes an in-depth study of leading large corporations in Japan – including Canon, Hitachi, Toshiba and Sony. In conclusion, it explores the possible evolution of intellectual property management towards a distributed intellectual capital management in the context of a wider transition to intellectual capitalism, fueled by new technologies in general and new infocom technologies in particular.

The book will have particular appeal to practitioners such as managers, economists, engineers and lawyers as well as students and scholars of industrial organization, economics of innovation and technical change, and management of technology.

Ove Granstrand’s book takes the reader into uncharted waters: the waters of an Intellectual Capitalism that promises to restructure the organization of economic life in the 21st century. In the course of his examination he shines the spotlight on recent developments in Japanese corporate capitalism that will prove to be highly illuminating to western readers.
– Nathan Rosenberg, Stanford University, US

This insightful book analyzes developments in Japan, Sweden, and the United States to illuminate the increasing emphasis placed on intellectual property in corporate strategies.
– F.M. Scherer, Harvard University and Princeton University, US

I have nothing but great admiration for the enormous energy and time needed to investigate and minutely analyze Japanese companies’ IPR systems and management. … It is a great achievement.
– Shoichi Saba, former Chairman of Toshiba Corporation, Japan

The most comprehensive study examining IP use, management and strategies in general, and in Japan in particular, is Economics and Management of Intellectual Property. See full review here.
– Petr Hanel, Université de Sherbrooke, Canada

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The preface from the author can be found here.

Chapter 1 – From intellectual property to intellectual capitalism

Key words: Intellectual property; Intellectual capital; Intellectual capitalism; Pro-patent era; IP values; Technology-based firms; Infocom technologies; Globalization.

This introductory chapter to the book presents its purpose, background, research basis and outlines of its various chapters together with an overview of developments of intellectual property (IP), intellectual capital (IC) formation and intellectual capitalism.

The broad purpose of the book is to present thoughts and ideas about a general, global transition into what can be called intellectual capitalism. The more narrow purpose is to present a study of IP and its economics and management in technology-based firms, being most important drivers of intellectual capitalism, although not the only ones. Regarding IP much is known about the USA but less about Japan, being compelled by lack of natural resources to be on the frontier with respect to IP management and IP policies for IC formation. The book also attempts to raise and merge the various growing interests in intellectual property and capital among managers, economists, lawyers, and technologists – practitioners as well as students and scholars. In so doing interdisciplinary breadth and understanding have been preferred to disciplinary depth. Besides presenting research results in an accessible way, the book therefore also gives the history and fundamentals of the field, as well as a textbook introduction to it. Appendices give simple bench-mark illustrations, as well as questionnaires, which could be used as diagnostic instruments. A glossary is also included.

The research basis comprises three major studies conducted over a ten-year period, covering US, Japan and Sweden, using public statistics, extensive survey questionnaires and case interviews, for analysis at national, corporate and technology levels.

The introductory chapter also describes a number of global mega-trends and the relatively rapid emergence of the “pro-patent era” in the 1980s, originating in the US and spreading around the world, with rising valuations of IP of various kinds – patents, trademarks, know-how etc., reinforcing the more gradual and long-run emergence of intellectual capitalism.

Chapter 2 – Philosophy and history of intellectual property

Key words: IP notions; IP history; IP philosophy; Patent system; Pro-patent era; Property rights.


When, where, how and why have notions about intellectual property evolved? This chapter traces the basic notions of intellectual property to its historical origins and describes how a diversity of IP notions have evolved and which roles they have played. Basic distinctions are made between material (physical, tangible) and immaterial (intangible, intellectual) property (resource, asset, capital); between property and property right; between individual and collectivity and between IPRs of various kinds (for inventions, information, identity marks, cultural ideas and expressions, designs etc.). Although much research remains to be done on these issues, there are indications that IP notions are fundamental and prevalent in human nature and societies, with clear signs of several IP notions in ancient societies as well as in different religious belief systems. Different IP regimes have also developed since ancient times pertaining to science, technology, culture, military activities and religion.

Among philosophers, property notions have commanded considerable interest, while IP has not, with a few exceptions, and the same could be said about economists. Physical property has also dominated property notions among jurists. This is somewhat paradoxical considering the importance of intellectual resources and creations and their inherent differences to physical resources and creations. The extendibility of physical property notions to IP was found to be severely limited as both scarcity and possession fails to serve as a basis for justifying and defining property rights in the intellectual field. The chapter describes the deontological, consequential and utilitarian justifications of IPRs, and how the utilitarian use of IPRs essentially to encourage innovation has become dominant.

