Better Measures

The conclusion of my chat with Apple, IBM, Microsoft and H-P heads of IP business about how they measure success (the Intangible Investor 43), “Measures of Success, II,” is running in the Sept-Oct IAM. Below is the executive, executive summary:

Understanding patents starts with a business’ ability to identify needs, establish expectations and measure performance. It’s easier said than done, say three experts.

Berman: Many high-tech companies believe that improving their patent portfolio through acquisition, in-license or sale is like admitting defeat. This would seem counter to IAM best-practices?

[Irving] Rappaport [Apple, Medtronic, National Semiconductor]: That’s a very narrow view of ROI. If the acquired rights help the company’s overall business strategy, it should be seen as a win-win, particularly if it would take a long period of time for the company to develop its own rights in the acquired technologies. The terms of the deal also are important.

[Joe] Beyers [H-P]: Defeat may not be the proper term. It is more like “anger” that they now have to pay a third-party, perhaps, a competitor, to execute their business strategy. Compounding the problem is that this cost was likely not forecasted in the financial model/budget. Surprise expenses are the worst kind of costs to an operating company or division.

[Marshall] Phelps [IBM, Microsoft]: Forward-thinking companies don’t believe that in-licensing or patent acquisitions are weaknesses.

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Companies have different IP needs at different points in their evolution. It’s nice for an operating company to say “No thank you. We have all of the IP we need.” But that level of self-sufficiency would be rare for most innovation dependent businesses, ever mindful of R&D costs, filing fees and litigation risk.

Image sources: baltimoresun.com, gottabemobile.com