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Innovation Monetization
• Financial leveraging of intellectual assets
• Increase either:• 1. Revenue streams• 2.Capital funding
Emphasis on patents.
Patent law
• Title 35 of the US code issued by the (USPTO)
• Patents issued to inventors/discoverers of a process, machine, manufacture, composition of matter, or improvement (paraphrase)
• Once issued, patents are personal property that can be bought, sold, transferred or assigned
• Infringement is the making, using, offering to sell, selling, or importing a patented invention without authorization and is subject to civil remedies.
Historical Perspective
• Historical methods for patent monetization:• Licensing• Enforcing patent rights and licensing
agreements
• However, patent holders have since devised new techniques:• Sale of patents• Middle men• Securitization
Licensing
• Common form of patent monetization• Example: Microsoft’s patent license with
Samsung for use of Android Software
• Risks include competition, obsolesce, or expiration• Example:
Obsolesce of floppy disks
and zip disks
Multi-Company Licensing
• Patent Pool and Cross-licensing
• Result of two companies with similar innovations, or inventions
that rely heavily on each other
• Negotiated in order to avoid litigation
Texas instruments
• First example of a patent holder taking a defensive position with regards to their patent licensing agreements- early 1990’s
• Used a litigation strategy to ensure that licenses were renewed- or else the licensors could face a patent infringement suit
• Forced royalties out of companies using TI’s innovation without authorization.
• (No innovation without authorization)
Changing Perspective
• IP monetization into important part of strategic management processes.
• Five changes for change:• 1. Utilizing the large, untapped potential of IT• 2. More expertise in structuring and executing IP
strategies• 3. Identification of IP suitable for financial
engineering• 4. Rise of non-practicing entities• 5. Avoidance of litigation risk
MiddleMen
• IP Aggregators• Acquire patents and patent pools• Provide capital• Provide financing
• Defensive Patent Pools• Offer protection for “high risk” patents
• Non-practicing Entities, aka The Patent Trolls• Big topic in current news• Very controversial
Patent trolls
• Do not create, provide, or innovate products or services (NPE)
• Buy patents and patent portfolios
• Receive revenues primarily through litigation, and threats of litigation
• Critics:• Exist only to sue others• Don’t use patents, or participate in innovation• Stifle innovation• “[Patent trolls] don’t produce anything, they just shake
down anyone who does”
False Marketing
• It is illegal to mark a product as “patented” if it is not
• Fines up to $500
• Does not apply for expired patents
Patent Management
• As monetization options have increased, so has the complexities of patent management.
• Integrate strategies for individual patents as well as in conjunction with each other.
• Keep future innovation in mind in addition to current monetization strategies
• Include patents and innovation as part of an overall business model