The chapter then gives a brief history of especially the patent system with its progression through various eras – the non-patent, pre-patent, national patent, multinational patent, international patent and pro-patent era, with their various elements of protectionism. A chronology for Europe and the USA was provided and one for Japan is provided in Chapter 5. The emergence of the pro-patent era in the 1980s in the USA and her success with the trade-based approach to IP legislation is described in some detail.

In summary IP notions have evolved gradually as a social construct but in a fragmented way with many IP regimes, IP types and IP systems, lacking unifying notions. Thus, one cannot talk about a coherent IP system. IP notions have also evolved in a marginalized manner very much in the sidewaters of law, economics and politics.

The philosophical as well as practical complexities of intellectual property offer grounds for forgiveness of any sins of omission historically among philosophers, legislators, economists, policy-makers etc. Another ground for forgiveness is that a legal IPR system has apparently been neither necessary nor sufficient for technical, industrial and economic progress historically, as discussed in the chapter.

However the grounds for forgiving any sins of omission regarding IP have receded since the 1980s. We are entering a new IP era triggered by the events in the USA in the 1980s. There are many reasons to believe that this era is here to stay and develop further, perhaps warranting further institutional innovations in the IP field.

Chapter 3 – Patents and intellectual property: a general framework

Key words: Patent system; Intellectual property; Innovation models; Diffusion; Economic theory of IP; IP valuation; Licensing.


Inventions, know-how, data, software, designs, trademarks and artistic works are all potential intellectual properties and may be protected by Intellectual Property Rights (IPRs). Such rights are granted in contemporary society as a stimulus to creative work and innovations. IPRs pertain to specific legal systems embedded in the respective social system that provides legislation, law adherence, policing, prosecution, court practices, and infringement sanctions or penalties. These elements comprise the institutional framework of the IPR system. The framework has evolved during centuries and differs across countries similar to how social and legal systems differ. What is perceived as legally or morally right and wrong is thus contingent upon cultural and historical influences.

This chapter presents a general framework for analyzing patents and intellectual property as a textbook introduction to the topic. Innovations are fundamental not only to economic development but to cultural development at large. Various types of innovations in general (technological, managerial, financial, legal etc.)  are described together with concepts (invention, innovation, diffusion etc.) and models related more specifically to technological innovations such as the product life cycle model, the interactive innovation model and the buyer/seller-diffusion model.

In order to achieve economic development in a market economy it is crucial to ensure an adequate rate of innovation with an adequate rate of buyer diffusion producing an adequate rate of returns to innovators, buyers and society at large. Imitation in the form of seller diffusion and the resulting competition may hamper the rate of innovation, since innovators then may be unable to capture sufficient returns to cover their investments in innovation. At the same time seller diffusion may increase buyer diffusion and vice versa so that the resulting rate of returns to buyers and society for a given innovation may increase. Thus there is a problem when balancing or trading off the static efficiency for a given innovation and the dynamic efficiency for a stream of innovations. The patent system has been designed as an instrument or institution to deal with this balancing problem by offering restricted monopoly rights as an incentive to the innovator. The innovator can use these rights in turn to restrict seller diffusion and competition or to sell licenses on the patented technology in order to capture sufficient profits and returns on the investments in innovation.

The chapter describes the nature and functioning of the patent system and its underlying rationales as an economic incentive system. The basic technicalities of patenting are described along with the issues of who can patent what as well as why, when, where and how to patent from the point of view of an individual or a company. The pros and cons of a patent system from society’s point of view are then discussed. The chapter also presents a simple, qualitative model for the valuation and pricing of patents and licenses.

The chapter finally gives an overview of the growing literature on patents as well as an overview of the evolving economic theory of patents and IP. Some examples of formal economic modelling and valuation of patents and trade secrets are also presented.

Chapter 4 – The technology-based firm: a general framework

Key words: Technology based firm; Intellectual capital; Intellectual property; Strategy ladder; Diversification; Open innovation.


This chapter opens up with a general description of the modern firm as a very viable economic institution, drawing strength from several layers of competitive super-, side- and sub-markets, as well as from the development of management capabilities and from a powerful co-evolution with science and technology. As a result of this co-evolution, technology-based firms have grown to altogether control most of the world’s technologies, thereby also increasingly giving rise to proprietary firm-based technologies.

