Julie Meyer talks at TEDx Brussels
This is a really insightful talk by entrepreneur Julie Meyer who among other things has appeared on the BBC Dragon’s Den show. In it she describes the world of the entrepreneur and the way the world is today.
There is a lot in this video to reflect on. In particular Julie describes the work of Venezuelan economist Carlota Perez who’s work on socio-economic cycles is really intriguing. Finally the network orientation of today’s new companies provides much to ponder for entrepreneurs.
Are you sure you have an IP strategy?
It is almost universally accepted at this stage that the value in the world’s most successful companies lies not in tangible assets such as plant and machinery but in intangible assets which include Intellectual Property. According to one estimate the value of intangibles for S&P 500 companies is greater than 80% and similarly for European companies with an intangible value of approximately 70%.
Therefore it seems to be almost self evident that a company should utilise its most valuable assets strategically. However, in our experience this is not always the case. Many companies, large and small, are not considering IP in their business strategy and do not invest in protecting and optimizing their IP assets. This leads to uncertainty, lack of decision making ability and ultimately a conflict between the business strategy and necessary IP investment in many companies.
Given the increasing proportion of intangible value, trends in globalisation and increasing technology convergence it is our view that the interaction between IP and corporate strategy is going to be one of the key elements that distinguishes the truly successful global companies in the future.
In our experience IP is not used strategically in the majority of companies for a variety of reasons including lack of core skills, fragmentation of responsibility and poor understanding of how IP can contribute to the elements of business strategy.
Before we can begin to talk about IP strategy we need to consider strategy in general. There has been a lot of academic analysis of strategy in the last forty years and many tools have been developed to help the strategist. The framework that we like is that of Hambrick and Fredrickson. These authors react against the fragmentation of strategy at the corporate level and consider strategy to be the “integrated overarching concept of how the business will achieve its objectives.” Their analysis places strategy centrally in the context of the overall management of a business as shown below.
They also break strategy down into its elements:
Arena: where will we be active?
Vehicles: how will we get there?
Differentiators: how will we win in the market place?
Staging: what will be our speed and sequence of moves?
Economic logic: how will we obtain our returns?
How does IP fit into this framework?
In our view IP strategy is not standalone. IP is applied to business strategy activity in the analysis, the strategy itself andin the supporting organisational arrangements. For example:
IP plays a big part in strategic analysis, patents in particular are a rich source of competitive intelligence from which vital information can be derived relating to customers, competitors and suppliers and a businesses position in the IP value chain can be analysed.
IP is an essential element of the strategy itself and we will expand on how IP fits with the five elements of strategy in future blogs.
Finally without IP competencies and processes and IP strategy is destined to fail.
We predict that companies that want to be successful in the future will need to add IP to their strategic thinking. Even SMEs and entrepreneurs need to address the elements of strategy albeit in a form that suits their stage of evolution.
IP and the Smart Economy
I was fortunate to have been invited by Leyton Associates to speak at their recent Innovation Seminar. Speakers included Entrepreneur Chris Horn, senior civil servant Martin Shanagher and Peter O’Neill managing director of IBM Ireland.
Today, policy makers, government officials, economists, R&D experts, consultants and many of Ireland’s most innovative companies gathered together at the Irish Management Institute for an innovation conference which sought to highlight the importance of research and innovation in securing Ireland’s economic future. Many key topics relating to innovation were discussed including the funding/incentives available, strategies for commercialisation and management of IP that derives from innovation…The general message for the future was one of optimism.
Personally I was very impressed with the commitment to improving Irish Society through innovation and education that was demonstrated from the speakers. In particular Martin Shanagher listened very carefully to all the contributions from the panel and the floor. I found that he was honest in his replies to questions and showed that the division of the Department of Jobs Enterprise and Innovation is led by a man genuinely interested and committed to innovation and the smart economy.
In my contribution I highlight some of the latest developments in new IP driven business models that are emerging through companies such as Intellectual Ventures, RPX and Acacia Research Corporation. I also put these developments in context with the history of FDI in Ireland and urged our policy makers to use the attractive incentives to IP trading companies to ensure that their know-how is transferred into the Irish innovation ecosystem.
All the presentations can be accessed on Leyton’s site in addition I have embedded my slides below:
US Corporations Stupid not to be in Ireland
That’s right. Stupid!
According to tax experts interviewed for this report on CBS news, the savings achievable by US companies moving some of their intellectual property rights to Ireland is so good that you would be stupid not to.
According to the report, the USA, with a headline rate of 35%, has the highest corporation tax rate in the developed world. In comparison Ireland’s rate of 12.5% may be reduced to as low as 2.5% for income derived primarily from intangible assets such as intellectual property.
