• Intellectual Asset Management Fact & Fiction
• Managing Your Intellectual Assets
• Portfolio Analysis: Realizing the Value of your Intellectual Assets
• Five most common intellectual asset management mistakes companies 
• Your Intangible Assets A Time to Take Action
• Present State of Intellectual Asset Management

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Newsletter Contents:

Key Questions

Letter to Professionals

#2 Intangible Asset Driven Business Trends  

Top 13 Challenges For  Intellectual Asset Management Teams

Seven Common Intellectual Asset Management Mistakes That Are Made When Entering Into Joint Ventures, Divesting, And Mergers And Acquisitions

Future Topics

Dear Professional:

Thank you for the support and positive response to our initial newsletter.  Not surprising, in response to our question in the last issue that asked, ”Does the business understand Intellectual Property?” we received e-mails from Patent Department management that struggle with the lack of business support.  Gordon and I see this as a critical issue in business today.  The lack of business support correlates to the lack of understanding.  So, whose responsibility is it to educate the business?  We would like to explore this topic over the next couple weeks.  What are the steps that patent departments should take to educate the business? 

In this issue we ask more than one question? We feel that the patent department should be shouldering the responsibility for protecting the company’s tomorrows and enhancing its competitive advantage.  They are presently consumed with looking at deadlines and prosecution expenses. The patent department is a critical element of the organizations viability, short term and long term, but they must make better efforts to educate and demonstrate to management its value and/or its potential value to the business community. Examples of value are evident in leading companies such as Dupont, Dow, and IBM. They have successfully leveraged their Intellectual Property for value and have developed corporate Intellectual Property cultures that will maintain a competitive advantage into the future. 

An aligned strategy can have a direct impact on the business scorecard.  A well-developed strategy can reduce patenting costs and expenses by 20-30%.  It can increase margins and competitive advantage significantly.  Do your business people understand how Intellectual Property can influence competitive advantage?  If not, start educating now.

We are hearing more and more from the patent departments that they are focused on the short term.  This would infer that the long term will take care of itself or that there is someone else looking after it.  We recognize that we are in the economic doldrums, but someone must look 3 years out and be looking at the quality of the portfolio. Stock holders will be more and more demanding for this kind of information and the value of the stock, which is base in part on expectations of how future profit will be impacted.

Just as important, if business does not understand the Intellectual Property value stream, Patent Departments will be continuously pushed into a tactical role. This will keep the pressure on them to reduce costs, and compete with outsourcing alternatives. Unfortunately, along the way, the corporation will be losing an opportunity to have keen experienced minds from participating in the strategic development of the business.

Thank you

Rob Williamson

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Trend #2     With greater frequency, sophistication and alacrity companies will develop strategies to leap frog their competition by managing and using their IP

 Implications

 Playing the game smarter by developing and protecting products and services that meet compelling customer needs and permit value pricing will allow companies to bypass traditional paths to market leadership. Intellectual Property will allow some companies to break into traditional value streams or disrupt them altogether. Underdeveloped countries will invest in the development of Intellectual Asset’s and Intellectual Property as a short cut to gaining competitive advantage with developed countries and traditional approaches.

SEVEN COMMON INTELLECTUAL ASSET MANAGEMENT MISTAKES THAT ARE MADE WHEN ENTERING INTO JOINT VENTURES, DIVESTING, AND MERGERS AND ACQUISITIONS

by Gordon Petrash

The amount of money, time and effort that goes in agreements is often times immense and critical to the future well being of an enterprise. The deal makers use many elaborate financial formulas to calculate the value of these transactions, but many times under value or completely ignore the intellectual assets that are encompassed within: The patents, trade marks, copyrights, brands, trade secrets, and key know- how are often times left out of the negotiations and are relegated to figure out after the numbers have been decided.  This is usually done during the due diligence where extracting value is not the intent.

MISTAKE ONE – Not knowing the key Intellectual Assets (IA) involved within the deal and their importance and value contribution to the viability of the resulting business state. This understanding should not just be an approximation but a studied one. Knowing the key Intellectual Assets on both sides of a deal should be fundamental in most industry segments. Particularly those in the technology areas. Once the assets are identified it is not a great leap to value them in their new context. The methodology to do this is readily available.

MISTAKE TWO – Under valuing the Intellectual Assets involved. This under valuation often takes place and all sides of the deal many times don’t even recognize it. Valuing an Intellectual Asset in its present context rather than in its new context can miss the value of the synergy. Under valuing also takes place when the benefit of the Intellectual Asset to a party in the new context is not understood. The value contribution of the Intellectual Asset should be linked to benefit short term and long term. Examine the business plans with and without the Intellectual Asset and have the right people input to the plans.

MISTAKE THREE – Brands are often times undervalued. Particularly when they are valued against having to build the brand equity from scratch. This should not be transparent and not account for a deal, as is often the case with smaller older brands. There are deals where one company benefits greatly by just being able to associate itself with another more recognized company. This needs to be considered as part of the value contribution and compensated for.

MISTAKE FOUR – Due diligence on the Intellectual Asset should take place before a deal is finalized rather than after. It is amazing how many major corporations allow licensing or business people negotiate deals that they have little understanding of the Intellectual Asset. People who know the asset and the competitive environment it resides in should verify all aspects of the Intellectual Asset’s. Preferably evaluate the asset before the negotiations. More value can be negotiated and fewer surprises will arise. 

MISTAKE FIVE – Negotiating the value of Intellectual Assets separately rather than lumping them altogether seems to bring consistently higher values. The whole often times is not as valuable as the parts individually. At least not when negotiating IA’s. Why is this? Because by separating them more focus and understanding is given to them. Contrast this with an inclination to just want to throw in the Intellectual Asset’s and give them a general estimated value. Understanding the Intellectual Asset’s can be difficult for both sides of a deal. The side that does it best will often times come out much better.

MISTAKE SIX – In Joint Ventures understanding how and agreeing to the disposition of the existing and the new Intellectual Asset’s developed in the Joint Ventures is critical and many times done with out enough clarity. This negotiation is best done before the Joint Ventures deal is consummated rather than during a break up.

MISTAKE SEVEN – Intellectual Asset’s are not limited to patents, copyrights, brands, trade secrets, trademarks, or know-how. We need to look at the key employees of an enterprise, and their type of contract or work agreement. Too many deals that looked good on paper looked much worse after key employees left or retired soon after the deal was consummated. And to add insult to injury there are instances where these employees went to competitors with trade secrets and know-how that was not adequately protected.

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