Questions and Answers
Previous events
IAM Media
The IP Hall of Fame
Register now

Questions & Answers

Joff Wild, editor of IAM and the conference chairman, recently asked a number of speakers from the forthcoming IPBC for their views on a number of important issues. Below are some of the responses he received.

Charles Clark - Global head of IP
Edwards Ltd

1. Why do you believe IP is an important corporate asset?
It is core to our ability to differentiate from competitors, sell premium products with healthy margins, and protect investment in R&D, trade secrets and know-how. Our brand is also a key asset as it communicates everything about the company, our reputation, our skills, our service.

2. When you think of the term IP value, what does it mean to you?
This is a measure of what IP adds to the bottom line for a company....the problem is measuring it!

3. What do you believe is the key issue in IP at the moment?
For me, measuring IP value and communicating it to the C-suite (as well as Office back-logs and anti-IP political pressures).

Henry Nothaft - President, chairman and chief executive officer

1. Why do you believe IP is an important corporate asset?
Patents and other forms of intellectual property are extremely important, especially for startup companies seeking venture funding to commercialise their inventions in the form of new products, services and medical treatments. Patents especially are associated with job creation, which makes sense given that the vast majority of entrepreneurs find them essential to obtaining the funding they need to hire and scale up R&D. For larger firms, patents can also have great financial and strategic value. They serve as the international currency of IP, enabling beneficial relationships with other firms. And from a legal standpoint, strong IP is essential to maintaining a strong competitive position in the marketplace.

2. When you think of the term IP value, what does it mean to you?
I've just finished co-authoring a new book on innovation policy coming out next June from Harvard Business Press, entitled Great Again: Revitalizing America's Entrepreneurial Leadership. So my focus lately has been on IP's value to society as a whole – which is enormous. We know that the patent system in particular stimulates innovation, and we also know that innovation is responsible for up to 90% of all economic growth and increases in living standards – at least in the US. Without patents, most entrepreneurs could not get the funding they need to develop their new products and services, and most startups – the one and only source of new job growth in the US – would have a difficult time succeeding without them. In every nation studied so far, the development of a strong and balanced IP system has led to dramatic improvements in the economy and living standards of the people.

3. What do you believe is the key issue in IP at the moment?
From my perspective as CEO of a US-based technology company, it's the need to fully fund the US Patent & Trademark Office (USPTO) and modernise its searching and examination systems. We must eliminate the huge backlog of applications that have built up at the USPTO. As the agency's new director David Kappos has noted, millions of jobs and thousands of valuable new products and medical treatments are being lost because of this backlog. I recognise that conditions may vary at patent offices elsewhere in the world. But for most Americans, the patent office is “the biggest job creator they never heard of”. It's essential to our economy – if not the world economy as well – that the US patent office be restored to full functioning.

Ralph Eckardt - LLC Manging director
3LP Advisors

1. Why do you believe IP is an important corporate asset?
If the prime objective of corporations is to sustainably generate and grow profits for their shareholders, then the importance of any corporate asset should be measured against their contribution toward that objective. Take a look up and down the balance sheet of any corporation and think about what assets they own that enable them to generate and grow their profits. Specifically, ask yourself what assets they hold that enable them to create and maintain an advantage against their competitors. What you will find is that there are precious few assets that corporations hold that make any difference to their ability to compete. The huge, glaring exception is intellectual property (and IP is largely absent from the balance sheet...but that's a different story). IP is one of the few (only?) corporate assets that can make a competitive difference in the marketplace.

  • IP assets can enable sustainable price premiums and higher market share through defensible product differentiation (think product features and branding).
  • IP can enable sustainably lower product costs through owned materials/manufacturing innovations.
  • IP can make a fundamental difference in the structure of industries by creating barriers to entry and fundamental and sustainable differences in the product economics of competitors.
Don't believe it? Take a look at the differences in economics between feature-rich, branded products in the consumer products, electronics, or pharma/biotech sectors and commodity products in those same industries. The right IP, managed properly, can be the difference between sustainable profit growth and corporate failure. I'd say that makes IP a pretty important (arguably the most important) corporate asset.

2. When you think of the term IP value, what does it mean to you?
A quick online search for “value” reveals the following set of definitions:
1. An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return
2. Monetary or material worth
3. Worth in usefulness or importance to the possessor; utility or merit
When I think of “IP value” I'm generally thinking about the third definition rather than the first two. The value of IP depends on the usefulness or importance to the IP owner. The usefulness of a patent (for example) can vary widely depending on who owns it. For example, the same patent could have very different usefulness in the following contexts:

  • The 10,000th patent in a corporation's patent portfolio.
  • The key patent which underlies a billion dollar product monopoly (eg, drug).
  • The first patent granted to a start-up which enables it to attract VC financing.
  • The same patent held by a licensing company or patent investor.
  • The same patent held by a patent aggregator which keeps it out of the hands of a licensing company or patent investor.
  • The same patent in the hands of a company that can use it defensively in litigation or to change the balance of payments in a licensing negotiation.
Every piece of intellectual property has a highest and best use. As a participant in the patent marketplace, our role is to create IP value by moving patents from low value uses to their highest and best use.

3. What do you believe is the key issue in IP at the moment?
How quickly can we get to a place where senior management in most companies are as comfortable managing IP assets as they are managing the rest of their business?

Roger Shang - Chief Patent and Technology Counsel
Alibaba Group

1. Why do you believe IP is an important corporate asset?
IP is important to Alibaba for three reasons:

  • First, we rely on IP to capture Alibaba's innovations – innovations in cloud computing, search, mobility, data mining and other areas developed by our thousands of engineers in China and the US.
  • Second, IP allows us to share innovations and data with communities and work with partners in a responsible manner. We contribute innovations to open source communities, we open a massive volume of e-commerce data to third party developers, and we work with partners to offer new products and services. IP allows us to clarify what is shared.
  • And last but not least, IP is important as a defensive asset. Alibaba's mission is to facilitate an open, transparent, sharing and responsible e-commerce ecosystem, and we do not want to be impeded from fulfilling our mission by those wielding IP as an offensive weapon.
2. When you think of the term IP value, what does it mean to you?
I think of IP value as a strategic concept, measured by how IP contributes to the company's long-term goals and protects it from disruptions. It is difficult to quantify, but if our IP can serve and protect Alibaba's businesses and allow the company to achieve its mission, then we have achieved high IP value.

3. What do you believe is the key issue in IP at the moment?
Entities large and small are obtaining patents in China in record numbers. It will be fascinating to watch how patent owners, including many new players, utilise these patents, and how the Chinese legal system deals with the perhaps inevitable lawsuits.