So this week I will be discussing a presentation we viewed in class about the role of intellectual property as a strategic business asset. Thank you to Efrat Kasznik, Founder & President of the Foresight Valuation Group, for giving this presentation!
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IP MARKETPLACE OVERVIEW
- Today, intangible assets comprise 80% of the S&P 500's market value, and intellectual property is playing an increasingly larger role within a variety of industries:
- Consumer Products vs. Digital Products
- Consumer products today are very easily patentable if they meet the criteria we discussed early on in the course
- However, Supreme Court decisions consistently rule that you cannot patent software or digital products
- The idea is that you cannot patent software because it is based on algorithms that already exist, so there is nothing proprietary about software
- A look at the comparison of IP rights shows that there are for types of IPs:
- Copyrights
- Original works of authorship
- Automatic protection for the author's life + 70 years
- Trademarks
- Word, name, or symbol used to distinguish goods
- No expiration as long as it is used commercially
- Trade Secrets
- Business information that has economic value and is kept confidential
- Indefinite lifetime value
- Patents
- A right to exclude others from producing, using, or selling a product covered by invention in a defined territory
- Lifetime of 20 years from the filing date
- The mobile patent wars serve as an example of the ever-increasing size of the IP marketplace
- Currently, 250,000 patents are going into smartphones, and that number continues to grow
- Over the course of the last few years, server multi-billion dollar deals have taken place for IP acquisition (i.e. Google purchases Motorola Mobility)
- The IP marketplace is currently being impacted by 4 key external forces:
- IP litigation is at an all-time high
- Patent transaction markets are currently very active
- Global competition is changing the IP playing field
- And the U.S. Patent and Trademark Office is both overloaded and underfunded
- This is largely due to the America Invests Act (AIA), which moved patents from a first to invent to a first to file system
- The IP market place features more than just patent holders and patent users - there now exists an intermediary known as a non-practicing entity (NPE), which we discussed in previous blog posts
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IP STRATEGY FOR GROWTH
- Sources of intellectual property include:
- Internal research and development
- Manufacturing
- Marketing
- There are 5 main types of IP transactions:
- Use internally
- License
- Sale
- Joint venture/spin off
- Enforcement
- The idea is to eventually grow an IP over the course of its life cycle into a strategic business asset
- Develop an IP position
- Innovators and technology enthusiasts adopt IP
- Early adopters and visionaries do so as well
- Portfolio commercialization and monetization
- Early majority pragmatists
- Late majority conservatives
- Portfolio liquidation
- Laggards and skeptics
- Goals to consider when growing an IP portfolio to maximize valuation
- Freedom to operate
- Block competitors
- Support future products
- Hedge against litigation
- Attract buyers and investors
- Monetization
- Liquidation value
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IP CASE STUDIES
Xerox: Xerox's failure to patent the Graphical User Interface (GUI) led to a loss in a half billion dollars in royalties from Mac and PC sales
Kodak: Infringed on 7 out of 12 of Polaroids patents instead of creating innovative new technology led to a loss of $3 billion
Hey Mo! This is honestly a great post that thoroughly summarizes what Kaznik presented in class. I like how you clearly define the 4 elements of intellectual property: copyrights, trademarks, patents, and trade secrets - and explain each of them very concisely. This post is extremely easy to follow - good stuff!
ReplyDeleteMo,
ReplyDeleteAnother wonderful post! I love how your vlogs always add such clarity to what is written in your posts. I also love how you included the IP case studies of Xerox and Kodak!
Hi Mo,
ReplyDeleteGreat post! I think you offered such a thorough description of Efrat's presentation! This post really solidified the material for me and I feel that aside from her presentation, this is a great source of reference when researching or discussing the topic. Very comprehensive! I think your posts and videos have come a long way since you started this intellectually-stimulating endeavor.
Hola again Mo! As usual, very good job. In this blog post the 4 key internal forces are what interested me the most. It definitely hints how the invisible hand of the market works in this particular industry :-)
ReplyDeleteHi Mo,
ReplyDeleteGreat post! I always like reading your posts because they are so comprehensive. I definitely can see this post as something I would refer to in the future to really recount Efrat's presentation and what she talked about. I think I will definitely offer this as knowledge to my peers and colleagues in the future. Next time, it may help to elaborate a little on each point that is written in bullet form, just to clarify for people who weren't attending the lecture! However, overall, great and comprehensive post.
Best,
Jessica
Hi Mo,
ReplyDeleteGreat post! I always like reading your posts because they are so comprehensive. I definitely can see this post as something I would refer to in the future to really recount Efrat's presentation and what she talked about. I think I will definitely offer this as knowledge to my peers and colleagues in the future. Next time, it may help to elaborate a little on each point that is written in bullet form, just to clarify for people who weren't attending the lecture! However, overall, great and comprehensive post.
Best,
Jessica
Mo,
ReplyDeleteFantastic post regarding the role of intellectual property as assets! I think this post is a perfect example of how you incorporate organized structure, detailed analysis, and entertaining graphics into each and every one of your blog posts! You did a fantastic job explaining Efrat's presentation, and I think your bullet points effectively and concisely communicate your points. Please keep up the great effort and work with these posts, as I would always love to see continued improvements.
Best,
Anish
Mo,
ReplyDeleteGreat post on intellectual property! Your notes on Kaznik's lecture were spot on and incredibly comprehensive. I like how you were able to reference specific numbers from the lecture to include in your blog post. It was really helpful!
Really great bullet pointed summary of Efrat's talk! Your points and arguments in her talk were fantastic. Although it didn't have the great graphics you usually use, it was just as good a post as you usually pump out! Great job!
ReplyDelete