Patent Monetization Can be a New Source of Revenue for Your Company: Make Sure You Know the Critical Steps for Success

As corporate revenues continue decreasing as a result of consumer and corporation belt-tightening, many businesses now seek to extract revenue from previously untapped areas. One such source experiencing increasing interest is patent monetization, whereby a business licenses or sells its unused or under-utilized patent assets to generate a new revenue stream.

At the surface, patent monetization would effectively appear to be a "no brainer" for business. That is, if one owns an asset that holds little internal value, but to which a third party would ascribe considerable value, why wouldn't a company move forward with selling that asset? In truth, however, few organizations possess the knowledge base required to succesfully execute on a patent monetization plan. This failure results not because patent monetization requires a complex set of skills; rather, the difficulty typically lies with the organization's lack of familiarity with the process of patent monetization.

A successful patent monetization process requires a step-wise progression through the four steps set forth in the following diagram. Each of these steps is discussed below.

Step 1: Perform an Objective Internal Patent Audit to Identify Potentially Saleable Assets
The first step to successful execution of a patent monetization plan requires the organization to understand whether its patent portfolio includes any assets that would be of interest for acquisition by a third party. This patent monetization audit objectively matches up the organization's current and future business strategy with the subject matter covered by its patent portfolio. In short, the audit should reveal those patent assets not in alignment with the organization's business strategy. The audit will also identify any patent assets that might in use by the organization, but for which it does not find it commercially necessary to exclusively retain rights. These identified assets will then comprise the potential candidates for patent monetization.

A patent monetization audit differs from the standard internal inventory of patent assets conducted by most organizations (which also may be termed an "audit"). Significantly, to accurately identify assets suitable for monetization, the audit should be conducted without regard to the history surrounding the generation of the patent asset. Often, however, those charged with conducting the audit are the same people who were involved in generating the patent assets and/or they may maintain valuable relationships with those who generated the assets. As a result, an internally directed patent audit often tends to be rather myopic, which can reduce the probability that the organization objectively identifies patent assets that should be offered to third parties for sale or license.

When conducted with an objective focus (that is, by someone with no vested interest in the outcome of the audit), a patent monetization audit is fairly straightforward. Specifically, patent assets are put into a "sell pile" when they do not align with the organization's existing or planned products or technology or which are used but not necessary to be retained exclusively. The sell pile constitutes the candidates for potential monetization and which are hoped to serve as a new source of revenue for the organization. However, the patent assets in the sell pile may not possess external market value. In order to find out whether these assets comprise candidates for monetization efforts, a market assessment and preliminary valuation must be conducted as Step 2 discussed below.

An objective monetization audit nonetheless presents the additional valuable benefit of identifying patents appropriate for abandonment. And, for any organization with fifty or more issued patents, it is probable that maintenance fee savings from abandonment of effectively worthless patents will well surpass the cost of conducting the audit. This makes a patent monetization audit a winning proposition even if it is later found that the organization does not possess any patent assets that are suitable for monetization.

Step 2: Patent Asset Marketing Assessment and Preliminary Valuation
Those patent assets placed in the sell pile in Step 1 are then reviewed to determine whether the covered subject matter would likely be of interest to a third party. In doing this, one categorizes the claim coverage of each patent and identifies what companies might find the claimed subject matter valuable to support their business objectives.

This patent asset marketing assessment should be conducted from a business perspective. That is, it must be undertaken in much the same way a company undertakes a consumer marketing study by determining who is a potential buyer for this patent asset product. It is highly recommended that a business professional manage the marketing assessment of the patent asset. While a lawyer can be peripherally involved, she should not manage the process because she will most likely review the third party analysis with an eye toward potential patent infringement, not toward making a win-win deal with a third party.

Preliminary valuation of the potentially saleable patent asset is conducted using a combination of business and patent legal analysis. The business aspect of the valuation reviews the potential purchasers identified in the assessment and attempts to determine a range at which those purchasers would pay for the patent asset. In the patent legal aspect of the valuation, a patent professional reviews the patent's record to identify any flaws in the procurement of the patent that would markedly reduce the price that a willing purchaser would otherwise pay for the asset.

