Measuring and Extracting IP Value  

POSTED BY Bruce Story AT 2:15 P.M. APRIL 29, 2011

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Key processes for this phase include out-licensing, infringement watch, IP enforcement, and IP value metrics (Figure 1). Out-licensing can be very lucrative with the right IP strategy and business model. The value of any IP is dependent on the context. Valuation of the IP in context and targeted marketing is important to gain returns on the licensing effort. Out-licensing can be a result of the IP enforcement strategy.

Figure 1

If IP enforcement is part of your IP strategy, then setting up a proactive, focused process for competitive intelligence is important. Which of your patents is most likely to be infringed upon and by whom? Do you have a reverse engineering capability to detect infringement of your patent claims? Do you have a competitive sample process to deliver to the reverse engineering function? These are some of the important questions to be addressed in an infringement watch process. The IP enforcement process will include valuation of the opportunity versus risk. Although IP enforcement is often thought of as a legal process, it should be considered a business process with key decisions made by an informed business management, not necessarily the legal department.

Key metrics derived from executing the IP strategy should address what has highest impact on the business results. What is the percentage of profit margin being protected by IP? How much is that? Is it increasing or decreasing? What percent of your revenue has patent protection? What is the licensing revenue? What percentage of your patent portfolio is being used for value protection or value extraction? When do key patents expire? A key issue here is that it takes the establishment of standard processes to do the extraction and evaluation of the numbers to get accurate data for these metrics.

Other types of IP metrics can be used for management purposes to set expectations for personnel and department performance. These tend to be centered on quantity. They may be necessary to feed invention disclosures into the IP review process, but quality and value are what is most important.


TAGS: Bruce Story | IAM | Metrics | Process | Licensing
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