Category: Patent

Does your Scale-up Reality Check Show an IP Strategy?

Investments in technology and global marketing are still happening, but in Canada, 90% of companies are not protecting the innovation as they move to grow. 

In the past several months I have talked with numerous startups and high-potential scale-up ventures, few of which are ready or able to adequately invest in protecting their R&D investments as they grow. The key challenge they all face? IP obstacles – both in funds to invest and the experience or expertise to do so efficiently, which will in turn become a limiter to their growth. The end result, at least for the ventures I met with, was they are at serious risk in expanding their global market footprint while keeping global competition at bay.

I considered if my experience was limited to the groups I spoke to, so I analyzed some additional Canadian market data, which confirmed my view.

First, we have to consider that there is support for company growth, and both Government and Canadian ventures are continuing to show success in innovations for global scale up. As an example, almost 75 Canadian companies were exhibitors at January’s Consumer Electronics Show (CES 2017) in Las Vegas, with more than half of them coming from Ontario. Navdeep Bains, Canada’s minister of innovation, science and economic development, was in attendance and met with a number of Canadians companies such as Blackberry, Mighty Cast, Interaxion, and Paradigm Electronics, to discuss innovation and access to global markets.  Considering the Government of Canada is investing $218 million over the next five years to increase global investments, and CES 2017 is billed as the worlds largest consumer technology tradeshow, the attendance by both Minister Baines and the exhibitors to help promote our innovations on a global scale makes sense.

However, when I look at the data, the long term impact of the Government’s global investments drive coupled with the ventures R&D investment, I struggled to find a way these investments would be protected. My analysis of the all the Canadian SME companies exhibiting at CES 2017 indicated only 18% had publicly listed patent protection for their technology. In fact, less than 10% of the SME’s reviewed had the beginnings of an Intellectual Property (IP) strategy. This implies that upwards of 90% of the ventures promoting their innovations on a global scale were not set-up to protect the benefits of their efforts in the long term.

What this means is while high-potential scale-up firms are producing ideas, ownership eventually will lie elsewhere as larger global competitors move to copy the product, or protect new iterations with their own IP protection.

Looking globally, there are several countries that realize this, and are moving to act on it. In April, Singapore launched a $1Billion innovation fund, which was partially funded by the IP Office of Singapore. Their goal is to fund companies that have “globally competitive technology”, and also begin to move Singapore as a “Global IP Hub in Asia”. With this it is clear that the innovation investments via Singapore will have a strong IP aspect to them. Canada, with creation of a National Patent Strategy in this years Federal Budget, will hopefully not be far behind.

In 2014 I posted a writeup about “Innovation and Sovereign Patent Pools”. The global IP licensing market has changed dramatically and while SPF’s and Patent Assertion Entities are still relevant, their approaches are expanding from pure licensing to stronger linkages to local innovation projects and funding.

So where do we move from here?

As a company, one must invest in not only research and global growth plans, but ensure they have the freedom to own their success – which can be accomplished by an IP Strategy. As an investor, either a private or government fund, policy and action via funding must consider the ownership of the technology: are we satisfied with merely creating technology, or will we strive to be the beneficiaries of our intellectual property?

To be successful, all key parties – ventures, investors, and government groups – need to make strategic investments in intellectual property to give freedom for growth.

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How an innovation and IP value-chain view can transform portfolio value

I recently authored an article in IAM Magazine, entitled “How an innovation and IP value-chain view can transform portfolio value“. I looked at how viewing an IP portfolio from the value chain of a business can identify gaps and opportunities for business and IP executives.   Overall, looking at the value chain from the perspective of both depth and breadth gives a more cohesive view of the landscape of the actual IP and innovation environment.

