Most of the value in companies lies in intangible assets. It’s estimated that over 80% of the market value of the S&P 500 companies is represented by intangibles, or what’s left after you take the market capitalization and subtract the tangible assets like equipment and real estate.
Some intangibles often considered include the brand and customer relationships. Then there is your intellectual capital—the people and your intellectual property. Your IP includes assets that have some sort of legal property protection, like copyrights, trademarks, and patents. While these are an incredibly important of your company’s value, patents are often delegated to the legal department.
It’s true that patents are very technical legal documents and require a unique set of skills. However, lawyers are not trained to manage—and managers are not trained to handle the legal aspect of IP. What this means, in many cases, is that patents are not being managed. This is a failure of managers and management. You, as the manager, are supposed to manage the intellectual property your company owns, specifically because these are some of your most valuable assets.
Why Patent Management Is So Important
A manager’s job is to take responsibility for the assets that are entrusted to him or her by the stockholders and then increase the value of those assets. Knowledge about the minute details of the patents isn’t necessary, just as a manager in an electronics company doesn’t need to know quantum physics.
The point is that patents represent one class of assets that are created from the intellectual capital of the company. They can, when managed correctly through analysis and strategy, protect revenue streams from the company’s products and create barriers to disruptive innovation from competitors.
What Is Your Patent Management Strategy?
In his seminal book, Competitive Strategy, Michael Porter says, “The essence of formulating strategy is relating a company to its environment.” To that, you have to understand that environment—where it is, and where it is going.
Patents and patent data contain critical components of business intelligence. Patents are expensive to obtain and maintain. More importantly, they most often represent significant investments by companies in technologies and products. Understanding the patent landscape is critical in understanding the business environment.
Why Not the Legal Department?
As previously mentioned, patents are an important asset with the ability to protect your revenue and prevent disruption from competitors. Yes, there are legal considerations, but in the end, patent management and corporate strategy are a manager’s jobs.
So, when IPVision calls, don’t transfer the call to the legal department unless you can answer these four questions:
- What is our strategy?
- Where should we be going?
- What steps should I take to implement that strategy and to expand and protect our position?
- How do patents fit into this?
If you can’t answer those questions, we can help. We’ll use our innovation experience and patent analytics to provide you—the manager—with unique business intelligence insights.
And while we’re helping you on the strategy front, we can also add real value to your lawyers and patent management staff. We just can’t do this if you miss the bigger strategic picture and send us directly to them first.
