Forbes: State of the Intellectual Property Union
Author: Tyron Stading, Forbes Guest Post
Only four years ago, the majority of patents and intellectual property (“IP”) concerns were confined to the legal department. Since then, the patent landscape has morphed into a complex terrain forcing corporations to create business teams with executive oversight to focus solely on intellectual property; proof that the value of IP is working its way up the corporate ladder.
I recognized the business need for a better understanding of IP assets during my time at IBM. In fact, I believed then, and I still believe now that the best companies are leveraging intellectual property to grow revenues and build a competitive advantage. Patent-to-product mapping, financial metrics and organizational data are critical to deliver the insight needed to effectively run an IP business unit that increases business value.
We have seen intellectual property transition from a legal cost center to a financial commodity. IP has become a viable financial asset via licensing and litigation, and investments are being made to capitalize on that value. In fact, financial institutions have invested over $8 billion into leveraging patents since 2007, a strong indicator that profitability no longer resides solely in self-manufactured assets. There are now publicly traded companies with over $2 billion of market cap specifically related to patents.
A corollary to the growing recognition of IP as an asset is the trend of corporations becoming much savvier on using information to gain an advantage. Focus has shifted from a defensive strategy to an offensive one. Top performing companies are more creative with their business models and more proactive about asserting their patents. Portfolios are being built and acquired to block other organizations from relevant market spaces and to lock in competitive advantages. Organizations are looking to mine as much revenue as possible from their IP assets by actively seeking appropriate licensing partners. Companies have also learned to work cooperatively to achieve their strategic IP goals by leveraging defensive patent pools, covenants not to sue, and creative cross-licensing models.
Another important trend is the growing understanding that IP-related risks are vital components of overall business and operational risk. In fact, IP risk is a growing concern at the C-Level. Mergers and acquisitions, which have a heavy IP component, are projected to increase 36 percent in 2011. Licensing is at an all-time high as companies struggle to grow in a down economy and speed time to market. IP risks and threats put these efforts in jeopardy. Litigation has increased with more defendants per case and longer trials. Even a cursory view of business headlines today emphasizes the neglect of IP risk management and limited appreciation of its implications. Progressive corporations know that integrating sound risk management practices with insightful IP-based business intelligence (“IPBI”) is important to identify and mitigate these risks.
IPBI will continue to adapt to the changing market, as the financial viability and infrastructure around patents will continue to become more sophisticated. New business models will continue to emerge in response to that evolution. There will be more transactions and fluidity in the marketplace with increasing attention to how patents impact risk and revenue, and more insightful intelligence will be required for key decisions.
Tyron Stading is the Founder and CTO of Innography, a SaaS company that delivers a comprehensive, online Intellectual Property Business Intelligence (IPBI) application. Prior to Innography, Tyron was an IBM worldwide industry solutions manager in the telecommunications and utilities sectors, and worked at startups focused on mobile communications and network security. He has published multiple patent research papers and filed over two dozen patents.