The chapter then puts IP in the context of a firm, its resources and its intellectual (or immaterial) capital (IC). A firm’s IC not only incorporates its IPRs, but also its relations and competencies, including its technological capabilities. In addition to the general properties of knowledge, technical knowledge, i.e. technology, has a number of specific properties which creates strong economies of scale and scope. In particular, technology is possible to codify and protect by patents.

The technology-based firm (TBF) is thus of particular interest, and the chapter presents a general resource-based framework for the resource structure of such a firm and a typology for the acquisition and exploitation of technology as a particular resource. A “strategy ladder” with various strategies at corporate, innovation, technology and IP levels is presented as a management tool for bridging the frequent gap between business and IP strategies. The various strategies for technology acquisition and exploitation – in-house R&D, joint ventures, licensing etc.- then correspond to strategies for inbound and outbound open innovation. This strategy framework is later used in the empirical studies reported in subsequent chapters of the book.

The chapter finally describes the dynamic nature and strategic role of technology diversification and technology management. Through notably strong economies of scale, scope, speed and space associated with the combination of different technologies and other resources, the TBF is subjected to specific dynamics in its growth and diversification processes. In particular, a TBF tends to engage in business-related technology diversification, thereby becoming a multi-technology firm. As such the TBF has incentives to economize on increasingly expensive new technologies by pursuing strategies of internationalization on both input and output markets and technology-related business diversification, as well as external technology sale and sourcing, R&D rationalization and technology-related partnering. Thus, diversification could be seen as a driver of open innovation.

Chapter 5 – Japanese patenting – an overview

Key words: Japan; Patent system; Catch-up process; Open innovation; Patenting propensity; Patent strategy.


This chapter starts with a review of the history of the patent system in Japan. Shortly after the Meiji restoration in the mid-1860s a patent system was tried in Japan, inspired by the perceived importance of new technologies and patents for the development of industry in the West and in the US in particular. Thus Japan’s patent system was installed right at the beginning of her industrialization. However, one cannot infer that the patent system was of decisive importance for Japan’s industrialization. The ability to catch up by absorbing and modifying technology from the West, and particularly from the USA after World War II, was much more important. The patent system was, however, widely used in the catch-up process, a process that has in fact been a large scale case of successful open innovation. Since the end of World War II Japanese corporations have accumulated very large patent portfolios and substantial patenting capabilities.

The modern Japanese patent system is more similar to the European patent systems than to the US one, but there are also some features specific to Japan, in particular regarding the way cultural factors and the catch-up process have influenced the use of the patent system. Thus the symbolic value of patents as rewards has been important, as have domestic technology diffusion and the use of patent information for technology intelligence.

The chapter then presents an empirical survey with data from 24 large chemical, electronic and mechanical corporations which further indicate the growth of R&D, foreign R&D, licensing out, R&D collaborations, domestic and international patenting, and patent portfolios. The survey also indicates a wide array of consistent trends. The most important of these are the increasing strategic importance of patents and top management attention paid to patents, the increasing resources for patenting, the increasing many-to-many correspondencies between patents and products, the increasing propensity to patent, infringe and litigate, and the increasing use of patent information for technology intelligence.

The extraordinarily large quantities of Japanese patents in international comparison need to be explained. A traditional explanation is that Japanese patents are of low quality. This may have been true in the past but it is no longer true. If the quality of a patent is broken down into legal, technical and economic quality aspects, each of which can be indicated in various ways, this study shows that Japanese patents are no longer inferior, on the contrary.

The chapter concludes with an analysis of various explanations for the high patenting propensity in Japanese corporations. In summary, the different types of (non-conflicting) explanations for the high quantities of Japanese patents were found to be:

  1. Historical/institutional explanations, referring e.g. to catch-up effects, legislation (single claim, narrow scope, utility models) and patent office behaviour.
  2. Strategic/managerial explanations, referring to response to pro-patent era and US litigation, increasing economic value of patent portfolios, R&D strategies and effectiveness (Kaizen, exploratory R&D, etc.), patent strategies (with emphasis on continuous patenting, flooding, fencing, licensing, bargaining power, technology acquisition), patent culture and internal incentives.
  3. Regression based explanations, referring to the most important company variables explaining the number of patent applications which were found to be number of patent personnel and amount of patenting expenditures, in line with previous research.

