Transcript IP CONSULTING FOR THE STRATEGIC USE OF IP ASSETS IN BUSINESS Delivered By Yahaya Maikori Principal Partner- Law Allianz.

IP CONSULTING FOR THE
STRATEGIC USE OF IP ASSETS IN
BUSINESS
Delivered By Yahaya Maikori
Principal Partner- Law Allianz
INTRODUCTION
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At no other time in History has Intellectual Property been as valuable
as it is now.
Ideas, innovations and other intellectual based assets are rapidly
replacing land, energy, raw materials and labor as the engines of
growth for many companies around the world.
According to former Federal Reserve Chairman Alan Greenspan, as
much as 75 percent of the value of publicity traded companies in the
United States can be attributed to intangible assets up from 40
percent in the early 1980s.
However, the value of intellectual property is usually
underappreciated especially in developing countries such as ours.
The challenge is for companies to understand the value of their
intangible assets for the purposes of maximizing business growth
opportunities. This is where Intellectual Property Consulting becomes
important.
WHAT IS INTELLECTUAL PROPERTY?
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Intellectual property (IP) refers to creations of the mind:
inventions, literary and artistic works, and symbols, names,
images, and designs used in commerce.
IP is divided into two categories:
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Industrial property, which includes inventions (patents),
trademarks, as well as industrial designs, and
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Copyright, which includes literary and artistic works such as
novels, poems and plays, films, musical works, artistic works
such as drawings, paintings, photographs and sculptures,
and architectural designs.
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Rights related to copyright include those of performing
artists in their performances, producers of phonograms in
their recordings, and those of broadcasters in their radio and
television programs.
TYPES OF INTELLECTUAL PROPERTY
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In general, there are five basic types of
intellectual property work that attorneys do.
While this list could certainly be toyed with after
some debate, for all intents and purposes, these
areas are:
Trademark
Copyright
Trade Secret
Patent
Licensing
TRADEMARK
Trademark law protects words, phrases, logos, or
symbols used to distinguish one product from
another.
In circumstances where a competitor uses a
protected trademark, the holder of the trademark
can go to court and obtain an injunction to stop
the use.
COPYRIGHT
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Copyright Law. Copyright law protects the creators of
expressive works, such as artists, photographers, writers, and
musicians and gives them the exclusive right to protect how
their works are used. It is important to note that unlike
trademark law, copyright law does not protect names or titles,
for example.
One way that copyright law can be distinguished from
trademark law is in the advertising context. Trademark law
would commonly protect the name of the product being
advertised, while copyright law would protect the expression.
For example, the statement in an advertisement: "If you drive
this X car, you will undoubtedly realize it is among the best in
the market for what it does," is an example of something that
would have elements of copyright and trademark within it.
PATENTS
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Patent law protects inventions. By filing and obtaining a patent from the
United States Patent and Trademark Office, the inventor of a product receives
a monopoly on the commercial exploitation and use of a product for up to 20
years.
Patents can protect the functional features of a process, machine,
manufactured item, asexually reproduced plant, or composition of matter, for
example.
In general, the United States Patent and Trademark Office will not issue a patent
for anything unless it is:
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Non-obvious - Surprising to a person with ordinary skills in the relevant
subject matter of the invention.
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Novel - New and unique in one or more elements when it is compared to
previous technology.
 The United States Patent and Trademark Office generally issues three types of
patents: Plant Patents - Patents to protect certain types of plants.
 Design Patents - Patents to protect the ornamental characteristics of a given
device.
 Utility Patents - Patents to protect inventions that have some type of
usefulness.
TRADE SECRETS
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A trade secret is "a secret formula, method, or device that
gives one an advantage over competitors." (The American
Heritage® Dictionary of the English Language, Fourth Edition
Copyright© 2000 by Houghton Mifflin Company. Published by
Houghton Mifflin Company. All rights reserved.)
In order to be a trade secret, the information must be such
that it is not generally known to others in the business
community.
If the owner of the trade secret takes reasonable steps to keep
the trade secret under wraps, courts will protect the trade
secret owner from unauthorized disclosure by:
(1) industrial spies, (2) competitors who wrongfully acquire the
trade secret, (3) employees of the owner of the trade secret,
and (4) anyone with any type of duty not to disclose the
information.
LICENSING
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While licensing law may make use of all the areas of law
above, it is a popular enough type of work that it merits
some discussion. A license is a grant of permission to do
something with an otherwise protected work or product. A
copyright holder, for example, can give permission to other
individuals to copy their work.
