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Third WIPO/INSME International Training ProgramFinancing your business with Intellectual Property
Topic 2Acquiring your Intellectual Capital:
The relevance of an IP audit in your business strategy
Bob HodgsonZernike (UK) Limited
GenevaDecember 2010
ZERNIKE (
UK)
ZERNIKE (
UK)
First some simple definitions
Technology – is how we do things now
Knowledge – is what we already know
Innovation – is doing things differently
Science – is one of the main drivers of innovation
Development – is how we apply science to do useful things
Research – is what we do to find out what we currently do not know
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
National competitive strategies and SMEs
Natural resource based: seen as second order but crucial to jobs and dependence
Labour surplus: productivity still an issue quality standards in products
Systems integration: rapid adoption and adaption source of innovation
Advanced technology: R&D driven leading edge commercialisation emphasis
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Alternate business strategies and intellectual capital
Lowest cost – efficiency savings for cost edge
Value performance – upgrading at acceptable cost
Most advanced – best performance driver
Greenest – lowest accredited footprint
Service +/- product – speed and responsiveness
Bob HodgsonGeneva 2010
All rely on knowledge and for some innovation is central
ZERNIKE (
UK)
Mismatches at different levels
National imperative - upgrading productivity and promoting innovation essential
Business level success is continuing to do right what you have always done – change is risky!
Competitiveness challenge: reconcile the two positions grow new higher value businesses improve existing businesses
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Real Economy: innovation engines
ARM – Advanced RISC Machines IP generator income from Licences and Royalties market cap - billions
Generics Group Plc – technology solutions provider IP accumulator and commercialiser – spinning out companies massive P/E ratio on flotation – hope value
Supported by specialist service providers
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
The starting point: has it potential value
Who will buy or already buys my product/service?
What will they pay?
How many potential customers are there?
What will any innovation replace?
Will it work and how much will it cost to make?
Is it likely to be profitable?
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Communicating potential: investment readiness
Business plan
Market data and evidence
Communications skills
Differentiating the investment pitch
Cultivation of the risk takers
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Recognising what is there and what to be added
An IP audit to codify present technology
Identification and packaging
An IP search
Negotiation and acquisition
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Personnel and Intellectual Capital
Skilled people are the capital of the knowledge economy
Codified v tacit knowledge
Methods of protection: formal registration contract of employment equity share
Restrictions of trade?
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
What are your Intellectual Capital Assets
Advanced technology – the archetypal IP candidate
Market credibility – trade marks and brand reputation
Production expertise – control and quality oriented
Product performance – incremental advances or radical changes
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Sources of technical and business innovation
Clients or customers 70% Competitors Internal sources Associations Technical standards 50% + Conferences/trade press Scientific journals Consultants Universities Government labs 20%
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Supply side perspectives
The inventor: the idea that will change the world – huge hope value and make me rich
The research institution: an output in its own right with weak commercial perspective
The commercial licence provider: revenue generating expectations tempered with restriction of own potential action
Alignment of risks and rewards clarity and competence of owners capacity to pay and to exploit position in market
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Valuation: the unresolved challenge
Easy – when there is a revenue stream
But even then worries about sustainability
Before the revenue stream it is much more uncertain
And is characterised by information asymmetries inventor knows the technology entrepreneur knows the market investor needs to independently evaluate both and then to reach a deal!
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Some additional limitations
IP system is not always applicable advanced engineering around F1 racing accumulated tacit knowledge
Commercial perspectives can cripple business Pro fit and its American licensee defence costs can overwhelm revenues all but a few USA universities spend more on IP than they receive
Bob HodgsonGeneva 2010
ZERNIKE (
UK)
Making the market work
Bob HodgsonGeneva 2010
Stimulating the supply side
Stimulating interest among MSMEs
Training brokers and agents
Educating fund managers
Ensuring quality implementation
Building the history
ZERNIKE (
UK)
Thank You
Bob HodgsonGeneva 2010
BOB HODGSONZERNIKE (UK) Ltd
The Grove High Street
SawstonCambridge
UKCB2 4HJ
0(044)1223 526980
bhodgson@zernikeuk.com
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