Cisco CEO, John Chambers, drives home the point. Chambers emphasises that one of the key responsibilities of the US multinational CEO is the reduction of the effective corporation tax rate.
New Morning IP works with US companies to legitimately reduce their corporation taxes on intellectual property income. If you are a CEO or are responsible for your corporation’s tax rate then please email or call +353-1-254 2340 to find out how you could save money.
Tax benefits for patent royalties
The Irish government’s decision to abolish a tax exemption on income from patent royalties does not close the door to foreign companies who want to monetize their patent assets in Ireland.
Richard O’Connor of patent attorneys Cruickshanks, speaking to Silicon Republic, has criticised the government’s decision to abolish the tax exemption on patent royalties. O’Connor wonders how the government can justify the termination of this incentive in light of its policy to promote the Smart Economy and increase R&D particularly given that the government will continue to pump almost half a billion per year into third level research. The patent royalty exemption was one of the key incentives for domestic SMEs and inventors.
On the other hand Ireland remains a very attractive place to hold, acquire and create intellectual property. A wide range of benefits remain available to international companies wishing to manage their intellectual property in a strategic overseas jurisdiction.
We offer international clients a cost effective managed licensing service to outsource all or part of their intellectual property operation quickly and cost effectively.
Why not contact us today to find out more.
Busy Week for Copyright
It’s been a busy week for copyright.
First came the 180 page judgment in Koger -v- HWM which saw the defendants successfully resist claims of copyright infringement and breach of confidentiality in relation to the software product they developed after leaving the employment of the plaintiffs. The judgment is available here (part 1 and part 2).
Secondly the recording industry was dealt a blow in the High Court when Mr Justice Charleton held that there was no provision in Irish copyright law to grant injunctions directing ISPs to take action against alleged illegal downloaders (EMI -v-UPC via @tjmcintyre). While UPC, the ISP in question, came in for come criticism from the judge, the Court was of the opinion that it was unable to take action since Ireland had not fulfilled its obligations under EU law in relation to copyright infringement. Naturally, there is quite a bit of commentary in the press (three articles alone in the Irish Times here, here and here). Understandably the record producers are not best pleased. Sharon Corr has also weighed in behind the producers. In my opinion the story is not at all black and white. Like most things in life things are not as simple as they may seem. It is hard to see this as just a case of illegal downloaders ruining the music business and denying artists from benefiting from their works.
There are many reasons why the producers are in trouble and some of it may even be their own fault. I am not convinced that there is a direct connection between the success of the artist and that of the record company. For example Thom Yorke thinks the music industry has had its day, not all artists are in love with the current business model. Finally Seth Godin provides a great analysis of the music industry and the issues facing it. In his opinion the problem is a failure to adapt to the internet and that attempts to control it by DRM, legal action etc. are destined to fail. The IPKat also agrees.
Finally the final draft of the ACTA treaty was published. This Treaty has been the subject of intense negotiation beween several countries and the EU in an effort to introduce a minimum international standard for the protection of intellectual property rights. The treaty targets counterfeiters and pirates and has sparked controversy in relation to illegal downloading, border measures and drugs. The best analysis so far comes from the IPKat (here and here)
Start-ups with patents do better!
According to a paper cited by the 271 Patent Blog, patents are a signal of the credibility of US start-ups.
Researchers carried out an analysis of three decades of patent data for VC-backed firms in the US to examine the effect of patents on their performance and the financing patterns of VCs. Their results show that US start-ups which file patents before receiving VC investment are more likely to file an IPO, less likely to fail or be sold privately and receive more funding from more prominent VCs.
According to the researchers the successful filing of patents before funding acts as a signal to the VCs relating to the quality of the opportunity where there is an asymmetry of information between the insiders in the start-up and VCs.
The researchers conclude:
[O]ur results show that start-up companies’ patenting prior to any VC investment is credible by leading to higher IPO success rates. Accordingly, entrepreneurs tend to wait for patent filing before asking for VC money and tend to file more patents when the degree of information asymmetry is higher. Consequently, patenting start-up firms not only attract larger and more experienced VCs in first VC financing round, but also receive significantly larger amounts in first rounds or all rounds of investment, and experience longer investment incubation periods. All these findings are consistent with the signaling role of patents in equilibrium. Patent filing also helps to enhance entrepreneurs’ control in start-ups: new ventures with prior patents are significantly less likely to be acquired in trade sale than those without patents.
The paper may be accessed here.
Nanotechnology in Ireland
Ireland’s national policy advisory body for science and enterprise, Forfás, yesterday published a report on Ireland’s nanotechnology commercialization framework 2010-2014.
The report comprehensively analyses the almost €250 million spend on nanotechnology in Ireland in the last 5 years and compares Ireland’s position with other countries including Germany, Holland, Israel, USA and UK.
