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Deals are important, but they are not the principal drivers of IP value

We are all back from Boston now after last week’s IP Business Congress (see reports here, here and here) and we are now going through the feedback we have had from delegates. Overall, it looks as if most of the 600-plus who attended found the event very worthwhile, both in terms of content and networking opportunities. There are criticisms and nits too, just as there always are, and we will look at these carefully so that we can make next year in Amsterdam even better; but, in general, the reception has been very good. I was pleased with the contributions from the vast majority of speakers and moderators; and I enjoyed the content and learned quite a bit – both by sitting in on sessions and talking to delegates in the breaks. It’s good to get together with a few hundred market leaders over a concentrated period as it tops up your information and knowledge bank very effectively.

In terms of general buzz, it looks to me as if patent-based deals are going to get more numerous, more widespread and, as the finance community gets increasingly involved, more sophisticated too. We are very unlikely to go back to the multi-billion dollar figures we saw a couple of years back, but in terms of volume and geographical scope things are moving quickly. There’s a lot of interest both in Asia, where the big companies are engaged in a very quick learning process, and the potential opportunities for NPEs that may be opened up by the arrival of the unified patent court (UPC) in the EU; though European companies themselves still lag in terms of their sophistication and are now in danger of being overtaken from the east.

I am not sure that those tasked with the creation of the UPC were thinking of offering hope and encouragment to NPEs when they developed their plans, but there is no doubt that it has caught the imaginations of many aggregators and intermediaries in the US and elsewhere. A single legal system covering a market of 500 million plus wealthy consumers combined with the possibility of a single injunction with no restrictions on who may get one and the chance to game the system, at least in the early years before rules and procedures are properly established, is a very tempting proposition for US entities feeling increasingly under pressure in their home market, not to mention ones that may spring up in Europe itself. The key for any NPEs that do enter the European market, though, will be the quality of the patents they assert. The UPC only becomes really interesting if there is a realistic chance of winning a case, because that’s when the injunction kicks in. The kind of nuisance troll that thrives in the US on the back of the expense of taking cases to court is unlikely to prosper in Europe, unless the cost of litigating inside the unitary system turns out to be much higher than expected. Instead, what will bring defendants it the table is the award of an injunction or the possibiliy that one may be awarded after a case has been decided. 

All that said, what I think some of those who attend the IPBC may lose sight of from time to time is the fact that IP deals are only possible because of the value that lies in IP outside of monetisation. Sales and licensing programmes do not exist in a vacuum; instead, they are made possible because of what the IP being transacted enables: freedom to operate, exclusion, collaboration, open innovation, targeted R&D and so on. For most IP owners, actual and potential, these possibilities are much more interesting and financially significant than making a few million dollars from cashing in on their portfolios.

Instead, what really drives strategic IP value inside the vast majority of corporations of all sizes are the ways in which IP is applied and how it relates to the other parts of the business – not the fact that it is bought, sold or licensed. You need spend only a few minutes speaking to any CIPO or in-house IP head to find that out. And, what’s more, they’ll tell you that it’s about a lot more than patents – that other IPRs and intellectual capital such as brands, reputation and know-how are equally, if not more, important. The real art is in working out not just where the value lies, but how to capture it, measure it, balance the differing types and then communicating all this to the C-suite, the rest of the business and to the outside world. And sometimes, an IP strategy can be about considering IP and then deciding that actually there are more important things to focus on.

Don’t get me wrong: deals are very important, not just in and of themselves, but because of how they bring IP to the attention of senior executives and investors. The more people know about IP, the better. But let’s remember that they are just one part of the equation; and for most businesses nowhere near the most important one. It’s my task to make sure that the IPBC, IAM and this blog reflect that too. We should never forget the big picture.


Joff Wild
IAM Magazine
17 June 2013

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IP management, Licensing, Brands, IP litigation, Copyright, Patents, IP business

Comments

RE: Deals are important, but they are not the principal drivers of IP value

Joff, I completely agree. As we highlighted in our session on "From IP to IC", IP exists in an ecosystem of other intangibles. Competitive advantage for a company comes from aligning all intangible assets to produce goods and services that meet market needs. IP is an important part of the equation, but only part. IP value comes from someone recognizing how the IP fits in to the broader operation. I hope we can continue to highlight this at future conferences.

Ken Jarboe

Kenan Jarboe, Athena Alliance on 17 Jun 2013 @ 19:32

RE: Deals are important, but they are not the principal drivers of IP value

"It's coming home! It’s coming home! Intellectual Property is coming home!"

As one of the inductees to the IP Hall of Fame indicated the IP world is in danger of overreaching itself and killing the Golden Goose.

We need to stop trying to think like bankers and begin to re-think what it means to be an IP expert and the role and point of the IP system. We also need to send the New Age IP gurus back to their none IP routes.

There were clearly some indications of this moving in the right direction at this IPBC and I would encourage further moves in that direction.

One day we will look back and be slightly bemused that anyone with any serious knowledge of IP and the real world of IP could ever have thought that IP should be or even could be an "asset class". It is just so much more than that.

Nicholas White, Tangible IP on 18 Jun 2013 @ 11:44

RE: Deals are important, but they are not the principal drivers of IP value

When the best, brightest, and most ambitious up-and-comers in an enterprise decide to become the head of IP instead of head of sales, finance, or operations, then you'll know things have really changed.

This is a very smart reminder, Joff.

David Kline, on 19 Jun 2013 @ 16:50

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