It is quite probable that the patent asset market assessment and preliminary valuation will reveal that the organization's unwanted patent assets do not constitute good candidates for monetization efforts, either because there is no likely purchaser or that the quality of the patent is low as a result of mistakes made in the patent procurement process. Value exists in this "bad news," however. An organization that obtains effectively valueless patent assets should recognize that it may be wasting considerable corporate resources. As such, the patent asset marketing assessment and preliminary valuation presents a strong opportunity for an organization to improve its patenting efforts so that better patents can be obtained to allow monetization to become a reality in the future.

If the marketing assessment and preliminary valuation reveals that the organization owns patent assets in which a third party might show an interest in acquiring, a marketing plan can now be executed upon. This is described in Step 3 below.

Step 3: Execution of a Patent Monetization Marketing Plan

After the organization identifies potential purchasers of a patent asset and how much a willing buyer might pay for it, a plan for monetization marketing plan can be developed. As many potential marketing plans can exist as there are potential purchasers. In short, monetization marketing plans will differ depending on the organization's level of internal expertise, business bandwidth and type of technology involved and, due to such variability, will not be discussed in more detail in this article.

In addition to the monetization marketing plan, the marketing channel must be selected. Even in the fairly nascent patent monetization market, several channels of patent asset marketing have developed to date, each of which consists of a unique business model. Some examples of existing marketing channels include:

• Marketing through an internal patent licensing business (e.g. AT&T Intellectual Property )
• Engaging a consultant having significant licensing expertise (e.g. Gnosssis LLC)
• Sale through a patent broker (e.g. IP Investments Group and IP Value )
• Sale through a patent auction (e.g. Ocean Tomo)
• Online "matching services" (e.g. Yet2.com, Innocentive.com)

Notably absent from the above list of suitable patent asset marketing channels is engagement of a lawyer to assist in marketing of the patent asset. There is little doubt that if a lawyer approaches a third party with an "offer to license" a patent, the offer will likely be viewed as a threat of litigation. As such, if an organization truly plans to monetize its patents, as opposed to litigating them, a lawyer should not execute the marketing plan, nor should she appear to the potential purchaser to be managing the process in any way. Put simply, the organization should treat a patent monetization plan as a business, where consummation of the deal forms the primary objective of the process.

Even if an organization successfully undertakes a business-based patent monetization marketing plan, many third parties will find the approach by a patent owner with an offer to acquire a patent to be akin to a threat of future patent litigation. This is a natural reaction to the existing paradigm where patents are legal rights, as opposed to corporate assets. As the market for patent monetization evolves, third parties will hopefully view offers to sell or a license a patent in a less threatening manner. In the meantime, however, any organization seeking to market a patent without intending to enter litigation should engage a marketing partner that is more likely to be viewed as non-threatening to the third party. Litigation will always be a possibility for any organization seeking to engage in patent monetization. With a well-crafted marketing plan and a careful execution, the possibility of litigation can be minimized.

Step 4: Bring in the Lawyers to Consummate the Deal

At the end of Step 3, the patent owner should know whether a willing buyer likely exists for its patent assets. At this point, each party will bring in its respective lawyers to consummate the deal for their respective benefits.

This stage of the patent monetization process requires diligence by the parties to ensure the deal does not get away from them. The end of the deal should be a win-win: the patent owner successfully generates a new source of revenue and the purchaser obtains exclusive rights to a desirable product or technology under favorable terms. While this may be easier said than done, for patent monetization to become a viable source of revenue for organizations in the future, it must be so.

Investors in the Green Economy: You Could Lose Your Investment in Green Innovators by Failing to Identify the Green Inventors that Came Before Them

With President-Elect Obama's announcement that he will establish an "Apollo Project" to develop a Green Economy, there is no doubt that "the Green Technology train has left the station." Indisputably, investors will start to invest heavily in companies that appear to possess commericializable Green Technology that will enter the marketplace as the US embraces the Green Economy and develops the necessary infrastructure to make this happen. Before staking a claim to one or more of these companies, however, investors should understand whether existing patent rights owned by third parties could undermine the investment potential of even the most promising Green Technology innovators.

