IP Considerations in Business

While working with entrepreneurs, I was frequently asked how vital is IP (specifically patent rights) to their venture making. Here is a high-level reference, and each sub-topic contains a lot more depth and nuances:

Generally, at a high-level management consideration, patent filing go-no-go can be summarized as follows:

1. If a company has the intention to manufacture, consider protecting invention with a territorial filing,

2. If a company has the intention to sell, consider patent protection in the territorial of filing

3. If the company intends to exclude competition from the territorial of filing, IP requires a further consideration (below).

4. Else, generally, it may be seen as little cost-benefit to file IP.

For a more careful consideration, value to IP can be categorized into 4 areas:

1. Offensive Value (particularly scientific breakthrough)

• Non-exclusive out-licensing of a patent for cash

• Non-exclusive out-licensing of the patent plus tech transfer (man-hours/demo kit/etc.) for cash

• Exclusive field-of-use licensing for non-core markets

• Cross-licensing with net cash plus

• Sale of IP (with or without grant back to use license)

2. Defensive Value

• Freedom of operation, deterrence or settlement of competitor IP infringement claims

• Cross-licensing with zero or negative cash

• Exclusive field-of-use licensing in non-core markets

• IP in place of cash as a contribution to joint venture or strategic alliance

3. Strategic Value

• The price premium for products/services with patented features (subjective price elasticity)

• Market share protection/expansion

• Share price support/improvement

4. Enterprise Value

• Enhance corporate value to potential acquirers/investors (subjective effectiveness, depending on the exclusivity of the invention)

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