“An innovation-based decision about what to continue to invest in must be made in the context of the intellectual property and the business ecosystem”

The article goes into detail on how this depth and breadth view of the value chain give business and IP insights to a management team.    For example, using IoT as a case study, we are able to see that the highest proportion of patents is in the component side of the value chain. This suggests that interoperability via communications is well protected and ventures should develop an IP position accordingly.  However, it also suggests that interoperability protection via IoT systems is extremely unbalanced, with few filings around system-level customer offerings

With vendors pushing innovations to interoperability to achieve faster market adoption (estimated 40% of the IoT value is in interoperability), there seems to be a disconnect with the amount of intellectual property filed at the solution end of the value chain (only 5%). This view does not even fully consider the convergence of segments that will come from traditional ventures in other sectors. For example, the connected car has traditional suppliers such as Ford and Continental filing IP registrations alongside other IoT-savvy vendors such as Alphabet, Apple and other selected telecommunications companies.

There is additional IoT patent landscape data in the article, and is available here for download.

Written by Comments Off on How an innovation and IP value-chain view can transform portfolio value Posted in Patent

Top 5 IP challenges all executives will face in 2016 (Part 1)

What are the key business oriented challenges that any manager or executive should be considering in 2016?

Based on current patent and market trends, below are the top 5 challenges all executives or company leaders will face – these challenges directly impact R&D departments, legal groups, innovation teams, and even finance departments.

Challenge #1 – Thinking Globally

It has been no surprise that as the US legal environment has shifted and as a result the IP investors have moved to find more stable environments – namely Europe. Yet while Germany seems to be the focus there still is discussion about increasing patent quality for licensable IP, and the bigger geographic picture still needs considered. Moves in IP growth across Asia Pacific (South Korea, China, and Japan) are happening in the background, perhaps a preview of where global enforcement will be in the next few years (Although Edward Jung notes it may already be there). To layer on top of this – while historically US assets were once purchased, now the IP marketplace is looking for more a global portfolio to purchase as a necessity.

Challenge #2 – Innovation is back inline with IP

Several NPE’s and PAE’s are adding know-how and knowledge transfer as part of the license deals, a leading indicator that IP professionals are starting to tightly align IP with innovation programs. For operating entities this is perhaps no change on output, except to suggest perhaps the bar is being raised on transfer of the technology by the receiving parties that are being asked to pay for licenses.

Challenge #3– Efficient Infringement

Compared to years past it appears if a company has the funds to extend and fight a patent infringement case, there seems a higher likelihood they can eventually defeat the patent. It seems the combination of legal tactics such as IPR filings and delaying payment (seemingly done by Samsung and Apple) are becoming common strategies considered by most firms now. The challenge of avoiding patents being so “efficiently infringed” may change in the US soon. But for patent holders that have quality patents, technology to easily transfer, and a global coverage, “efficient infringement” still remains one last hurdle at the end of a monetization program.

Challenge #4 – Converging Markets

Technology groups are converging – smart phones, connected cars, smart homes, wearables, internet of things – and with this convergence is non-traditional companies moving into new fields, such as the rumored Apple electric vehicle. Expect to see challenges by new entrants increasing new filing volume and old incumbents working to ensure future positions are protected now as R&D works to catch up to the convergence.

Challenge #5 – Buyers Market

On average the costs to acquire IP continues to be at record lows. Edward Jung has noted for Intellectual Ventures right now the average cost per asset is at it’s lowest in the history of buying assets. BRG Capstone recently presented the possibility of the price finally rebounding. Other firms are indicating if the capital is there to purchase quality IP there will be profits to be made in the longer term. Parties linking the upcoming “IP trends” with the low priced global IP portfolios will be at a distinct advantage in the years to come.

Where does this leave us?

Next post I will writeup the key actions all startups, investors, executives, and business leaders – not just IP focused leaders – need to take in 2016 to address the challenges.

IP Dealmakers: The 3 Key Take-aways for IP Licensing Deals in 2015

Things are looking up.

Spending 2 days with the IP and Investment leaders in NYC this week at the IP Dealmakers Forum, highlighted for me 3 key take-aways of IP licensing in today’s business environment: Optimism, Geography, Bargains.

1) Optimism

Despite the doom and gloom the past two years, most of the discussion was centered around the discussion of a (slightly) improving marketplace – with even a flat marketplace being something to be happy with. Although nowhere near market highs of past years, BRG Capstone provided an interesting chart asking if a price rebound was a real indicator of a more optimistic market.

