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As the recessionary storm clouds grow ever darker and the news pages are filled with deficits, lay-offs, broken banks, closing companies and scandalous bonus payments, it is understandably hard to look on the bright side. But sometimes it is probably worth doing just that.
So, in this spirit of optimism, IAM columnist Bruce Berman, CEO of Brody Berman Associates in New York, has penned a piece for our next issue called "Don't worry be happy". In it he identifies a number of reasons why now is a good time to be betting on intellectual property. If you are feeling pretty miserable, why not console yourself with the fact that you happen to be in the right business. This is why Bruce thinks that you are:
• Most IP is misunderstood. New inventions are abstract. So are the rights that protect them. Scepticism about patents is healthy. It is what financial institutions lacked when they engaged in structured finance. Asset-backed investors blindly outbid each other for bad assets; IP investors seldom overpay for acquisitions.
• Patents are cheap. Despite the proliferation of IP aggregators such as RPX, Intellectual Ventures, Rembrandts, Coller and Papst, the market for patents relative to the cost in R&D, prosecution costs and filing fees is relatively cheap. The inefficient market means potential opportunities for intelligent buyers.
• New products will help businesses emerge from the financial crisis. Whatever the next wave of prosperity looks like, innovation and the rights that protect it will probably play a key role. The worse the financial crisis is the more important these assets will prove.
• Strategic patents play a clearer role in profitability. The freedom of action they provide can generate higher margins and protect market share without generating a dollar of royalties or damages.
• Higher R&D costs are causing businesses to rethink business models. Pharma companies learned in the 1980s that they cannot fill their pipeline with in-house discoveries. To succeed they must identify the right inventions, knowhow and partnerships at the right price. They need to spend less while doing more. High-tech is just learning this.
• Open innovation is fuelling broader, better and more efficient investments. Open invention means greater return for more types of innovators and businesses, and greater efficiency for established ones. OI is not charity; it is good business and it requires the right patents to succeed.
• Brand names are better positioned to endure an economic crisis; so are branded patents. Pepsi, P&G, Kraft and McDonald’s are considered among the safest investments in a weak economy. Innovation brands such as IBM, HP and Philips are likely to be seen as safer plays, too.
• The playing field is levelling. A more diverse and better informed worldwide pool of innovators and patent holders encourages new ideas. It has become more difficult to infringe today without being caught. This facilitates more licensing and better alternatives or design-arounds. Roadblocks for some are becoming building blocks for others.
• Some companies need to monetise to survive. The courts have made it more difficult, uncertain and costly to license patents and enforce them. Selling a patent can be an attractive alternative to companies without the cash, experience or timeframe to monetise it directly.
So, is Bruce right? Broadly, I think he probably is. Has he missed anything? Quite possibly. Why not let me and/or him know?
IP management, Brands, Patents, IP business, IP finance