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INTELLECTUAL PROPERTY ANALYSIS

-Shradha Diwan

Intellectual Property is any product of creative intellectual endeavor such as an innovation,

design, trading style, artistic work, or literary work – including computer notation. There are
basically 4 types of intellectual property: trademarks, patents, copyrights, and trade secrets.
Each is legally created and protected by a specific federal and state statute.

The IP category of intangible assets constitutes a majority of a bus iness entity’s total intangible
asset value. The asset category of intangible assets is described as patents, trade names, and
other intangible assets acquired from an independent party. Unlike the general commercial
tangible assets, IP assets enjoy special legal recognition and monopolistic protection. General
commercial intangible assets are typically created in the normal course of the subject business
operations. These general intangible assets may include, for example, a supplier contract, a
customer relationship, an assembled employee workforce, or a leasehold interest. However,
the creation of an intellectual property asset can be attributed to a specific individual’s
intellectual capital.

A company’s intangible intellectual assets build an IP portfolio. Managing a company’s

intellectual assets in order to achieve the organization’s growth plans is important for the
success of a business venture. A company’s IP portfolio is a strong indicator of its valuable
intangible assets and it needs to be constantly strengthened by filing new patent applications,
licensing, and cross-licensing. All of this is required to survive and thrive in a competitive
business environment, adding value through creative and non-traditional applications.

IP analysis is essential to explore competitive and IP-related situations surrounding a company’s

products and services. It plays a significant role in defining a strategy for maintaining market
leadership and determining which technologies should be IP protected. It also helps to
determine the timing of patent filing and how to best market one’s intellectual property.
Identifying potential revenue and managing the costs of existing IP is essential to the asset
management of an organization. It also helps the company obtain information regarding what
technology development opportunities exist in the market and also to gain deep technical
knowledge to support complex litigation needs.

The following factors can affect the value of IP in several ways:

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The legal life of the IP asset: it influences the valuation analyst’s estimation of the
remaining useful life of the subject

The opportunity to commercialize an IP asset: by entering into licensing, joint venture,

or other exploitation and development agreements

The amount and quantity of market data regarding IP asset transactions: availability of a
larger amount of data with regard to the sale, license, or other commercialization of IP
due to more reported IP sale/license transactions

The greater royalty rates earned on IP assets compared to other commercial intangible
assets: an IP trades at higher prices because IP buyers and licensees are willing to pay
more for an IP due to the protection afforded to them by IP laws

The quantity of judicial precedent relating to IP assets: a review of published precedent

may provide the valuation analyst with an indication of a reasonable range of pricing
multiples, royalty rates, damages-related lost profit margins, and so forth

The passive value of the IP asset: active value of an IP is created when it is used
proactively and passive value is created when it is used defensively. Both active and
passive values are legally influenced by the legal and economic attributes of the subject
IP.

Basically, IP analysis is an envelope term for IP mining, IP strategy, IP portfolio management,

and IP management. It involves planning using tools like IP landscaping whereby a company can
target specific areas where acquiring IP rights can be economically beneficial. Undervalued
assets of a company can be organized and boosted through IP partnering, licensing, and
litigation that otherwise might remain unearthed.

IP Mining is a multistep process that begins with cataloging and organizing a company’s IP and
ends with a boost to its bottom line. That boost comes through IP partnering, licensing and
litigation that might otherwise have remained unearthed. Patent mining requires more than
just legal expertise - it also requires the involvement of experts in the strategy, processes,
technology and the industry.

Companies, once only interested in understanding the pate nts within their own portfolio, are
now interested in knowing about the patents held by competitors. Patent management
application and robust search engines allow internal IP managers to quickly pull together
organized sets of patents from within their own portfolios, those of specific competitors, and

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those patents citing relevant technical or industry terms. With the advent of such patent
analysis software, IP managers have pushed the patent mining process toward studying larger
and larger patent sets.

Human analysis must be teamed with the software’s technical capabilities in order to mine a
large portfolio successfully. The information thus obtained should be visible to the entire
company, from R&D, to product marketing, to the highest levels of management in order to
raise IP-consciousness within the organization. With this consciousness, more people would be
engaged in everything from spotting infringers at a trade show to recognizing a complementary
technology that could enhance an internal effort.

A company’s own patent mine contains only a small bit of the gold that stands to create
strategic advantage for it. The technology landscape is spotted with patents and technologies
that can hold danger and opportunity. Previously, patent searches were aimed at determining
prior art during prosecution. On the other hand, now they are also used for winnowing out
patentable new technologies before the research and development teams spring into action.
This is known as IP landscaping.

Examining the IP landscape will reveal that the aftermath of the technology bubble collapse has
left the technology landscape strewn with patents available for licensing or sale from disrupt or
bankrupt companies looking for quick cash and willing to sell off their IP assets. Licensing or
purchasing the rights to these patents and technologies can be valuable in several ways. First, it
can help companies bolster IP position and avoid the risk of defending their product position
against infringement claims (particularly to be guarded against is allowing key IP to fail into the
hands of so-called trolls. With no products of their own, these patent-holding companies troll
for patents in the IP marketplace with the goal of enforcing the patents against product-holding
companies – often at outrageous prices). Second, it can help contribute progress to the
development of and reduce the time to market for new products. Finally, it can help maintain
competitive advantage as companies develop new product features and improvements in the
face of alternative products being brought to market.

The new era of patent mining involves creativity, assumes a higher degree of risk, and most
importantly, requires engagement from upper management. However, the rewards stand to be
much higher, beyond licensing fees or royalties.

References: www.ipfrontline.com

Shradha.Diwan@gmail.com