Anyone seeking to capitalize on the Green Economy and its attendant Green Technology must recognize a fundamental reality of US patent law: in granting a patent, the Patent Office cares only that an invention is useful, novel and nonobvious. Significantly--and this is the rub for investors in Green Technology companies--the Patent Office cares not a wit that an invention has commercial significance either today or in the future. As a result, many patents exist today for inventions that did not possess commercial viability when the patent issued, but that cover Green Technology that today may be on the cusp of commericialization. The owners of such patents can (and quite likely will) enforce their rights against those companies that successfully introduce that same Green Technology into the marketplace. Put simply, investors in Green Technology innovators must be hyper-diligent to ensure that inventors who had the same idea but could not commercialize that technology do not derail their commercial plans.

A salient and well-known example of an inventor extracting a patent toll from a successful innovator is found in the infamous NTP vs. Research in Motion ("RIM") patent litigation. In this case, NTP acquired patents issued in the early 1990's to email technology for use on mobile devices. The inventor of the NTP-owned patents never commercialized the patented technology and the patents issued several years before RIM introduced the technology into its BlackBerry(r) device. Nonetheless, after several years of contentious litigation, RIM settled with NTP for over $600 million. The huge settlement was bad enough, but RIM also suffered from loss of market share due to the uncertainty resulting from the litigation, which certainly led to significant additional financial loss. No doubt investors in RIM would have liked to know about the NTP-owned patents prior to making their investments in this mobile email innovator.

Many people reference the NTP vs. RIM case using the term "patent troll litigation." However, it would likely be wrong to characterize the owners of patents to not-yet-commercialized Green Technology with the pejorative "patent troll." Many reasons can be present for such patented inventions having failed to be successfully commercialized, not the least of which is that a market simply may not have existed at the time the patent covering the technology issued. In the US, however, any inventor owning a patent possesses superior rights to the patented technology over one who successfully commercializes that same technology. In short, inventors' US patent rights trump those of innovators. (Note that this rule differs in some oher countries, where the patent laws require compulsory licenses from the patentee to those seeking to commercialize the patented technology.)

So what does all this mean for those who seek to capitalize on the emerging Green Economy by investing in innovative Green Technology companies? At a minimum, Green Technology investors must endeavor not to focus solely on the viability of the technology itself such that they fail to determine whether another party owns superior rights to that technology. To this end, Green Technology investors must obtain Freedom to Operate opinions, which will inform them whether the technology of interest is covered by a third party's patent rights. While this may seem like an obvious step when vetting a new Green Technology investment, I am nonetheless repeatedly surprised that even sophisticated VC's and private equity investors fail to conduct the most basic of Freedom to Operate analyses before moving forward with an investment decision in a technology company.

A Freedom to Operate analysis should only be the first step when investing in a potentially commercializable Green Technology company, however. An investor must also conduct what I call a "Permission to Innovate" analysis. A Permission to Innovate analysis tells the investor whether any third party patents exist that are close to the likely development and commercialization path of the relevant Green Technology. A knowledge of such closeness is critical to know when a technology is yet-to-be commercialized because an innovator must be able to develop technology freely in response to market forces. A Permission to Innovate analysis will provide the investor with knowledge of whether the area of Green Technology in which she seeks to invest is crowded with third party patents that could limit the freedom of a Green Technology company to innovate in the future.

Many investors will see the emerging US Green Economy to constitute a possible "gold mine" and will rush to stake a claim. Nonetheless, investors would be well-served by realizing that good Green Technology ideas have been in existence for many years, and many of these ideas are covered by US patents. Investment success may hinge on knowledge of such pre-existing patent rights to ensure that a company's commercialization of promising new technology is not restricted by the person who first invented and patented that technology. As such, I believe it is critical for Green Technology investors to develop substantive patent knowledge of the relevant patent landscape prior to joining the Green Technology "gold rush."

Existing Sources of Investment Information Failed Us: Patent Landscaping Analytics Provide a Necessary Innovation for Investors

As global stock markets continue to struggle, smart investors seeking to capitalize on relatively cheap stock prices are searching for promising investment opportunities. Unfortunately, however, most investors are likely relying on the same sources of investment information that failed to accurately predict the current stock market situation. If the predictive nature of this information has been wrong time and time again, why do investors continue to rely on it? The answer is pretty simple: investment professionals lack knowledge that alternative sources of information exist.

