Transcript The Relevance of an IP Audit in Your Business Strategy

Third WIPO/INSME International Training Program
Financing your business with Intellectual Property
Topic 2
Acquiring your Intellectual Capital:
The relevance of an IP audit in your business strategy
Bob Hodgson
Zernike (UK) Limited
Geneva
December 2010
First some simple definitions
 Technology – is how we do things now
 Knowledge – is what we already know
 Innovation – is doing things differently
 Science – is one of the main drivers of innovation
 Development – is how we apply science to do useful
things
 Research – is what we do to find out what we
currently do not know
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Bob Hodgson
National competitive strategies and SMEs
 Natural resource based:
 seen as second order
 but crucial to jobs and dependence
 Labour surplus:
 productivity still an issue
 quality standards in products
 Systems integration:
 rapid adoption and adaption
 source of innovation
 Advanced technology:
 R&D driven leading edge
 commercialisation emphasis
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Alternate business strategies and intellectual capital
 Lowest cost – efficiency savings for cost edge
 Value performance – upgrading at acceptable cost
 Most advanced – best performance driver
 Greenest – lowest accredited footprint
 Service +/- product – speed and responsiveness
All rely on knowledge and for some innovation is central
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Mismatches at different levels
 National imperative - upgrading productivity and
promoting innovation essential
 Business level success is continuing to do right
what you have always done – change is risky!
 Competitiveness challenge:
 reconcile the two positions
 grow new higher value businesses
 improve existing businesses
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Real Economy: innovation engines
 ARM – Advanced RISC Machines
 IP generator
 income from Licences and Royalties
 market cap - billions
 Generics Group Plc – technology solutions provider
 IP accumulator
 and commercialiser – spinning out companies
 massive P/E ratio on flotation – hope value
 Supported by specialist service providers
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The starting point: has it potential value
 Who will buy or already buys my product/service?
 What will they pay?
 How many potential customers are there?
 What will any innovation replace?
 Will it work and how much will it cost to make?
 Is it likely to be profitable?
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Communicating potential: investment readiness
 Business plan
 Market data and evidence
 Communications skills
 Differentiating the investment pitch
 Cultivation of the risk takers
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Recognising what is there and what to be added
 An IP audit to codify present technology
 Identification and packaging
 An IP search
 Negotiation and acquisition
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Personnel and Intellectual Capital
 Skilled people are the capital of the knowledge economy
 Codified v tacit knowledge
 Methods of protection:
 formal registration
 contract of employment
 equity share
 Restrictions of trade?
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What are your Intellectual Capital Assets
 Advanced technology – the archetypal IP candidate
 Market credibility – trade marks and brand reputation
 Production expertise – control and quality oriented
 Product performance – incremental advances or
radical changes
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Sources of technical and business innovation










Clients or customers
Competitors
Internal sources
Associations
Technical standards
Conferences/trade press
Scientific journals
Consultants
Universities
Government labs
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70%
50% +
20%
Bob Hodgson
Supply side perspectives
 The inventor:
 the idea that will change the world – huge hope value
 and make me rich
 The research institution:
 an output in its own right
 with weak commercial perspective
 The commercial licence provider:
 revenue generating expectations
 tempered with restriction of own potential action
 Alignment of risks and rewards
 clarity and competence of owners
 capacity to pay and to exploit
 position in market
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Valuation: the unresolved challenge
 Easy – when there is a revenue stream
 But even then worries about sustainability
 Before the revenue stream it is much more uncertain
 And is characterised by information asymmetries
 inventor knows the technology
 entrepreneur knows the market
 investor needs to independently evaluate both
 and then to reach a deal!
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Some additional limitations
 IP system is not always applicable
 advanced engineering around F1 racing
 accumulated tacit knowledge
 Commercial perspectives can cripple business
 Pro fit and its American licensee
 defence costs can overwhelm revenues
 all but a few USA universities spend more on IP
than they receive
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Making the market work
 Stimulating the supply side
 Stimulating interest among MSMEs
 Training brokers and agents
 Educating fund managers
 Ensuring quality implementation
 Building the history
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Bob Hodgson
Thank You
BOB HODGSON
ZERNIKE (UK) Ltd
The Grove
High Street
Sawston
Cambridge
UK
CB2 4HJ
0(044)1223 526980
[email protected]
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Bob Hodgson