Seven things every CEO should know about IP
BY TIM SANDLE
To remain competitive in the market place, businesses need to value their intellectual property. This is not as straightforward as it might seem. Erik Reeves, CTO of Boston-based IP software company, ANAQUA offers some top tips for businesses.
Intellectual property is a broad term. Within this category of property falls intangible creations of the human intellect, and, in the legal sense, it primarily encompasses copyrights, patents, and trademarks. The term also includes other types of rights, such as trade secrets, publicity rights, moral rights, and rights against unfair competition.
For businesses, having the right type of intellectual property protection helps them to stop people stealing or copying the names of your products or brands. It also protects inventions, the design or look of your products, and the things written or produced. Companies of all sizes are at risk of having their unique ideas, products or services infringed upon, even if they are on the other side of the world, making intellectual property protection more important than ever. In fact, former Toys R Us CEO Gerald Storch recently said in a CNBC interview that if a company owns IP, it is much richer.
Are we investing enough in R&D and intellectual property development to compete now and into the future?
According to Erik Reeves: "Firms should be investing sufficiently in R&D to grow by developing new products and maximizing return on investment (ROI) on those investments through IP protection. With the pace of innovation increasing every day, senior executives and Boards need to be mindful of potential risks, including catastrophic disruption; as well as emergent opportunities."
Do we understand the value of our intellectual property (IP) and how it drives our Profit and Loss Statement (P&L)?
Reeves: "The management of your IP should be seen as an ongoing discipline that is aligned with, and an integral part of, your business planning and strategy. The closer it is tied to key financial statements and other standard metrics, the better the alignment is likely to be."
Do we have a strong IP strategy to compete globally and can we articulate this to our shareholders and the market-at-large to realize increased value?
Reeves: Having an organized IP strategy in place will ensure that there is a streamlined process on identifying, protecting, and managing your IP. Equally importantly is unlocking the latent value for shareholders.
Given that these critical assets are not captured in balance sheet, are investors expected to factor them into stock price or assume they are already accounted for in the P&L?
Reeves: Because intellectual assets represent such a significant portion of a company's worth it is important that a company communicate the importance and value of IP to analysts, shareholders and potential investors. If innovation and IP excellence are not baked into valuation, senior leaders are failing their shareholders.
Are we prepared to deal with the increasingly complex world of IP risk and opportunity and react (and communicate our plan) quickly to changes?
Reeves: IP tools and technology evolve constantly and require re-visiting your IP plan and priorities every year. There needs to be a proactive plan in place to monitor and stay on top of a company’s product and IP ecosystem real-time.
How do we value IP when looking at our own acquisition strategy?
Reeves: Having a systemic approach and methodology to align IP value and business strategy extends to how a company directs their acquisition strategy.
Does our product roadmap include an IP roadmap and implications for financial projections?
Reeves: Just as a product roadmap and pipeline is the lifeblood of any company, the IP “roadmap” associated with these products needs to drive competitive advantage. A bad product won’t sell, but a great product will – and the sustainability and profitability will be driven by the product advantages, including IP protection.