One such alternative approach to making investment decisions involves using patent landscaping analytics to assess existing investment in a particular product or technology area. My research demonstrates that properly conducted patent landscaping analytics can effectively allow one to predict the future trajectory of product development by companies.

For example, as I have written about here and here, the fact that Google and Yahoo intended to significantly invest in Intenet-based television technology was fully predictable from their patent filings many months before Google and Yahoo actually made their respective public announcement of such plans. AT&T's launch of its U-Verse Internet television service was similarly predictable from the volume of patent filings in this technology area.

One looking to invest in a company or investment fund with offerings in the Internet television-related area would have been well-served by using this information to decide to move forward with caution. That is, Google, Yahoo and AT & T's respective deep pockets should serve as a signal that competition in this area will be fierce in the foreseeable future. This means that even if a company or technology emerges that is superior to those currently being offered, these "big boys" may still win in the marketplace. Therefore, a potential investor in Internet television technology should take great care not become enamoured with a superior technology or apparently brilliant start-up business plan, because the patent landscape demonstrates that the Internet television marketplace will be a tough place to play.

Of course, the above example is a look into the rear view mirror because Internet television has already been introduced to consumers. More interesting would be application of patent analytics to products and technology that have yet to make it to market in significant form. One such area is biofuels, where examination of patent filings can demonstrate what companies are making technology investments.

For example, corn-based ethanolic biofuels gained acceptance in the market in recent years. However, this technology now appears to be on the wane because of the huge increase in food prices that occurred during 2008 due to greater demand for ethanol. Market forces clearly demonstrated that biofuels should not be made from food sources, such as corn. As a result, biofuel technology appears to be moving toward non-food mass starting materials.

One such source of non-food mass starting material is switchgrass. Not only is this plant unsuitable for providing food such that its use will not cause food to be re-directed toward fuel production, recent research demonstrates that it is a more efficient source of ethanol than corn. Thus, it would appear that switchgrass biofuel technology holds good investment potential. Nonetheless, before getting excited about investing in technology related to switchgrass-derived biofuels, a smart investor should look to see whether any company owns patent rights in this technology area.

To this end, a patent search reveals that there are only 7 patent filings that mention "switchgrass" and "biofuel" in the claims--all patent applications. The earliest filing date of any of these applications is late 2006, thus signifying that this technology is only just emerging. This information demonstrates that one seeking to invest in this area should examine these patent filings in more detail. This investigation should focus not only on the claim scope and technology "quality," but also on whether the owner of the claims has the requisite deep pockets to make it more likely that their technology will succeed in the marketplace. Additionally, after investing, one should regularly re-check the relevant patent filing information related to switchgrass-derived biofuels to determine if investment assumptions and projections still remain viable.

There are no doubt countless other examples of how patent analytics can improve the quality of investment decisions in emerging technology areas. While investment professionals may find patents an unfamiliar and arcane source of information to include in their vetting and selection processes, recent events in the world financial markets indicate that change is needed in the way that money is invested in companies and technology. Integration of patent information into investment decision-making could constitute a necessary innovation.

If Your Company is Not Capturing IP-Related Tax Savings You are Likely Leaving Significant Money on the Table

I recently heard a group of tax experts spoke about issues related to intellectual property ("IP"), and since then I have been thinking about how my clients could benefit from better incorporating IP into their corporate tax planning and accounting processes. The topic is very complex and, as such, I will leave the details to the experts. (Feel free to contact me for recommendations in this regard.) I believe it is nonetheless valid to make the following statement: if your tax experts do not include IP issues in their tax planning and accounting processes, your company is likely leaving considerable money on the table.

As these experts discussed IP-related tax issues, it became apparent to me how important IP asset management should be to corporate tax planning and accounting efforts. However, my experience demonstrates that few corporate managers are aware that such savings are possible. Even if they know about this opportunity, it would likely be exceedingly difficult for them to capitalize on this savings because few organizations possess the IP infrastructure that allows efficient capture and assessment of costs associated with obtaining and managing IP assets. And, without such IP accounting information, the tax savings cannot be appropriately captured.

