Patents in the boardroom

Patents-in-the-boardroom-Photo

Asking C-suite officers for their view of patents can provide surprising results. Andy Elder dissects the results.

Patents are headline news again. That’s not surprising when, according to Ocean Tomo, more than 80% of publicly-traded companies’ value is in intangible assets, compared to less than 40% in intangible assets just 30 years ago. This dramatic shift is likely to be partly linked to the growing appreciation for IP as both a financial and strategic asset.

Rising importance also comes with more intense debate, particularly in the United States. The value of patents and their role in innovation is a hot topic in both policy and high-tech circles, and correspondingly, tends to be accompanied by more rhetoric than fact. In an effort to better understand how the average American business leader views patents and the role of the growing IP industry, my company, Intellectual Ventures, commissioned anonymous surveys and interviews with over 200 US Chief Executive Officers, Chief Financial Officers and Chief Technology Officers from over 30 industries, ranging from financial services to retail to construction. The results were illuminating:

• 68% of the C-suite we surveyed has a positive overall perception of patents. Only 7% view patents negatively.

• 70% of the C-suite believes patents are good for innovation.

• 87% of the C-suite believes that patent rights should be respected.

• 78% of the C-suite believes people should pay a license fee to use technology that is patented. This is all excellent news and suggests that patents are doing the job the US Constitution intended. The alleged demise of the US patent system is grossly exaggerated. But of course the story doesn’t end there.

How patents matter

What struck me most is how few of these C-suite respondents – the same ones who could see such value for patents in the abstract – could not distinguish how the value of patents was relevant to their business in the specific. Over half of the C-suite surveyed said they were neutral, or had no opinion, about whether their business is better off with patents. (For those that are wondering, only 3% believes business is worse off, the remaining 44% believes business is better off). These same executives rank product development and competitive edge highly in their 2013 business priorities, yet nowhere indicate patents as a business strategy to help them achieve these goals.

For some, this is an issue of relevance. Based on my own experience, I can certainly appreciate the distinction. I was at Cisco for 13 years. Strong intellectual property is what our business was built upon, yet IP stood for “internet protocol.” I had no idea, until I joined Intellectual Ventures, the role patents played in the fundamental value of a company and how the right patent investments could increase the bottom line.

For some companies, IP is used for defense or litigation clearance, for others it represents a path to monetization and strategic invention. For many more, it is a combination of all four. The more I compared notes from the survey respondents to my own discussions with the IP strategists in multinational companies, the more I saw the paths align. The issue being discussed among American business leaders’ appears not to be whether patents matter, but how they matter. The delta in opinion appears to rest in the resources and wherewithal.

Making the call on IP

In fact, 75% of the executives we surveyed say they are the primary decision makers regarding patents, yet only 24% consider themselves very informed on the topic. Consider that for a moment: only one out of every four C-suite leaders feels qualified to make the call on IP.

Moreover, the C-suite we surveyed rely so heavily on their attorneys and legal departments for information and guidance with respect to patents, that they even admit they do not actively seek out information about IP. Those who do rely on a combination of industry trade journals, general internet searches and colleagues as their top IP resources; only 8% said they rely on government sources.

For such a complex area of law, it makes excellent sense that the C-suite is turning to their attorneys for information on patents. So they should! As many of you reading this can attest, there is no simple answer or single, reliable source for a business leader’s IP questions. It varies from case to case, from country to country, and from one industry to another. That complexity is why no one deal my organization has structured in its 13-year history has ever been the same. Every company has unique IP requirements, and as the nascent IP industry grows, so too does the sophistication of IP strategy.

Influencing the C-suite

I know from my own Fence speaking with the C-suite, that rightly or wrongly, the complexity of IP can relegate patent lawyers to the role of gatekeeper, not translator. But the days of patents being the sole domain of prosecution experts, or only a matter of policing infringement are long gone. Patent lawyers need a seat at the boardroom table to…TO CONTINUE READING THIS ARTICLE PLEASE CLICK HERE

Résumé

Andy Elder, Executive Vice-President, Global Licensing

Andy is executive vice-president of global licensing at Intellectual Ventures, where he oversees the development of the global licensing program, marketing, pricing and sales.

Prior to joining Intellectual Ventures in 2011, Mr. Elder spent more than 13 years with Cisco Systems, Inc., and ultimately served as vice-president of worldwide sales for sports and entertainment solutions. In this role, he was responsible for all aspects of the creation and execution of the global

go-to-market strategy and sales. Mr. Elder was also a member of the emerging solutions council and go-to-market working group, which set strategic direction for emerging systems. His previous roles with Cisco included vice-president of enterprise and advanced technology, and country manager for the United Arab Emirates, Bahrain, Oman, Qatar, Yemen, Pakistan, Afghanistan, Kuwait, Cyprus, Turkey, Malta, Greece and Israel. In addition to traveling extensively, he has lived in the Middle East, Netherlands, United Kingdom and United States and is truly a global citizen. Mr. Elder holds a bachelor’s degree in computer science from Lewes Technical College, where he also completed strategic and business leadership programs.