Phew. What a long long week. In fact October end to end has been hard work every step of the way. I’m not by any means saying that I’m pleased to see the back of it, but it’s been full of lots of ups and quite a few downs. I suppose though that I’ve learned through the years that in trying out something new the magic is to look for the upward trend, whilst treating the little downs as correction points to warn against getting ahead of yourself or becoming arrogant.

This week was full on closing out an investment round for one of our clients. We went from carrying out a relatively easy piece of diligence to managing an ownership issue, correcting old documents that did not reflect the parties’ original intentions. And, as usual with ownership issues, what looked relatively simple to fix took a little life all of its own, and close on two full weeks of work.

I spent some time on Monday with David Jones of Exponent IP chewing over the development of the IP market and how boutique organizations that share the same ethos (quality, professionalism, can do mentality, longevity) can help to grow the market by working together. I like David and Ben as they share these principles and are easy people to work with. This catalysing has become a bit of a theme for us at ipVA, particularly as we know that there are so many pretenders out there who talk without having gone out and done it.

This must be one of the challenges of a growing market, picking out the good from the bad. So I’ll end this week’s post as a call to fellow pioneers and to raise a theme that David and I talked about as one of the key steps in developing this market. That is speaking with a common language. We think that without this, it becomes very hard to communicate and understand even each other. Never mind to communicate with the 95% of the market who don’t get IP.

I was explaining to David that, in our view, the IP world fixates itself on those imposters of value, patents. Just because they are publicly viewable and every second advisory firm has a way of rating them, is this really an indicator of corporate value? Is it heck! If one understands where patents typically come from or rather don’t come from, it is bizarre to badge them as any indication of a corporate worth or surefire predictor of value.

We see all the time that the smartest engineers devalue their own ideas, patenting things that should be better maintained as trade secrets, and retaining as know how little implementation nuggets that would be great patents. We see investor pressure to file greater patent numbers driving a behaviour of filing everything whether good or bad. We see large corporates binging (thank you Craig Opperman) on filing huge patent numbers to help cross licensing discussions, whilst some cultures (France is good at this) spurn the system as creating fraudulent indications of the worth of inventions. In short, one cannot rely on the vagaries of human experience and behaviour towards patenting as giving a reliable result. Sorry IV, you will no doubt capture huge amounts of license revenues, but will you really carry the true debate forward? Will you crack the IP value code and start to explain what drives value in the best companies?

As an alternative, to work out the true comparative worth of companies, we need to work hard at obtaining this common language. And, for us at ipVA, this means following the accountants’ language. Intangibles is the word. This message in a bottle is to those out there who follow that same principle. Ignore the imposters that are patents as nothing more than one way that inventions can be properly protected. Not irrelevant, but just because they’re easy to see does not make them any more important that any other part of the intangibles tree. The accountants have actually given us a pretty good guide in the categories of IP assets able to be valued in IFRS3. Examples of intangible assets to be separately recognised and categorised within the purchase cost are set out in the regulations and include:

Marketing related – intangible assets are typically those assets associated with the market or promotion of a company’s products or services (trademarks, brands, trade names, trade dress, internet domain names, newspaper mastheads, non-compete agreements).

Customer related – intangible assets are assets, which are utilised in the development, procurement, management and maintenance of a company’s customers (customer lists, order or production backlog, customer contracts and related relationships, non-contractual customer relationships).

Artistic related – intangible assets relate to artistic products or services which are protected by a contractual or legal right, such as copyrights (plays, operas, ballet, books, magazines, newspapers, musical works, pictures, photographs, videos, films, television programmes).

Contract based – intangible assets represent the value of rights which arise from contractual arrangements (licensing, royalty and standstill agreements, contracts for advertising, construction, management, service or supply, lease agreements, construction permits, franchise agreements, operating and broadcasting rights, use rights such as drilling, water, air, mineral, timber cutting and route authorities, servicing contracts, employment contracts).

Technology based – intangible assets represent the value of technological innovation or advancements, and can be protected through legal or contractual rights (patented technology, computer software, unpatented technology, databases, trade secrets).

As comprehensive as could be….don’t you think? Does anyone want to join in the debate?

Client confidentiality prevents providing any giving any client details, but I thought it might be a useful exercise to give people a feel for the sort of things we do at ipVA. So here has been the last week in the life of this strategist in the week beginning 13th October. Not all weeks are like this one, this has been a little on the brutal side and has packed a lot in, but it is becoming the norm.

Monday.