A word of qualification--I am in no way a tax expert. Nevertheless, I do understand that in order to capitalize on tax deductions and tax credits related to IP, accounting processes must be able to determine the costs of obtaining and managing such assets. It would then make sense that IP attorneys such as myself would be contacted on a regular basis to assist tax experts in the information capture process. In my years of high level intellectual property practice, I was never expressly brought into the tax planning or accounting processes. I must therefore conclude that most, if not all, of my clients failed to adequately capitalize on the tax savings opportunities discussed by the tax experts. Indeed, the tax experts who I heard speak confirmed that many c companies are effectively ignorant about how proper IP asset management and tax planning can reduce overall corporate tax liability.

How can a corporation capture this tax savings value? The first step is certainly to obtain education about the categories of tax savings that can be captured through improved IP management programs. Management would be well-served in this regard by finding the necessary IP and tax expertise to identify opportunities for value capture through tax savings. Due to the highly arcane nature of the interplay between tax and IP, I would advise one to seek specific expertise outside of their organization. This will require payment to consultants, which could be a limiting factor for many corporations. However, without the initial investigation by the appropriate consultants, the result will be that no IP-related tax savings will be captured.

If this investigation proves that demonstrable IP-related tax savings are possible, the next step would be to institute an intellectual asset management ("IAM") system that allows the corporation to capture the costs associated with obtaining and managing IP-related assets. Many corporations have successfully developed and executed on IAM systems by internally developing robust business-focused IP management processes. Such "home grown" solutions to IP management can be very effective, however, long term management commitment and infrastructure development are typically needed for success.

For organizations seeking to obtain IP-related tax savings more quickly and (possibly) with less infrastructure development, an IAM software solution may be beneficial. Examples of such software systems are Decipher, Anaqua and Lecorpio. These software solutions can be expensive to implement and maintain, but for many corporations the reduction in tax liability may clearly demonstrate immediate ROI associated with such a product.

To reiterate, my knowledge of tax is minimal. However, I feel strongly that much opportunity exists for corporations to capture tax savings through better IP management processes. I intend to reach out to tax experts and hope to post an update to this post in the near future.

You Paid WHAT for that Patent?! or How the Choice of Patent Law Services at Many Companies is Like the Vice Presidential Wardrobe Selection Process

The recent hullabaloo regarding Sarah Palin's "gold plated" wardrobe from Saks and Neiman Marcus got me thinking about how many companies select patent law firms. This may seem like a non-sequitur, but bear with me. . .

Those responsible for dressing Gov. Palin apparently believed that the large expenditures at Saks and Neiman Marcus automatically translated into value for the Republican ticket by allowing her to be viewed as more "Vice Presidential" than she would otherwise been considered. Notwithstanding the high cost of her new wardrobe, as reported in the New York Times, her overall "look" remains the same as when she campaigned for and served as Governor of Alaska: business-appropriate jackets, feminine skirts and high heels. The response to this wardrobe makeover by a major fashion commentator: "Honey, I could have dressed you for a lot less than that." From this comment, as well as the continuing backlash about the cost, it appears that the expense of Gov. Palin's wardrobe does not directly correlate with the value provided to the McCain-Palin presidential ticket.

Not dissimilarly, when I review patent portfolios for clients for valuation and strategy analysis, I often think to myself "you paid WHAT for this patent?!" All too often, otherwise smart business professionals effectively engage in "magical thinking" by assuming that the act of throwing money at a high end patent firm will translate into creating business value. Of course, these same professionals would not believe that the mere act of spending of money will result in value creation in other areas of their business. So why do they do this in the patent realm?

I believe that the information costs associated with vetting and selecting patent legal services make it difficult for busy business professionals to make informed decisions in their company's patent matters. Without legal training or substantive business experience in patent matters, the vast majority of business managers likely do not believe themselves to be capable of directing strategic decisions about their company's patent portfolio. They therefore cannot rationally make the decision to identify a low cost, but otherwise excellent, patent law firm to work on their patent matters. For lack of any other means by which to select counsel, they assume that company value will be increased if they hire the patent law firm equivalent of Saks and Neiman Marcus, even when they could have obtained the same patent "look" by hiring a much less expensive law firm.

