Back in 2016 I wrote an IAM article on IP & Value chains, entitled “How an innovation and IP value-chain view can transform portfolio value“.  In the article I talked about looking at an organizations value chain from the perspective of both depth and breadth, as it will give a more cohesive view of the landscape of the actual IP and innovation environment to build an IP strategy around.

This past month there was a published an article titled “Canada’s big, urgent economic priority is dynamic growth” (paywall enabled), where it talks about the how  building an intangibles-rich economy is the key to success.  The author notes that British and Dutch economics have found companies that have strong intangible assets capture much more of the value from “Global Value Chains”, and states that “The businesses that control the intangibles-intensive stages of global value chains will receive a disproportionate share of the gains as global value chains expand”.

The comments stem from the work of the 4 economists (Buckley, Strange, Timmer, and J. de Vries ) in the recently published Global Strategy Journal in their article entitled Rent appropriation in global value chains: The past, present, and future of intangible assets. The summary of their findings show that returns from intangibles are higher than returns from tangible assets (1.7x higher), and that effective management of intangibles is key to helping firms create and maintain competitive advantages in global markets.

I found it interesting that my “bottom up” business approach to building a strategy that takes into account complements and suppliers, the “top down” economic view maps this to rents related to the upstream / production stage / downstream stages of the global value chain address the same problem: ensuring deeper IP value is created and retained within firms. Further, both articles recognize the same thing: intangibles matter AND those companies or policy makers that have the foresight to place IP ownership in high rent areas of the value chain, will be rewarded in the future.

There is no denying that the value of intangibles as a component of corporate value are on the rise. The Ponemon Institute analyzed the value of intangible and tangible assets over nearly four and a half decades on the S&P 500 and found that in 2015 they make up 84% of all enterprise value on the S&P 500, a massive increase from just 17% in 1975. Newer data suggest it is now up to 90%. But as our approach to global business has changed since 1975, so has impact of where rents are found in global value chain.

To remain competitive, the articles (and others from the OECD similar to it) provides both background and support for companies, investors, and policy makers alike: intangible positions matter – both at the place we invest in, and the upstream / downstream position round around it.

For both policy makers and companies, our investment in a robust intangible position that covers the high rent areas will become an important area to cultivate over time. The result can be drivers of economic development for clusters or jurisdictions, and success for businesses in the form of increased market and financial growth.

This is Part 8 of a 8 step series on how SME’s can strategically manage IP during economic events: Asset leveraging

The key to successfully managing strategic IP during economic challenges relies on the ability to actively mange IP assets in new ways.

The constant change of IP needs

Due to the fact that the IP lifecycle of registered IP rights can last at least 10-20 years if properly maintained (and some unregistered rights in perpetuity), a structured approach to map and assess IP assets will provide a critical foundation to asses the impact of changes in internal business plans or external market shifts. This will be important because over time many organizations will see risks and rewards shift, IP talent requirements change, and trade offs between operational budgets vs IP retention discussions will occur. This structured approach ensures IP needs will be kept relevant with the realities of an organizations IP position.

One immediate outcome of this iterative approach to managing IP is there becomes a pathway for active review of assets to look for new opportunities. This includes asking the following questions:

• For ongoing prosecution of patents, are their new claims that can be considered to cover the market evolution or market shifts? This may include market expansion of the current business or spin-off creation of new businesses.
• For granted patents, are their existing patents that now cover newly created market opportunities that become the basis for out-licensing? This includes both technology transfer (know-how) as well as patent licensing.
• For the IP intelligence gathered, are their new opportunities identified to bring forward for the business to act on?

Finally: Bringing it all together

This discussion is meant to help define a structured approach to evolving an IP strategy based on market changes, with practical steps under the following general stages:

• Building an IP foundation (Steps 1-5): This starts with understanding what IP rights or opportunities a business may have, and working to understand what rights have higher value and what rights may have less so there can be a prioritization of efforts and costs. Next it considers resource (talent, budget) requirements over a defined IP lifecycle window, and a check to ensure IP rights are still aligned with market and business needs.
• Updating IP plans (Steps 6 and 7): Use of external IP advisors can add critical IP intelligence needed to ensure the IP foundation is still well positioned, and any new market or business shifts are now accounted for in any go-forward plans.
• Leverage (Step 8): With a new strategy in place, active reviews may provide new opportunities to leverage (new business spin-offs, new technology transfer or licensing programs). This could could be seen both as defensive positioning to block competitors, or offensive leveraging in the form of monetization plans.

In uncertain economic time – either for a business or an economy as a whole, finance and cash flow management is a critical aspect to ensure sustainability of the business both in the short and long term. For SME’s holding or needing to support their IP (patents, trademarks, etc), it is even more critical as working capital is required for ongoing IP related costs as well as continued investment to ensure future rights are still available once these difficult times have been weathered. These stages and the details in the steps outlined, provide tangible points SME’s can consider and take action on today.

his is Part 7 of a 8 step series on how SME’s can strategically manage IP during economic events: updated IP Strategy

The key to successfully managing strategic IP during economic challenges relies on the ability to shift an IP plan or strategy, while minimizing impact on the protected value of the organization.

Re-prioritizing Efforts

Companies need a robust IP strategy that takes into account how to spend less but still create or retain intangible value over the long period. While access to continued capital for maintenance of patent portfolios will be important, those that understand which areas of the portfolio to “double down on” and which to divest or abandon that may only have secondary value will be much better position on balancing short term finance needs against long term value retention.

Strategy refresh

The efforts done previously during the IP audit (Step 1) and the changing landscapes (Step 6) now come into play, where analysis may be done to identify any recommended changes balance the cost and value of the assets. During re-prioritization of efforts, adjustments in business requires updating of how IP assets value may be considered, including assessing the IP assets against changes or shifts in market offers. As one example: The Covid-19 pandemic saw changes in product offers from many industries, including autonomous robots manufactures expanding to add UV-disinfecting robots to their product offer, or tracing and mobility tracking expanding to support public health challenges. What was not previously considered “secondary IP value” for an organization, may now be a primary value driver in a changed economy.

Other changes that may require re-assessment of the overall strategy stem from the review results of contractual obligations (Step 5) and changing IP landscapes (Step 6). These may bring to light new intelligence that creates new business opportunities or risks, which may make new IP backed business cases to bring forward to the organization. For example, in refreshing a strategy, seek to answer the following questions:

• What market changes or new IP insights will change how we prioritize and categorize our IP assets (Step 1)? Does this re-prioritize how we invest in or manage IP?
• What budget changes do we need to make to support expected changes in IP operations or portfolio management (Step 2)?
• What IP talent do we need to adjust to accommodate our strategy shift (Step 3)?
• What prosecution repositioning will we need to do to ensure any new business strategy has the required IP protection (Step 4)?

Moving forward

A market driven approach to innovation requires an IP strategy that is flexible, and is never a static plan over time. A useful patent strategy still needs to have applicable IP coverage that can be used to at least defend, license, or enforce rights as the market evolves. This requires update to an IP strategy as external markets change, and internal business priorities shift to match the market need. While this may see obvious, in practice it does not always happen. Often, due to the length of time required for patent prosecution claims may narrow and granted based on older market needs and not reviewed for relevance (either during prosecution or after granting). Involving external advisors (Step 6) in helping identify changing landscapes or patent prosecution strategies will often ensure alignment with ongoing prosecution and changing IP needs.

This is Part 5 of a 8 step series on how SME’s can strategically manage IP during economic events: Contractual needs