Chapter 6 – Technology and commercialization strategies

Key words: Technology strategies; Commercialization strategies; Catch-up processes; Open innovation; IP management; Diversification; Standardization.


This chapter deals with the commercialization of new technologies in Japan as seen at the national level, the corporate level, and the level of individual product businesses. Various strategies and common features for technology exploitation, i.e. outbound open innovation, will be elaborated upon to provide a broader context for subsequent chapters in this book, which will deal specifically with IP strategies and IP management.

Japan has rapidly and successfully developed into a technology-based state after World War II. Capabilities in acquiring and exploiting technology, i.e. inbound and outbound open innovation, have evolved during Japan’s catch-up process in a way that has found traditional innovative leaders in the West with strong S&T capabilities and S&T cultures, often embracing more closed innovation, falling behind.

The chapter first briefly reviews the pros and cons of being an early or late mover on a market – i.e. the economies and diseconomies of speed to market- a review that can help explain the dynamics of the often observed phenomena of catching up, forging ahead and falling back and then perhaps coming back again.

The capabilities in managing technology and IP that have developed in Japan during its catch-up process, especially in large corporations, have some specific features, although they often build upon management concepts and techniques having originated in the West. Based on survey data and interviews the chapter has pointed out country differences as well as sector differences in various technology management strategies and IP management strategies. Unlike European and US corporations, Japanese corporations considered patents as the most effective means of capturing the value from innovation.

A number of specific features in Japanese strategies for exploiting technology, i.e. outbound open innovation, were elaborated. One such feature, differing sharply from the West, was the propensity to engage in technology related product diversification in co-evolution with product related technology diversification, thereby benefiting from economies of scale, scope and speed. The case of Canon was given as an illustration. Speed to market and speed to technology were other important features, as were application diversification based on application visions and user cooperation. Emphasis on intellectual property management was a further important feature.

The chapter finally described how issues surrounding patents and standardization have become much more closely intertwined and altogether commercially important in recent decades.

Chapter 7 – Intellectual property policies and strategies

Key words: Patenting motives; Technology strategy; Open innovation; IP strategy; IP policy; Patent strategy; Trademark strategy; Trade secret strategy; Multi-protection.


This chapter starts by describing a classification of various motives or advantages and disadvantages of patents from a company point of view and the importance attached to them by the 24 large Japanese corporations surveyed. Four main categories of advantages can be distinguished, which in order of perceived importance were (1) provision of protection, (2) bargaining power, (3) internal advantages and (4) image improvement. Several of the advantages of patents increasingly accrue as they become part of a patent portfolio and a patent portfolio arms race in the company, something that was recurrently emphasized in interviews. There was also a shift from defensive to more offensive motives behind patenting, although it is difficult to draw a sharp line in between. The perceived advantages of patenting by far exceeded the perceived main disadvantages concerning disclosure of information and direct costs for filing.

Since most Japanese corporations had a corporate-wide patent policy in contrast to many Western corporations, the chapter thus elaborated on the rationale and content of an IP policy in general. As IP has gained increasing strategic importance and top management attention, patent and IP policies evolve and become more comprehensive, strategic and integrated with business and technology management.

Chapter 7 then analyzed various generic patent strategies, counter-patent (patent response) strategies and litigation strategies as well as other IP strategies in general, such as trade secret strategies and trademark strategies. These typologies of IP strategies were then integrated in the strategy ladder model with the typologies of technology strategies for open innovation and commercialization strategies as presented in Chapter 4 and 6 in the book.

Concerning IP strategies in Japan, a number of commonly used strategies were described, such as flooding, fencing and continuous patenting as well as CI/BI-building of trademarks. Such strategies have been developed in the past by leading companies in the West, and in the USA in particular, but have been adopted, refined and applied more systematically by Japanese corporations in a manner not unlike what has happened with several other management techniques originating in the West. The chapter presented illustrations from Canon, Hitachi and Toshiba regarding patents and from Sony regarding trademarks.

The use of what was called multi-protection and total IP strategies for a business (eco)system with all its product and service components rather than for an individual product was finally described and advocated. In this way, the value of the IPR portfolio is enhanced and the company’s intellectual capital leveraged.