Fortunately, there is a solution to the patent law firm information cost problem. The emerging speciality of intellectual property ("IP") business strategists can provide business professionals with the information necessary to make educated and more cost appropriate selection of patent legal counsel. An IP business strategist can effectively operate as a business professional's "personal shopper" in selecting patent counsel and in assisting in managing patent legal expenses. In this role, the business IP strategist can obtain the right patent "look" for a company by knowing where to shop for legal services.

This is not to say that the business IP strategist would never select the Saks or Neiman Marcus equivalent of a patent law firm. Situations certainly exist where the cost of such a patent firm would be justified, such as in a so-called "bet the company" invention or litigation. However, as a "personal shopper" for patents, an IP business strategist can allow a business professional to make an informed decision about the appropriateness of such higher costs.

Moreover, the IP business strategist also understands the profit margins associated with patent law firms and, as such, will be better able to negotiate a discount with the law firm. That is, the patent "personal shopper" can help a business professional to obtain Saks and Neiman Marcus quality at a "sale price." And, who doesn't love to get a high quality product at a discount?

A "personal shopper" for patents will not necessarily result in reduction of a company's costs, however, I can virtually guarantee that the quality and overall value of the patent portfolio will increase. Also, it is highly likely that the cost savings enabled by a company's engagement of an IP business strategist will cover the cost of hiring this specialist. As more companies become aware that legal cost does not necessarily equate with patent value, the more IP business strategists will be seen as a useful way to improve the way one obtains patent legal services.

Taking a Disciplined Approach to Protecting Innovation Investment Allows You to Reduce Legal Spends While Still Obtaining Necessary Patent Rights

This week, I am intrigued by what appears to be a recent convergence of reporting and blogging about the state of innovation in the US. There is an obvious concern by those who keep track of such matters that, in the current economic climate, government and business will "take a hatchet" to R & D and innovation budgets in an attempt to reduce overall costs. Such cutting is, of course, a rational short term solution to address today's problems. Government and corporate leaders taking the long view will nonetheless understand that, when it comes to R & D and innovation spending, it is much better to apply the proverbial "scapel" to one's budget.

Moreover, as discussed by Tom Donahue (President and Chairman of the US Chamber of Commerce) recently on The Huffington Post (h/t Front End of Innovation), intellectual property protection is a critical component of successful innovation efforts. No organization wants to give its competitors, whether another company or country, free R & D--but, that is exactly what happens when an innovative organization fails to include patent protection a critical component in its innovation strategy. It is therefore mandatory that an organization that chooses to "bite the bullet" and invest in innovation during today's challenging business conditions also develop a strategy to obtain intellectual property protection for those innovations.

Fortunately, protection of innovations does not necessarily mean that an organization must increase patent legal spends. An organization can actually reduce the amount spent on patent protection by adopting a disciplined and strategic approach. When operating in this way, all decisions regarding patent protection are made only when the legal spend supports the recognized objective served by the associated innovation investment.

Successful implementation of such a plan necessarily requires that business issues drive the go/no go decisions regarding patent protection. Decision rights for patent procurement must therefore become either singly or jointly the responsibility of those corporate managers who are responsible for selecting and supporting the organization's innovation investment.

Business managers who obtain responsibility for ensuring return on innovation investment can act to reduce patent spends by adopting a disciplined approach to patent protection. Each organization will view this disciplined approach in relation to its unique characteristics. However, the common thread to this approach is that the successful organization will adopt a concrete and reproducible framework for decision-making regarding patent protection, and will hold participants accountable for following the process.

As one example of this disciplined process, the organization can decide that patents will not be obtained unless the NPV of an innovation opportunity meets a pre-determined threshold level. Why spend $30 K to obtain a patent for an innovation that has a useful life of only a few years and a total NPV of $3 MM? The patent might not even issue before the innovation runs its course in the market and, as such, the patent protection would be fairly meaningless anyway. This disciplined approach to patenting would dictate that, regardless of how "cool" the innovation is, the organization will obtain a patent only when the cost of patent protection does not reach a pre-determined threshold of NPV for that product or technology.

