Intellectual Property Analysis

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INTELLECTUAL PROPERTY ANALYSIS -Shradha Diwan Intellectual Property is any product of creative intellectual endeavor such as an innovation, design, trading style, artistic work, or literary work – including computer notation. There are basically 4 types of intellectual property: trademarks, patents, copyrights, and trade secrets. Each is legally created and protected by a specific federal and state statute. The IP category of intangible assets constitutes a majority of a bus iness entity’s total intangible asset value. The asset category of intangible assets is described as patents, trade names, and other intangible assets acquired from an independent party. Unlike the general commercial tangible assets, IP assets enjoy special legal recognition and monopolistic protection. General commercial intangible assets are typically created in the normal course of the subject business operations. These general intangible assets may include, for example, a supplier contract, a customer relationship, an assembled employee workforce, or a leasehold interest. However, the creation of an intellectual property asset can be attributed to a specific individual’s intellectual capital. A company’s intangible intellectual assets build an IP portfolio. Managing a company’s intellectual assets in order to achieve the organization’s growth plans is important for the success of a business venture. A company’s IP portfolio is a strong indicator of its valuable intangible assets and it needs to be constantly strengthened by filing new patent applications, licensing, and cross-licensing. All of this is required to survive and thrive in a competitive business environment, adding value through creative and non-traditional applications. IP analysis is essential to explore competitive and IP-related situations surrounding a company’s products and services. It plays a significant role in defining a strategy for maintaining market leadership and determining which technologies should be IP protected. It also helps to determine the timing of patent filing and how to best market one’s intellectual property. Identifying potential revenue and managing the costs of existing IP is essential to the asset management of an organization. It also helps the company obtain information regarding what technology development opportunities exist in the market and also to gain deep technical knowledge to support complex litigation needs. The following factors can affect the value of IP in several ways:

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The legal life of the IP asset: it influences the valuation analyst’s estimation of the remaining useful life of the subject The opportunity to commercialize an IP asset: by entering into licensing, joint venture, or other exploitation and development agreements The amount and quantity of market data regarding IP asset transactions: availability of a larger amount of data with regard to the sale, license, or other commercialization of IP due to more reported IP sale/license transactions The greater royalty rates earned on IP assets compared to other commercial intangible assets: an IP trades at higher prices because IP buyers and licensees are willing to pay more for an IP due to the protection afforded to them by IP laws The quantity of judicial precedent relating to IP assets: a review of published precedent may provide the valuation analyst with an indication of a reasonable range of pricing multiples, royalty rates, damages-related lost profit margins, and so forth The passive value of the IP asset: active value of an IP is created when it is used proactively and passive value is created when it is used defensively. Both active and passive values are legally influenced by the legal and economic attributes of the subject IP. Basically, IP analysis is an envelope term for IP mining, IP strategy, IP portfolio management, and IP management. It involves planning using tools like IP landscaping whereby a company can target specific areas where acquiring IP rights can be economically beneficial. Undervalued assets of a company can be organized and boosted through IP partnering, licensing, and litigation that otherwise might remain unearthed. IP Mining is a multistep process that begins with cataloging and organizing a company’s IP and ends with a boost to its bottom line. That boost comes through IP partnering, licensing and litigation that might otherwise have remained unearthed. Patent mining requires more than just legal expertise - it also requires the involvement of experts in the strategy, processes, technology and the industry. Companies, once only interested in understanding the pate nts within their own portfolio, are now interested in knowing about the patents held by competitors. Patent management application and robust search engines allow internal IP managers to quickly pull together organized sets of patents from within their own portfolios, those of specific competitors, and [email protected]

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those patents citing relevant technical or industry terms. With the advent of such patent analysis software, IP managers have pushed the patent mining process toward studying larger and larger patent sets. Human analysis must be teamed with the software’s technical capabilities in order to mine a large portfolio successfully. The information thus obtained should be visible to the entire company, from R&D, to product marketing, to the highest levels of management in order to raise IP-consciousness within the organization. With this consciousness, more people would be engaged in everything from spotting infringers at a trade show to recognizing a complementary technology that could enhance an internal effort. A company’s own patent mine contains only a small bit of the gold that stands to create strategic advantage for it. The technology landscape is spotted with patents and technologies that can hold danger and opportunity. Previously, patent searches were aimed at determining prior art during prosecution. On the other hand, now they are also used for winnowing out patentable new technologies before the research and development teams spring into action. This is known as IP landscaping. Examining the IP landscape will reveal that the aftermath of the technology bubble collapse has left the technology landscape strewn with patents available for licensing or sale from disrupt or bankrupt companies looking for quick cash and willing to sell off their IP assets. Licensing or purchasing the rights to these patents and technologies can be valuable in several ways. First, it can help companies bolster IP position and avoid the risk of defending their product position against infringement claims (particularly to be guarded against is allowing key IP to fail into the hands of so-called trolls. With no products of their own, these patent-holding companies troll for patents in the IP marketplace with the goal of enforcing the patents against product-holding companies – often at outrageous prices). Second, it can help contribute progress to the development of and reduce the time to market for new products. Finally, it can help maintain competitive advantage as companies develop new product features and improvements in the face of alternative products being brought to market. The new era of patent mining involves creativity, assumes a higher degree of risk, and most importantly, requires engagement from upper management. However, the rewards stand to be much higher, beyond licensing fees or royalties. References: www.ipfrontline.com

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