In general, licenses grant rights to do one or more of the
following things: To reproduce a work that is otherwise
protected.
To distribute copies of the work to others by rental, sale, or
lease, for example.
To display the work.
To prepare derivative works from the original work using
protected expression from the original work.
WHAT ARE THE BENEFITS OF IP?
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Intellectual property or IP can generate income
through licensing, sale, commercialization of IPprotected products or services that may
significantly improve an enterprise’s market
share or raise its profit margins.
IP assets can also enhance the value of worth of
the enterprise in the eyes of investors or
financing institutions and in the event of sale,
merger or acquisition, IP assets may significantly
raise the value of SME.
WHY DO WE NEED IP STRATEGY?
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Trade Secret Law. A trade secret is "a secret formula,
method, or device that gives one an advantage over
competitors." (The American Heritage® Dictionary of the
English Language, Fourth Edition Copyright© 2000 by
Houghton Mifflin Company. Published by Houghton Mifflin
Company. All rights reserved.) In order to be a trade secret,
the information must be such that it is not generally known
to others in the business community.
If the owner of the trade secret takes reasonable steps to
keep the trade secret under wraps, courts will protect the
trade secret owner from unauthorized disclosure by
industrial spies,
competitors who wrongfully acquire the trade secret,
employees of the owner of the trade secret, and
anyone with any type of duty not to disclose the
information.
WHAT IP CONSULTING CAN DO FOR
SMES
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Licensing, royalty, cost and pricing compliance
Valuing IP for acquisitions, sales, joint ventures, merger transactions,
cross-licensing, securitization (using IP assets,) and tax-related
purposes
Calculating damages
Testifying on intellectual property damage cases filed in federal and
state courts, as well as with the Federal and International Trade
Commissions
Performing license and royalty compliance testing
Helping evaluate, structure and execute intellectual property
transactions, such as licensing, cross-licensing, joint venture and
start-up company creation
Providing competitive market assessments
Developing recommendations for value extraction from existing and
future intellectual assets within client portfolio
Providing focused management of intellectual assets including IP
holding companies
Litigation support and expert witness services
VALUING IP- DEFINING THE PARAMETERS
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WHAT?: What is the IP to be valued (Patent,
Copyright, Trademark, Know-how e.t.c)
WHO?: For whom is the valuation being done?
WHY? What is the purpose of the valuation?
WHEN?: The date of the valuation, (in the
context of a dated balance sheet of the
company)
WHICH?- Which valuation method is most
appropriate under the circumstances?
VALUING IP- METHODS
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There are four main approaches to valuing
Intellectual Property namely:
Market value of company LESS Net Tangible
Assets
Cost based (Historical & Replacement costs)
Comparable Market Valuations
Economic Benefits Method
THE COMPARATIVE METHOD
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It is devoted to asses IPR market value by reference to
comparable market transactions.
The method basically consists of assessing prices and/or
profits achieved by third parties in comparable market
transactions, such as mergers and acquisitions as far as the
IPR assets are concerned, IPR sales or the grant of IPRrelated licences.
An itemisation of such model is the relief-from royalty method
that takes into account only previous licensing royalties prices
determining the value of related IPR. Such methods imply
serious problems mostly when comparable transactions cannot
be found with regard to the relevant IPR.
b
c
THE COST BASED METHOD
This method assumes a direct impact of costs on the
IPR value.
It is based on the analysis of costs necessary to replace
the IPR concerned, as well as on costs that have been
invested for the development, application,
maintenance and commercialisation of IPR, and on a
consideration of costs which may have been avoided
by establishing IPR such as royalties for licensing-in
a related technology.
The disadvantage of this method is that, not considering
IPR market indicators, it does not allow to establish a
fair relationship between IPR costs and related IPR
real market value.
THE PROFIT BASED METHOD
Such method is the most comprehensive one as it aims
at determining the IPR potential for market revenue
growth, the profit to be expected by the future
commercialisation of the IPR concerned.
This method analyses the nature of the asset, its legal
status, its related marketability as well as market
conditions, likely performance and potential, and the
time value of money.
It is illustrative, demonstrating (or not) the cash flow
potential of the property and is highly regarded and
widely accepted in the financial community.
CASE STUDY 1
CASE STUDY 2
CASE STUDY 3
IN CONCLUSION
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Intellectual property is increasingly becoming a
source of value for businesses big and small.
There is a need for companies to be able to
identify, value and maximize the potential of
their intellectual property.
This makes obtaining the help of Intellectual
Property Consultants a critical decision for
businesses to make.