A further example of this disciplined approach is for the organization to decide that patent protection need not be ideal in order to adequately protect the business. All too often, organizations invest heavily in patent protection in an attempt to fully protect the upside opportunity of a new product or technology. When the project fails, the organization is left with "gold plated" patent protection for a worthless product or technology. The disciplined approach to patenting can mandate that the organization obtains patent rights that are adequate, but are not so broad as to fully protect the upside opportunity associated with the innovation. The risk to such an approach is that if the innovation is a runaway success, the patent rights may not be broad enough to fully exclude competition. Few product or technology innovations are truly runaway hits, however, so the organization that decided that not all patents must be gold-plated would probably come out significantly ahead in patent legal spends.

These examples are just two of many other ways that exist to permit innovative companies to obtain effective patent protection while at the same time reducing patent legal spends. The key to effectively doing so is to let the business process drive the strategic decision to obtain patent protection. This is undoubtedly a new role for many business leaders, but a critical one in today's economic climate.

CEO's and Corporate Managers: Develop an Engaged Knowledge of Your Company's Intellectual Assets to Stop Leaving Corporate Asset Value on the Table

More than 70 % of corporate value today lies in the form of intangible assets, much of which are in the form of patents, copyrights and trademarks. Notwithstanding this fact, many otherwise sophisticated CEO's and corporate managers essentially leave a significant portion of firm value on the table by failing to develop and execute on a business strategy directed to capturing and maximizing this class of assets.

Of course, few organizations would admit that management fails to fully realize the asset that forms the bulk of today's corporate value. Many managers also may not believe they have the requisite knowlede to determine whether their company's intellectual assets are being properly exploited. Fortunately, it can be fairly easy to discern whether a company's management expends the effort necessary to capture and maximize its intellectual assets. Put simply, if an organization's top business leadership does not possess an engaged knowledge of their company's short and long term intellectual property strategy, one can directly infer that the company is leaving significant intellectual asset value on the table.

What do I mean by "engaged knowledge" of a company's intellectual property? The following quiz should shed light on this critical aspect of strategic business management today.

Assume that as the CEO of a Fortune 1000 company, you are called upon to participate in an interview with a business magazine reporter. The article will be widely read by the investment community for insights as to whether your company is a good long term invesment. The reporter includes your company's intellectual property strategy as a list of topics about which she may inquire. To prepare for these questions regarding your company's intellectual property do you:

• A. Call your intellectual property counsel to give you an overview of the status of your company's intellectual property; or
• B. Nothing. As CEO it is your responsibility to formulate and oversee your company's intellectual property operations at a strategic level. You are therefore capable of and comfortable with discussing your company's intellectual property strategy in the interview.

If you selected choice B, you likely already possess engaged knowledge of your company's intellectual assets. If you selected choice A, your company may have room for improvement to more competently realize its intellectual assets. Moreover, to successfully do so, you need to make changes to the way you interact with your company's intellectual property.

Admittedly, the subject of intellectual property can be rather arcane and difficult for a non-specialist to embrace with earnest. This no doubt results in many corporate managers resisting development of engaged knowledge of their company's intellectual assets. However, failure to develop engagement with their company's intellectual property strategy is self-defeating: continued resistance will result in corporate value left on the table and the company falling further behind in realizing its intellectual asset.

Fortunately, it is not as hard as it may at first seem to develop engaged knowledge of your company's intellectual assets. Just as a business professional need not become an expert in environmental science and policy to participate in his company's sustainability strategy, one does not need to become a legal expert to develop engaged knowledge of their intellectual property strategy. For example, engaged knowledge does not require you to be able to recite with specificity the number of patents pending and what products or technology are covered by your company's patents. Such tactical knowledge properly rests with your organization's intellectual property specialists. Instead, engaged knowledge of your company's intellectual assets requires you to have a strategic understanding of where your company stands today with respect to its intellectual property, as well as the strategic efforts your organization plans to undertake the intellectual property realm.

When you develop such engaged knowledge of your organization's intellectual assets your company will improve the probability that your short and long term business strategies will pay off and your company's financial objectives will be achieved. In short, you will more likely capture your company's intellectual asset value and stop leaving this money on the table.