A real fun day with a cleantech business we have recently started working for in the run up to a funding round with Chris and Stephen. One of the IP challenges with clean technologies and their IP is that the base technologies that they use are often pretty old. And this company is typical. A lot of work to do to create a solid IP story over the next 6-8 weeks. Assets to build, risks to decipher and explain and a governance and reporting program to implement. But we made a positive start, brought people to a common level of understanding and made a few people smile with “well I’d never thought of IP that way”. I truly love what we do. The day finishes with sending out the outputs from our meetings and a summary report and recommendations. A clear path forward we think.

Tuesday.

At a media client all day working on an open licensing strategy and options to implement it. This is hard stuff and pretty new to me. Jordan has opened my eyes to the whole open content area over the last 12 months and this project demands a shift from a closed and highly proprietary model to an open or partially open model for a new platform technology. Some good comparables to look at though but some serious research and modelling to do before the right option will become clear. Jordan has pulled out some amazing research (lots of privately known data) on the revenue models behind the iPhone as a comparable that have opened the client’s eyes. We have a short number of weeks to get the story straight but this should be enough. I’m confident we will pick up pace on this one in he next few weeks.

Few days end much before 10pm and this one closes with a few catch up items. A VC backed client needs to understand a specific risk and we speak about a program to understand this by a technical assessment. A 9:30pm call with the client we are visiting on Thursday to agree an agenda and discuss one specific area of concern and a call with Stephen to discuss yesterday’s meeting and how we can keep on making our client smile.

Wednesday.

A couple of meetings cancelled so some time to catch up on report writing. A 6am start to write a red flag diligence report (getting better at these… lots of practice) and a feedback session with the client around the end of the morning – all positive. Another diligence project we are running has thrown up a tricky ownership issue that could take a week or two to unpick. I think we can solve it though. We also picked up three new opportunities on Wednesday (the current run rate is around one per day into our funnel) from our network and an opportunity to contribute to the 100 day post investment plan of a VC investment. A really cool technology and one to watch. Even dinner with a mate on Wednesday evening doesn’t escape from some IP evangelism… he’s brought a napkin from a dinner we had 4 months ago when I drew out an IP plan for his company. I hope I’m not becoming boring. 1130 to bed and…

Thursday.

Ouch, a 4am start to fly to Europe on a new project preparing a business for exit with Dave and Rob. After an intensive first day I think we have a solid plan for the next 3 months. Poor Dave was flagging by 6pm as the business CTO looked as though he could go through the night. Rob, as ever, highly creative, drawing away. There are times, many times, when I simply love what we do and how we do it. I laughed with Maria, my wife, a couple of weeks ago, that we’d found the Rosetta Stone to help people with no IP background, understand and get IP. I know, laughable, but we do seem to make it make sense. An 11pm finish and then…

Friday.

Bugger, another early start to fly back to the UK. Writing up our project plan from the day before till lunchtime, budgets to do, priorities to resolve… feels about right. Then it’s into prepping for a fund presentation we are giving 4 weeks from now, signing off the spec on a new product we are shortly to launch and discussing a referral agreement we want to sign for a SW provider. Just time by the end of the day to talk to an excellent possible consultant to add to our team. The last 6 months has been very kind to us with the quality of good candidates out there. We are now up to 16, with 4-5 more people with whom we are in active discussions. We set out to build Europe’s best IP advisory business. Maybe, just maybe, we will get lucky. An 8pm finish and a 75 hour week. Ugly but fun.

Its a little tough to switch off something that is just so damn interesting. Even my Saturday morning tennis with Maria gets interrupted with a thought of “what if we could do that, rather than that…wow!”. I literally do tire myself out at times.

Roll on Monday. This week is quite a big week for us with a few pipeline opportunities to get over the line. We’ve also skipped our regular Monday morning planning session for the last 2 weeks because of client commitments so back to the rigour tomorrow morning. The next month to plan out. More streets to walk, doors to open… it is like a pioneering mission sometimes but so much more fun now than 12 months ago.

So it’s no surprise just by looking at the map of the IAM 250 list of IP strategists that the US leads the list for strategists-by-country. It’s a big place, a leading global economy, and one that has made IP and innovation a priority.

But it’s not clear just how much the US leads the league tables on sheer number of listed IP strategists from the map – so I made a graph:

The US leads with 195 of the listings, or 76%, with a more than comfortable lead over it’s closest competitor – the United Kingdom – at 16 listings and about 6%. With 19 countries represented, there is definitely a long tail of IP strategists, with the short head being the US.