While this gives brokers and sellers something to be happy about, on a complimentary note, the pure licence based companies still are moving to hedge their bets by diversifying. Gene Quinn summarizes Edward Jung’s keynote, noting how diversification is helping offset some of the challenges of the past.

 

One interesting point I heard was Brian Hinman from Royal Philips, where he noted that even inside the Philips IP group they diversify as well via investments in startups and other portfolios:

 

But just because it’s looking up doesn’t mean it’s still easy. The one point mentioned several times is how for small investors, lenience entities, or single patent sales / enforcement, the market challenges still hasn’t changed for them.

2) Geography Perhaps part of the optimism is the shift to Europe and China to supplement the US. And while the US legal environment is smoothing out, it is still to unpredictable to make large IP investments and bank on a return. With a reduced time to decision, Germany seems to still be the venue of choice with the predictability of process trumping the potentially lower returns.

It was interesting to note that even in broad geographies like Europe, a focus on some specific countries still dominates like Germany. But to simply to consider German as your EU strategy – and to do so without a quality patent – isn’t enough the bigger global picture still needs considered.

Even within Asia Pacific there are countries of note, with South Korea and Japan leading the play, with Singapore looking to be the IP hub via government incentives.

In short it’s still a global business that needs managed with topics like tax structures, enforcement, bond requirements, and injunctions to consider:

3) Bargains

Discussions around the conference seemed to indicate prices seemed to be at the point where it was low, and although it may drop a little more it was low enough to start to re-invest in purchasing – particularly for those that had the backing to buy and hold.

A few people indicated that investing outside of the traditional US only IP marketplace was done and the global portfolio was a necessity. BRG Capstone noted investing in Chinese patents was one thing to seriously consider.

Wrapup: As usual, the industry is constantly changing and it is those that are adapting quickly are seeing the financial benefits. Having a licensing program for any venture requires a key team to search out and execute on opportunities, and with new geographical opportunities and IP assets seemingly at the bottom (for now), there are deals to be made.

Is it time for a strategy reboot?

This month it happened again – meeting with a company about defining their patent strategy, only for them to discover their filing and prosecution strategy was the same as it was 5 years ago when they started.  Unfortunately for them the seemingly vast changes in law, license environments, and competitive space have left them with little relevant IP to use going forward… and a hefty legal bill to show for it.  There is an inherent risk associated with filing patents – the process is longer than it takes to get some products to market, and is tremendously costly.  This issue becomes compounded for most companies as they are too small to have their own IP group, so it becomes an outsourced action to counsel, managed by a VP or R&D leader, a line item checked in quarterly meetings saying “patents are underway”.

But what are the IP leaders doing? How are they positioning for success?

Innovation as the new IP

While the majority of organizations continue to plow onwards, perhaps only adjusting the patent budget line item as needed, a few companies seem to be tackling the change head on.  And much like a canary in the coal mine scenario, some of the first moves for change can be see in the professional NPE or Innovation firms.  For example, companies like Patent Utility – formed to remove the friction of licensing in the market – has pivoted to Haystack IQ which is linking innovation and IP together for clients.  ipCreate, an innovation on demand firm (also heavily linked with IP in the executive team) is also growing,  announcing a major fundraising effort earlier this year. Last month IAM Magazine reported that publicly traded NPEs Vringo and WiLAN have also hinted at becoming more involved in product development, and R&D activities, as has Marathon following its merger with Uniloc. It is not a coincidence that those heavily involved in IP are pushing for a greater link to tangible new innovations as part of their growth (or survival) strategy.

A change in thinking

It is becoming clear that the IP professionals are seeing future of IP tightly linked to innovation programs.  As first movers they will be spending a tremendous amount of time focusing to get ahead, while traditional R&D firms doing innovation will be left well behind with their old IP strategies. So this begs the question – are R&D based companies, who are centered around innovation for survival as well, updating their IP plans to be aligned with the IP professionals path?

There is a new fight within innovation emerging and the only thing that is clear is this: It is time for Innovation + IP strategy reboot.