Chapter 8 – Intellectual property organization and management

Key words: IP management; IP organization; Japan; Patent culture; Intellectual capital (IC); Distributed IC management.


This chapter describes the developments in the organization and management of IP resources and activities in large Japanese corporations. Partly as a result of a long process of catching up with the West and partly as a response to the pro-patent era emerging in the 1980s and the ”patent wars” – hot as well as cold – with US corporations, large Japanese corporations have developed leading IP management practices and IP organizations. IP resources have increased substantially, and the IP organization has become upgraded, more centralized, and more comprehensive, and has received more attention by top management, technology management and business management. It appears as if Japan, partly as a result of the advent of the pro-patent era since the 1980s, has developed still another area of management in which Western companies have much to learn.

Taylor and Silberston (1973), being a pioneering study of patent organizations in industry, identified four types or stages of organizational devlopment. In relation to these, the patent organization in large Japanese corporations represents a quite different fifth type. A hypothetical ensuing sixth type with an IP organization extended to embrace e.g. open innovation is also described in the chapter.

Many large Japanese corporations could also be said to possess a patent culture, which can be characterized as having: top management involvement in patenting and IP; patenting and IP as a common concern for all engineers; patent policies and strategies integrated in business plans; clear patent objectives; clear patenting incentives for R&D personnel and organizational units; behavioural attitudes and norms conducive to technology protection and technology intelligence; visible organizational means to promote attention to patenting; and a special language, methodology and philosophy.

Patent organizations have also developed in many companies in the West during the pro-patent era, although to a lesser extent on average than in Japan. In general, the patent department has moved from being a small, reactive service department, often with low status and narrow operational tasks decoupled from business and top management, towards a larger pro-active organization with more comprehensive IP responsibilities, more status and power, more commercially oriented, more strategic concern and more interaction with technology management, business management and top management. In addition to having grown, diversified and become more integrated in the corporation, the IP organization has also become internationalized as the R&D organization has internationalized.

Further developments of IP management and IP organizations are conceivable. As the role of intellectual capital, comprising IPRs, human capital and other intangibles become more important in firms, intellectual capital management, encompassing IP management, might develop in various ways. The IP organization may also become subordinate to a type of distributed management of intellectual capital, signifying a reorientation of the whole company organization towards its intellectual capital, somewhat analogous to the total quality management movement.

Chapter 9 – Analysis of patent information

Key words: Patent information analysis; Patent mapping; Patent intelligence; Patent analytics; Patent networks; Techno-economic analysis.


As part of the “patent deal“ between inventors and society, inventors have to disclose information about their inventions in exchange for patent rights. This information should be sufficient to allow a skilled person or team to reproduce the particular invention (although that is not always the case in practice since patentees often try to minimize what they disclose in their patent applications.) A patent document thus represents value to prospective imitators, at least when the patent expires. In addition, patent information is also of value, and even more so, to inventors and firms performing related R&D, because it assists in their technical decision-making. Patent information also adds value to economic decision-making among a variety of other agents, e.g. policy makers. Thus, patent information may be helpful e.g. in avoiding some overinvestment of R&D in a particular field, pointing out technological trends, assisting in division and coordination of inventive labour, finding collaborators, etc.

This chapter describes how patent information is used and can be used. Since this topic is rich and rapidly expanding, this presentation cannot be comprehensive. Therefore, this chapter is intended to serve also as a textbook introduction.

The stock of publicly available patent information in the world is in fact a tremendous and unique source of technical knowledge. For various reasons (such as lack of time, costs, varying information quality, ignorance), this source of information has traditionally been underutilized, but the ongoing computerization of the patent system rapidly offers increasing possibilities to tap this valuable resource. The costly and tedious act of digging into patent archives and the subsequent distribution of patent documents are gradually being replaced by computerized patent databases, data mining and AI assisted information processing, thereby drastically improving both the costs and benefits for companies using patent information. At the same time, patenting propensities have increased and become more consistent, increasing both the quantity and quality of patent information. However the set of basic information items for a given patent has changed very little.

The present study as well as other studies show how companies have increased their use of patent information and consider such information to be one of the most important means for technology and competitive intelligence. It is significant that most companies have not considered the avoidance of patenting worthwhile in preventing other companies from finding out about their own technical developments. This is an indication that patenting may provide net benefits to industry as a whole (i.e. patenting could be considered a positive sum game in this respect.)