Europe’s role

In terms of Europe, this fits with Benoit and David’s observation in their earlier post about the IP ecosystem in Europe:

IP generation [in Europe] is thus not an issue, whereas utilisation most definitely is. Traditionally, European organisations will utilise the IP they have generated either by making products based on that IP or else by licensing that IP to another party, or a combination of the two. Beyond that, other notions of utilisation are scant,

IP strategists and related IP services are about the utilisation of IP, and thus it makes sense that less utilisation (at least when compared to the level in the US) would produce less listed strategists. Benoit and David’s chart of the IP ecosystem is worth reviewing again in this context.

In our last post I developed some word clouds of out of the firms and professional associations out of the data in the IAM 250 listing of the world’s leading IP strategists that Joff and co. kindly set me up with. Next up, I’ve turned all of the world’s leading IP strategists as ranked by IAM into an interactive world map.

The full map has its own page on the blog at:
http://www.tangible-ip.com/iam-250-world-map
(it’s easier to use with a larger space)

You can choose the opacity and map data source (including my friends at Open Street Map) up in the top right corner. Along the side, you can scroll through all the IP strategists in alpha-by-first-name order to find them on the map. Each listing has their name and location and firm name, and for those that went for a full listing in the IAM 250 guide, I also had website URL data that has been added (if anyone feels like handcranking the remaining 170 or so URLs, just let me know and I’ll update the map).

Many of the IAM 250 cluster in certain areas such as the US and Europe, (Africa and South America are a little lonely) but the full extent of the clusters in the cities and regions are only really obvious when you zoom all the way in.

Take California for example:

Northern California is clearly a hotbed of activity with lots of people listed, but of course you’d expect that with Silicon Valley and the start up scene there.

If you zoom in to the Bay Area, you get lots more detail:

IP strategists like the peninsula, which having spent some time in Menlo Park, I can see why.

For those interested, the process involved first cleaning up the address data into a good format to use for geocoding. I then used the great tools at GPS Visualizer to geocode all the addresses, which in turn generates a set of Lat/Longs for each address. About 20% of them geocoded to the wrong address either because of international address formatting errors, differences in English spelling of foreign place names, or just needed tweaks on the data (Talal Abu-Ghazaleh is not in this Cairo for example). Add in some more tools at GPS Visualizer and hand editing the code with TextMate to add in HTML for the URL tags and add it to the map and voila – IAM 250 as an interactive map.

More thoughts and bar charts in a future post.

Thanks again to Joff and Gavin and the rest of the team at IAM for both producing the list and granting me access to their data. The data and IAM 250 listing is the copyright / database rights of IAM, with the geo data and map tools credits on the actual map. Screenshots of Google Maps used with permission. Special thanks to GPS Visualizer for making the tools available to help put this together.

What do you think?

The IAM 250 is a major and unique new publication. There are any number of guides that claim to identify leading trademark, patent and copyright litigators, or IP experts in a particular field of industry. But to our knowledge, no research has previously been done specifically to identify consultants, intermediaries and financiers, as well as lawyers and attorneys, whose primary skill set is focused on helping IP owners to increase the value of their rights portfolios.

In short, this listing looks at the wider IP ecosystem rather than the narrow band of IP legal professionals, which I’ve been loosely calling the “IP services market”.

By getting access to the data from the underlying listings, I’ve been able to put some data visualisations together. Up today are word clouds using Wordle.
First up is all the firm names of everyone listed. Everyone in the IAM 250 provided employment/firm information, so this is a pretty good data set. I like this one as you can see straight away that Finnegan (5), CRA International (5), PWC (5), and RPX (4)  top the list in terms of firms.

Firms represented in the IAM 250

Large scale version IAM 250 firms.

The second is professional associations.  Association data was available only for those that went for a full profile listing in the IAM 250, and shows their self-declared memberships in professional organisations.  LES clearly dominates this space as does the AIPLA, IPO, INTA, and AIPPI.  Because many of those listed are lawyers (or have legal backgrounds) the ABA and state and local bar organisations also featured prominently.

Professional memberships of the IAM 250

Larger scale version IAM 250 memberships.

Thanks again to Joff and Gavin and the rest of the team at IAM for both producing the list and granting me access to their data.  The data and IAM 250 listing is the copyright / database rights of IAM, and the Wordle visualisation is CC-BY under their terms of use. For the curious, in order to produce these word clouds, I went through and cleaned up the data and formatted it in way that Wordle would understand, and then tweaked all the settings, colours, and other options until it looked right.

Up later this week, I spent lots of time cleaning and geocoding the IAM data to produce an interactive world map of everyone’s listing, which has turned into a pretty neat tool — hope you’ll find it useful.

