The new mantra: Innovate, protect and leverage or lose

The Internet in its short history has spawned a number of cottage industries. From the folks who market the antiques they find in their attics to the entrepreneurs who silk-screen t-shirts in their garages, the Web is overgrown with hustlers looking to make a buck.

An unexpected cottage industry has emerged recently, changing the way companies do business. This industry involves intellectual property — more specifically, the protection of such property. If you have it, you're sitting in the driver's seat. If you don't, you're scrambling to get it or find someone who does so you can work a deal. And if you can't do that, you're in for a bumpy ride.

Last June, free Internet service provider Juno took NetZero to court, accusing its arch-rival of violating a patent that prohibits any other company from displaying third-party advertising while a user is offline (reading e-mail, for example).

Six months later, NetZero took Juno to court, claiming that the latter violated a patent NetZero owns that gives it exclusivity concerning third-party advertising viewed when a user is online.

At about the same time, Amazon.com received a preliminary injunction — since overturned — against Barnesandnoble.com that prevented the brick-and-mortar e-tailer from using a “one-click” ordering system. This system allows the user to place orders based in part on key information about the user that was previously collected and stored.

Get used to it. This is only the beginning, claims Kevin Rivette, chairman and CEO of the Aurigin Group, which produces a software program that tracks patent activity across a variety of industries.

“This is something that people are starting to pay a lot of attention to, especially over the past two years,” says Rivette. “[Intellectual property] is nothing more than the protection of innovation. It's not some black legal box and it's not something that only lawyers deal with.”

Not that long ago — no more than seven years ago, claims Rivette — protecting intellectual property wasn't something that anyone considered simply because it wasn't necessary. It was enough to be the only company that could afford to build or distribute a product.

No longer, says Rivette, who co-authored “Rembrandts in the Attic,” which examines the ins-and-outs of patent protection.

“People have figured out that, in a knowledge economy, when the old barriers to entry are falling away, innovation can't be protected unless you can protect it with a legal right. And that's done through a patent,” Rivette explains.

But protecting one's intellectual assets is only half the equation. Equally important is figuring out how to take advantage of it. “Do you want to keep everyone out of the market, or do you want to open it up and try to make it a standard, where everyone pays you a very small percentage on their use of it? Or do you want to sell your company based on it?” Rivette asks.

“There are a lot of things you can do once you've got protection. The new mantra is, ‘Innovate, protect and leverage.’”