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Intellectual Property and Boards of Directors: Conclusion and Next Steps

Regardless how long you’ve served as a member of the Board of Directors for your company, you may have seen some information here that you had never before considered. As we said from the beginning, intangible assets such as intellectual property are often overlooked—though less now than ever before. Our hope is that we not only introduced some information that can help you as you serve as a Board member, but also that we provided the “why.” 

A Closer Look at Patent Quality During M&A

To this point, we have discussed the importance of IP and the high level questions a Board of Directors should ask Management about the company’s intellectual property. These questions cover a wide range, believe it or not. It’s never so simple as simply knowing which patents the company holds, though many Boards leave even that much to the IP lawyers. First, there’s the deep dive into research and development, which questions such as:

Should the Company Make or Buy an IP Portfolio?

Let’s return now to the mental image of a piece of real estate. If your parcel of real estate is “landlocked” because someone else owns all of the adjacent property, you have no way of reaching your parcel unless you and the other landowner reach an agreement to provide an easement, or a license to cross the land.

IP Strategy Revisited - Time Horizons

We have discussed the importance of intellectual property and the questions that Boards of Directors should ask about their company’s IP. These questions are really an “as is” assessment.  What are we spending on R&D—actual and relative to competitors? Are we harvesting the output of R&D and turning it into intellectual property to benefit the stakeholders of the company? These questions are just the beginning.

How “Good” Are the Company’s Patents?

To this point, we have discussed the importance of IP and the high level questions a Board of Directors should ask Management. These questions cover a wide range, believe it or not. It’s never so simple as simply knowing which patents the company holds, though many Boards leave even that much to the IP lawyers.  We started with the deep dive into research and development, with questions such as:

How Good is the Company’s Patenting Process?

It’s easy to assume that a company has a good process in place for determining what to patent. Unfortunately, this is often not the case—even for large companies with resources. Certainly, some inventions should come from planned research and development.

Is the Company Patenting The Right Things? What is the Company’s IP Strategy?

Understanding how efficient the Company is in generating and capturing inventions is one measure but boards of directors should be asking if the Company is patenting the right things, i.e., what is the Company’s intellectual property strategy?

How Efficient Is the Company in Generating and Capturing Inventions from R&D?

In our last installment, we discussed the absolute and relative spend on research and development, and how Boards should certainly be sure to keep watch over these expenditures.

Why R&D Spend and Patents Should Be Crucial to Boards of Directors

For decades, boards of directors held to the adage, “If you can’t measure it, you can’t manage it.” That standard business expression seemed cut out specifically for intellectual property and other intangible assets. For that reason, most companies have a poor track record of crafting IP strategy and managing their intellectual property assets. Boards of directors simply didn’t think of intellectual property as a business tool. Instead, it was something for the lawyers to handle.