The literature on the use of patent information as technology indicators and/or economic indicators has grown rapidly as well, and this chapter gives a large number of references. Patents are also compared with other technical information carriers, such as publications. Several application areas of patent analysis were described, such as competitor benchmarking, technology analysis, international patenting analysis, valuation of technology assets and tracking of key inventors, together with a number of caveats. Patent analysis is then put into the general context of a framework for techno-economic analysis, which could be used to integrate various applications of patent analysis.

From this general description, the chapter then describes the nature and origin of the so-called patent mapping methodology developed in Japan. Broadly speaking, patent mapping mainly uses patent information as technology indicators. This methodology originated in the Japan Patent Office in the 1960s and has since been adopted and developed further in industry and in the leading large corporations in particular. Patent maps have a variety of applications, for example as a tool for creativity, intelligence, technology management, bargaining, litigation, communication and education.

The chapter finally gives a number of fairly simple illustrations of patent maps including a patent network map, a patent-by-country map, a patent-by-technology map and a patent-to-product map and illustrations of how Toshiba and Hitachi have organized patent information analysis.

Chapter 10 – Intellectual capitalism and beyond

Key words: Capitalism; Knowledge economy; Infocom technologies; Intellectual capital; Internet; Intellectual property

This concluding chapter synthesizes and discusses the findings in the preceding chapters as well as elaborates further on the theme of intellectual capitalism as introduced in Chapter 1.

Capitalist economic systems with its many varieties are altogether as strong as ever after the rise of competitive Asian economies, the downfall of the Soviet Union, and the resurgence of the US economy after the 1980s. This chapter argues that capitalism is now being transformed into a most important new form, what can be called intellectual capitalism. In broad terms intellectual capitalism can be interpreted as a confluence of a capitalist economy and a knowledge or information economy. More specifically, intellectual capitalism refers to an economic system with basic capitalist institutions (private property rights, private profits, competitive markets and free enterprise) in which productive assets and processes, as well as commercial transactions and products, are predominantly intellectual or immaterial rather than physical in nature. Despite palpable problems to account for intellectual capital and products an unfolding shift towards intellectual capitalism is indicated by various indicators (Solow-type residuals, Tobin’s q, Becker-type human capital accounting, intangible investment ratios, emergence of a pro-patent era, share of corporate R&D to total R&D in the world, growth of technology markets and markets for corporate control, etc.).

This chapter argues that the main driving force behind this shift is technological change and the accumulation of new technologies in general and their co-evolution with firms, markets and legal systems. More specifically, the family of information and communication technologies, infocom technologies or ICTs for short, plays a pivotal role in the emergence of intellectual capitalism, not unlike the role played by the family of material and energy technologies in the emergence of original capitalism. ICTs not only enable fast, cheap and differentiated production and distribution of various old and new types of information, but ICTs also enable recording, codification, packaging and mass marketing of information, making it commercially available at a low transaction cost. The traditional malfunctioning of pure information markets thereby becomes mitigated. Consequently, human communication and information barter, be it on a habitual, altruistic or profit basis, becomes more easily commercialized. Vast opportunities to profit from innovation and increasing competitive pressures at all levels in society will ensure that, in fact, information and communication will become far more subjected to commercial transactions than we have as yet expected, let alone hoped.

A number of key functionalities are offered by ICTs to support intellectual capitalism. Increased codifiability, connectivity, processability, interactivity, selectivity, and controllability in communications deserve special mentioning. These functionalities enable economic agents to profit from information, e.g. by raising excludability through building electronic locks and fences around information assets. Although we practically have a global intellectual property rights system in place, ownership of information per se, (including knowledge, competence and data) is not the decisive issue for intellectual capitalism. Rather, it is the ability of economic agents to control the rent stream from information that is crucial. Such control has traditionally been accomplished by embedding information with physical products or with individuals and more recently by embedding it with small companies as well. Appropriation of benefits has then been accomplished by using product markets, labour markets and stock markets. ICTs now significantly enhance the possibilities to control rent streams from intellectual capital and products and raise excludability and lower transaction cost without necessarily relying on intellectual property rights, although IPRs increasingly matter as well. Thereby, intellectual capital management with technology management as an important part becomes a key managerial issue in most companies, large and small. Old companies and organizations in general, such as libraries and universities, will have to transform and adapt, and new ones will appear such as data mining companies, information brokers and content providers. Similarly, intellectual capital oriented policies (for education, R&D, etc.) become of key governmental concern, especially in nations like Japan and South Korea, being poor in natural resources. However, by and large, it is yet too early to fully identify all managerial and policy implications of the emerging intellectual capitalism.