The report makes some important recommendations which can be summarized as “focus”. Focus on key areas, collaborate with complementary operations in other countries and focus on commercialization.
Figure 15 presents an interesting comparative overview of various nanotechnology commercialization strategies in various countries.
Ireland seems to lie at the extreme end of the spectrum for all the strategies examined by the authors. Whereas Ireland’s approach is technology focussed with an emphasis on technology transfer Israels’s is application specific and focusses on startup creation. On all measures of strategy we are at the opposite end entirely to Israel, a country that is often held up as an exemplar in technology commercialization. This does not bode well for out strategy.
In my opinion, the most important finding of the report is that there are no “super-customers” in Ireland which act to generate a market pull for nanotechnology based products and services. The super-customer may be public (e.g the US DoD) or private (e.g. the German SME sector) but its existence appears to be critical.
According to the report,
In an ideally functioning science commercialization economy, the market acts as a guiding mechanism for technology development and innovation by defining its needs and demanding solutions (thereby setting a research agenda).
In the case of Ireland, there is no market-driven demand pull for research. This is where public sector agencies have to step in. In the case of the US (although a parallel market mechanism exists), the nanotechnology research agenda is largely set by what one could call super-customers viz. the Departments of Energy, Defence etc. In Israel, the military establishment serves in this role and in the early days of the INNI, it was the only demand centre. In essence, a super-customer is a large funding agency which, through programmes like Small Business Innovation Research (SBIR) grants, helps provide early-stage sustenance to emerging technology companies, while at the same time ensuring that focused research (to serve its priorities and needs) is carried out. Ireland does not a super-customer to act as a demand centre for emerging nanotechnologies and this can be a significant barrier to commercialization.
Taking this onboard, Ireland must guard against having a sole super-customer. A model worth considering is the US NNI. The NNI is made up of 25 federal agencies with their own priorities and agendas. Technology-centric agendas of the National Science Foundation (NSF) and the National Institute of Health (NIH) are counterbalanced by more application-driven agendas of the DoD and the DoE. This results in a more diverse portfolio of technology development priorities.
Unfortunately this apparent gap in Ireland’s strategy does not appear to be adequately reflected in the report’s recommendations,
Given the absence of a defined “super-customer” capable of driving priorities in research and development towards viable applications, resource allocation should be explicitly channelled to commercially viable opportunities until a working “market mechanism” for prioritisation evolves. Identifying these opportunities is a critical step and should be undertaken in a consultative fashion.
In the absence of a market, directing resources to commercially viable opportunities is virtually impossible. The report is silent on how a “market mechanism” may emerge. Let’s hope that the implementing committee that has been formed on the back of this report seriously addresses how demand can be generated for nanotechnology outputs from research. At the very least the government should be able to develop a list of technologies that it wishes to acquire and which thus forming a basis for future funding decision. The alternative strategy of picking winners will only lead to us dropping behind the curve compared to out international competitors.
Japan to centralise development and exploitation of some university IP
From the excellent IP Finance blog comes news that Japan is to reorganise the way in which it exploits some of the patents developed in universities. The Innovation Network Corporation of Japan (INCJ) is to set up a fund called LSIP which will bundle public sector IP, add value and license it. According to the announcement:
(1) Even though the companies seeking the patent licence from the university want a group of intellectual property that has been sorted and bundled to a certain extent, each university has tended to market its own patents without any coordination, making the patents much less attractive to the companies.
(2) University patents tend to be made simply on research results and so the data backing the patent is insufficient, which reduces their value as intellectual property because peripheral patents are not filed. Not only are public research institutions in Japan faced with similar problems, it is also likely that some companies have dormant patents that cannot be put to practical use.
This is an interesting way to overcome some of the issues relating to the exploitation of university IP. The same problems arise the world over namely lack of coordination, duplication of effort and lack of value add after a patent is filed.
This model could be applied in Ireland and indeed pushed further. For example the IP fund could offer R&D funding to the original inventors to carry out added value development or to pursue patents in related aspects of technologies. This would bring a more IP focussed coordination and add more value than the current ad-hoc system of funding research projects.
The European Union Patent 1981
From the vaults, this link appeared in one of my regular Google alerts. It details the position in 1981 regarding the Community patent and trade mark within the EU. The tone of the paper implies that the Community Patent would come into force sooner rather than later. Unfortunately this has not been the case. Interestingly the paper called for ECJ supervision of the EPO appeals process an element that is strikingly missing from the current proposal for a unified patent litigation system. This was one of the objections of the Advocates General put forward in their opinion to the Court. They were off the view that since it was proposed that the EPO Enlarged Board of Appeal would not be subject to CJEU supervision in violation the TFEU.
While the trade mark directive was adopted at the end of the 1980′s, thirty years on it seems that we are no closer to the magical European Patent.