The coming of age of IP asset management

By Paul Adams

Intellectual property is a critical business asset yet so often it isn’t managed like one? Fortunately, new thinking is unlocking value.

Twenty five years ago announcing “my company has just hired a CTO” would have prompted raised eyebrows. The idea that information technology was an asset, let alone important enough to have a dedicated C-suite appointment, was completely foreign.

Today most medium size and larger companies either have a full time IT department or outsource their IT or both. At very least IT is a SMT responsibility. IT is managed like an asset (cost vs return is carefully analysed), there is an IT plan and IT is integrated into business operations.

What happened to IT is now happening in IP (intellectual property). Companies large and small are realising that fundamentally “we are about IP”. That could be IP in technology (patents), in brand (trademarks), in copyright (media content or code) or in confidential information (data, systems and processes, know how and trade secrets). It most cases it’s a combination of all of the above. IP is now acknowledged as the single most valuable asset most companies own. With that shift is the recognition “we need to manage IP properly” with many companies now appointing Chief IP Officers (CIPOs) to manage their IP.

This change can’t come fast enough. Innovative companies abound but their track record of managing and leveraging that IP into growth and shareholder wealth is poor. Historically most companies have thought “IP = patents and trademarks” and have “managed” it through their patent attorney or lawyer. This is much the same as thinking IT = a hard drive and I’ll let the local computer store decide how many I should buy and what I should do with them.

Managing IP involves ensuring that IP is proactively identified, assessed, protected and exploited and that the processes for doing this are efficient and easily understood throughout the organisation. Done correctly it can dramatically reduce IP cost, ignite innovation, reduce risk, increase opportunities for engagement with suppliers, vendors and partners and generate increased revenue. So how can companies start to manage IP more effectively?

  1. Recognise IP is not a legal issue – it is a core business function and needs to be driven by the Board and CEO. Ensure someone within the Senior Management Team has responsibility for IP and understands it.
  2. IP Management has two core functions: a) strategy and b) administration. Strategy takes 20% of the time but adds 80% of the value. A good IP strategist will cost $150,000 plus. Administration takes 80% of the time but adds 20% of the value. A competent legal exec can do this and will cost $60,000 plus. It is impossible to combine these two functions into a single person: you are either paying your expensive strategist to do administration or your legal exec will be trying to do strategy.
  3. Unless your company is very large it’s unlikely to make commercial sense to employ the full time team of CIPO and IP admin required to do the job properly. However that doesn’t mean you have to do without. Just as companies large and small outsource IT, outsourcing IP management to a professional external provider delivers the benefits of a CIPO at a fraction of the cost of an FTE. A virtual CIPO also offers other advantages including:
    • the security of dealing with a team rather than a single individual
    • access to the multi-disciplinary knowledge and networks
    • no overhead, holiday or training costs (with FTEs these are typically 15 – 30% of salary).
    • no IP database or license fee costs (these are typically part of the service).
    • because it’s generally contract based the ability to cancel the outsourcing at will.
    • Like outsourced IT it can be “dialled up or down” as work load requires making it suitable for both large and small enterprises and especially fast growing companies.

Finally, you can’t manage what you can’t see: IP management begins with understanding what IP you have now and what you do with the new stuff you are creating. The starting point for any IP management exercise is an IP Audit or IP Management Review, this should be conducted by someone other than your existing IP provider (just as you shouldn’t have your accountant as your auditor).

The key take way: if you’re in the business of employing smart people then you’re in the business of building IP assets, which means you need to manage them properly.

 

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