New technologies play two main roles for intellectual capitalism. First, they constitute a lion share in the generation of intellectual capital and products and second, and more specifically for ICTs, they serve to privatize the benefits from intellectual capital and products by raising excludability and lowering transaction costs. The Internet with its web sites is a most important illustration of how ICTs play both these roles and thereby foster intellectual capitalism on two accounts. Internet provides a market place in the true, original sense of the word – a meeting place for prospective buyers and sellers, displaying merchandise and quoting prices with possibilities to communicate over prospective transactions. The market place provided by Internet and related networks is rapidly growing into an efficient, fast, global mass market with numerous information products and linked databases and with a concomitant rapid growth of electronic commerce in general. However, the fastest growth will probably be in information and multimedia related commerce, especially with the next generation of Internet protocol and digital payment systems enabling click and pay functions also for ”microtransactions” of information on a large scale.

This chapter concluded with two scenarios. One regards the future of the intellectual property rights (IPR) system, originally designed to foster innovation but at the same time perhaps increasingly counteracting its own purpose. However, amid the rhetoric of sceptics, a reversal to a weak IPR regime is not likely. Rather, fixes will be attempted, as well as further international harmonization and rationalization. A certain convergence of the IPR regimes, linked to science and technology respectively, is also likely.

The second scenario regarded the future of intellectual capitalism altogether. Various authors (e.g. Marx, Schumpeter, Drucker, Thurow, Rosenberg) have emphasized different self-destructive, evolutionary or stagnating tendencies inherent in capitalism. As for intellectual capitalism it is probably not overly technocentric to assume that new families of technologies will appear that will again fundamentally change the economic system, gradually or not. For example, a new technology family or technology system is emerging in and around biotechnology and health care, what we perhaps can call biohealth technologies. It is not inconceivable that intellectual capitalism will increasingly be perceived in society to clash with fundamental humanistic values, especially in connection with biohealth technologies. Such clashes may very well spur the emergence of new types of economic systems, be they capitalist, quasi-capitalist or something else, yet to be identified.

Just as Schumpeter described the process of “creative destruction” within the capitalist system, capitalism itself may undergo a similar process. Although intellectual capitalism may represent an advancement in the development of capitalism and create greater opportunities for those firms that exploit its potential, this does not imply that society as a whole is better off.

In religious belief systems Adam and Eve were punished for eating from the tree of knowledge, and Zeus punished Prometheus for giving fire to mankind. The message here is that knowledge, and technology in particular, is power, and power is dangerous. Although knowledge can be used to enlighten, it has too often been used to suppress and dominate. Ultimately the fruits of knowledge, growing higher and higher up in the tree, may not be so sweet to mankind as we compete for a taste without learning how to control our appetite.

Appendix 1 – Japanese and Swedish corporate patenting – a comparative analysis

This section describes one of the sub-studies from the research basis of the book, described in Chapter 1, more thoroughly. This sub-study compared publicly available patent statistics for a number of large Japanese and Swedish corporations. A broad picture of the patenting profiles of the largest Japanese and Swedish corporations is given here together with a comparison of the profiles for the important pairs of actual or potential Japanese and Swedish competitors.

This comparison provides an illustration of a simple “benchmarking” with respect to patenting activities without going into a detailed comparative analysis of separate business areas in the large corporations studied. Several tables of data are provided simply for the interest of readers in the corporations studied. This hopefully serves as a starting point for further exercises in utilizing patenting statistics per se and especially in combination with other sorts of statistics. More specifically this section highlights the following questions:

a) What is the total level and trend of patenting over time in the largest technology-based Japanese and Swedish corporations?
b) What is the width of the corporate technology base (or the extent of technology diversification) as indicated by patenting activities?

Appendix 2 – The conduct of the questionnaire survey

The purpose of the questionnaire survey for the research studies covering Japan and Sweden was to provide a more general picture of IPR-related facts and perceptions in large corporations as well as complementing other sub-studies in the overall study. A complete list of the companies participating in the survey can be found here. The intention was to include a major segment of the industrial R&D in Japan and Sweden, and thereby a major share of the IPR resources and activities. Comprising 27 pages with over 400 questions, the questionnaire was comprehensively designed to cover all major issues related to patenting and its role in corporate commercialization of new technologies.

