CMP IP communication 4-08

IP CommunicationIntellectualAssets, CorpApril 16, 2008

Increase Value with IP Communication

David McFeeters-KroneIntellectual Assets, CorpIP Strategy - Licensing - Tech Scouting

[email protected]


Ground Rules & Caveats

• Patents are just part of the equation.• Communication is one part of IP

strategy• Dave is not a lawyer.


“Intellectual Property lies at the center of the modern company's economic success or failure”

- Lester Thurow


IP is Intangible Value

• Patents, trademarks, copyrights• Trade secrets

– Know how– Secrets– any work product not publicly known


Why have an IP Strategy?

Source Les Nouvelles 3/2006

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are needed to see this picture.


Benefits of the IP Strategy

• Legal– Freedom to operate– Cross licensing

• Market– Competitive advantage– Premiums

• R&D– Focus– Acceleration

• Finance– Clear explanation– Value preparation– Revenue (maybe?)

O - Offensive

X - Defensive

- Market InnovatorPatents, Trade Secrets

$ - Assertion


IP Strategy Components

• Internal– IP Audit– Patent / Trade Secret / Copyright / TM policies– Education

• External– Competitive Intelligence– Communication

• IP Council• Continual Review


Communication to Stakeholders

• We understand the value of our IP• We have an IP generation engine• We know how to capture and protect IP• We have a sustainable

competitive advantage


Who Cares?

Your stakeholders• Investors• Customers• Partners• Employees


WSJ coverage 1992- 2007

IP Stories in the WSJ 1992-2007

0

50

100

150

200

250

300

350

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Year

# of IP Stories

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

IP Stories / 1000

Over 2.5x stories

Over 4.7x %


Investors Care

• The company has greater legal protection– Freedom to operate– Counter claims (cross license)

• There is greater market potential– Competitive advantage

• They see your concentrated efforts in R&D– Tangible output from R&D


‘Take aways’ for Investors

• Link IP to revenues• Reduce risk with

– More tangible assets, less volatility– Understanding of the IP strategy– Confidence in IP management


Potential Value of IP

• Intangibles listed at 80% of firm’s value

• Average poorly communicated

20 20

80

114

0

20

40

60

80

100

120

140

160

Reported Potential

Tangible Intangible

100

134


Esterline

• Specialized manufacturing company serving principally aerospace and defense markets.

• “Although we hold a number of patents …, we do not believe that our operations are dependent on our patents …. In general, we rely on technical superiority, continual product improvement, exclusive product features, superior lead-time, on-time delivery performance, quality and customer relationships to maintain competitive advantage. “


HP (circa 2004)

• Excellent 10-K– Importance of patents– Number of patents and trend– Even a small breakdown by industry– Comments on licensing

• Don’t Walk the walk


3M

• Poster child for innovation• R&D called out (including expense)

– Reorg of R&D includes # of personnel• Patents, ™, licenses including their

value• Just a taste of patent detail.


Value of Harmony

IP Communication

BusinessCommunication

• Aligned communications are additive


IP Communication Plan

• Section in Annual Report• PR Focused on IP

– About the IP of Company– Distilled into About Company

• White papers• Raise the level of discourse with

stakeholders (including reporters)


IP is Tangible Value

Processes, Know how

Formulas

Designs, Inventions

Public

Logos, Brands

Written Works, Recordings

Patent

Patent

Patent

™©

Partnerships, Contracts

Secret

TS

TS

TS


State your IP Value

• Clear space• Competitive advantage• Efficiency


CI: Themescape

• •••••

••••

•

••

•

•

Clear Space


CI: Citation analysis

Competitive Advantage


IP Communication1. Relate its direct impact on your revenue2. Relate your IP position in the market3. Outline strategy (capture, alignment, etc)4. Reveal the IP business advantage5. Basic legal issues


Summary

• IP is a significant part of firm value• If you are not in control of your IP,

then it is out of control.• A clearly communicated IP strategy

will increase firm value


Thank You

David McFeeters-KroneIntellectual Assets, Corp

IP Strategy - Licensing - Tech [email protected]

(503) 493-0477

Increase Value with IP Communication


Customers Care

• It can simplify purchasing decisions• Offers security and confidence • Offers competitive differentiation• Customer can better defend decision


Partners Care

• More reason to do business with you• Potential barriers to exit• Channel partners can leverage your

IP


BASF

• R&D: Because of the high degree of complexity and uncertainty involved in chemical and biological research, there is a risk that projects might be discontinued or that developed products will not receive approval for marketing. We lessen this risk through our global Know-how Verbund, our collaboration with our partners and customers as well as our innovation process whereby efficiency, chances of success and general conditions of research projects are continuously reviewed.

• Patent risks: The Global Intellectual Property department of BASF SE, together with the appropriate units of the U.S.-based BASF Corporation and BASF Coatings, Munster, Germany monitors all the intellectual property rights of BASF. At the same time, we aim to avoid patent and licensing disputes as far as possible through our extensive clearance research.


Documents

CMP IP communication 4-08