Appendix 3 – Interview questionnaires

A summary of general interview questions from the questionnaire survey can be found here.

Appendix 4 – Approximate confidence limits

General tables for approximate confidence limits, supporting the calculations made in the book, are presented here.


The glossary provided here is published in Ove Granstrand’s later work Evolving Properties of Intellectual Capitalism: Patents and Innovations for Growth and Welfare (2018), which is an extended version of the glossary from The Economics and Management of Intellectual Property – Towards Intellectual Capitalism. This glossary contains many of the key concepts from the book as well as from several other publications from the Innovation and Intellectual Property Research Group.


A complete list of the literature references can be found here.

Index of names

An index of names mentioned in the book can be found here.

Index of subjects

An index of subjects discussed in the book can be found here.

Review from Prof. Petr Hanel

Excerpt from Hanel, P. (2006). Intellectual property rights business management practices: A survey of the literature. Technovation, Vol. 26 (2006), p. 909.

The most comprehensive study examining IP use, management and strategies in general, and in Japan in particular, is Economics and Management of Intellectual Property (Granstrand, 1999b). In addition to the detailed account and analysis of the results of his own survey of large Japanese corporations, the author compares the Japanese situation and the strategies of large corporations in Sweden and also occasionally in the US.

Granstrand’s historical overview of Japanese patenting provides an enlightening introduction to the subject. It may be well known, for example, that the Meiji dynasty opened Japan to the world in 1868 and introduced a patent system inspired by the US and Europe 3 years later. Likely less well-known, however, is the introduction of the ‘Ordinance Prohibiting Innovations’ by the Tokugawa dynasty in 1718 in order to prohibit ‘new things’. Subsequent to the introductory chapter is a comprehensive overview of the philosophy and history of IP, followed then by a description of the general framework of IP including an extensive survey of the economic and management literature up to the mid-1990s. The book also contains a useful summary of economic theories concerned with IP and patents.

Granstrand reminds the reader that with regard to the monopoly power conferred by patents, an important distinction to be made is that a patent provides first of all a monopoly on an input: (1) many other costly complimentary inputs may be needed before monopoly profits are gained and (2) as with many inputs, a patent may be substituted by other patented or non-protected solutions.

The evolution of R&D spending and patenting in industrial countries is compared up to 1991, followed by the survey data on R&D and patenting in large Japanese firms (chemical, electrical and mechanical). After the presentation of the Japanese patent system, the remainder of the book is dedicated to a discussion of patenting practices and strategies by Japanese corporations, based on the author’s survey and interviews he has conducted. That is followed by an insightful description of Japanese technology and commercialization strategies and a com- parison of means for the commercialization of new product technologies in Japan, Sweden and US. These strategies include patents, secrecy, lead time, switching costs and
superior marketing. The author discusses strategies related to the use of IPRs in standardization, IP policies and strategies, and the advantages and disadvantages of patenting in general and specifically in Japan. His survey shows that ‘‘the status of patent activities within the firm’’ as well as the ‘‘strategic role of patents,’’ ‘‘licenses’’ and ‘‘top management’s attention to patenting’’ all increased in Japan over 1987–1992. He stresses that unlike the European and US corporations, Japanese corporations considered patents as the most effective means of capturing profits by restricting competition. One of the specific features in Japanese strategy was the propensity to engage in technology-related product diversification in co-evolu- tion with product-related technology diversification, there- by benefiting from economies of scale, scope and speed (as exemplified by the case of Canon). The chapter on patent strategies is particularly interesting and informative. The presentation of various strategies (patenting, trademark, secrecy, licensing and litigation strategies) is completed and illustrated with survey results detailed for the three industry sectors.

His discussion of the analysis of patent information as a source of technical information is complemented by a warning regarding the use of patent statistics. The Appendix presents the methodology and research tools (the description of the survey, the sample and the questionnaire) used for corporate benchmarking and a comparison of corporate patenting in Sweden and Japan which may be a valuable source of information for similar studies. I will return to some of these specific issues below in the relevant sections of the report.
In the synthesis of his richly documented book, Granstrand argues that we are entering an era of intellectual capitalism, i.e. systems dominated by private ownership of intellectual capital, an issue resumed and developed further in Granstrand (2000).