Any further thoughts or analysis you’d like to see?

I knew some of the people there already. Though even with those I didn’t know, there was a sense of meeting old friends, as we seemed all to share the same passion for IP, and the same frustration as to how to get business leaders to get it.

IP on the dinner table

I’d come across Jon Calvert of ClearViewIP at the Go4Venture event we ran in June and we had breakfast afterwards to share ideas. I like Jon and the technical-led IP approach of the ClearViewIP team, but I also like the fact that we share the aim of building a big business. we shook hands on a pact to promote each other, recognising that this boutique market of IP service providers doesn’t help.

I’ve known Ben Goodger of Rouse since we first met in 2004 when I did some marketing for Rouse. Ben is a lovely guy and a great IP thinker. I’ve also met John Pryor of CPA Global, Jackie McGuire of Coller IP Management and Simon Edwards previously through networking though not worked with any of them.

New relationships for me were with Matt Dixon of HGF and Mark Thompson of UMIP. Both interesting and stimulating guys to talk to. Matt makes me smile, and bucks the image associated with patent attorneys.

I didn’t go there with any particular agenda other than social, but putting this group and a few glasses of wine together, the conversation turned to the state of the European market, and how to make IP real to business leaders. This is a consistent theme for us as ipVA and on the blog so it was good to hear how others are approaching this challenge. Nobody seems to have cracked it, or at least wasn’t admitting to it, so I think we are all in the same boat. Hard work and shoe leather.

My own views are pretty well known on this theme, and I’m still of the view that one of the single biggest challenges is the inability for the IP world to speak a common language. I’m becoming boring on the point, but the more I hear the IP world speak, the more I think that any outsider would ask himself if we were all talking about the same thing. “IP”, “IPR”, “I-capital”, “intellectual capital”, “IAM”, “IP assets”, “intangibles” – though by word association almost everyone is focused close to exclusively on patents when they use these terms.

If we could at least crack that first issue, I think we might begin to work towards the next series of challenges, including objective measurement.

Holiday is coming up for me next week and can’t come soon enough. Full time pioneering alongside intense projects, building a business and being a father and husband are all energising but tiring. I’ll take a couple of weeks off before my grumpy chip kicks in. I could feel it clicking a few times last week so know it is time to recharge.

Image by JS Hatcher and based on Radio Festival Gala Dinner by Dan Taylor and CC-BY.

In creating the list, IAM went through a process of interviews (phone, in-person, and emails), and to get on it, IP professionals had to have three recommendations and then be confirmed through independent research on their level of contribution. IAM says about the need for the list:

The IAM 250 is a major and unique new publication. There are any number of guides that claim to identify leading trademark, patent and copyright litigators, or IP experts in a particular field of industry. But to our knowledge, no research has previously been done specifically to identify consultants, intermediaries and financiers, as well as lawyers and attorneys, whose primary skill set is focused on helping IP owners to increase the value of their rights portfolios.

In short, this listing looks at the wider IP ecosystem rather than the narrow band of IP legal professionals, which I’ve been loosely calling the “IP services market”.  Frequent ipVA collaborator and consultant Tom Ewing and both of our co-founders (and fellow Tangible IP bloggers), Andrew Watson and Rob Harrison, have all made it on to the IAM 250,

Out of Andrew’s original post on IAM’s search (back in October) and his recommendations,  Duncan Bucknell,  Severin de Wit, and Craig Opperman all made it on to the list.

The focus of the listing on IP strategy can only mean good things for this growing group of professionals as we figure out the models, partnerships, and strategies behind the IP strategy sector.

If journalists do not get IP and report it badly – or not in the way IP professionals would like (sometimes the two are not the same) – I would argue that it is because those inside IP do not make it accessible enough. If IP professionals are not able to make IP relevant to senior management or to journalists or to anyone else, it is no good blaming anyone but themselves. That may sound harsh, but there you go. To get journalists to take IP seriously, you need to explain it to them in a way that they will understand, find interesting and relevant to their readerships. If you don’t do this, they will just not listen – why should they?

Firstly I’ll state that I agree with all of the above. IP is a potential/emerging asset class but the IP world that believes this so passionately seems to find it hard to communicate this to the business world that does not.

Why is this? I don’t find it too hard to understand (when I can listen, definitely with a few raised eyebrows) to Stephen Hawking telling me about quantum physics and the dawn of time. So where are we going wrong?

To widen out the debate, with some thoughts on how to make IP more understandable:

1. The need for a common language. IP in its narrowest sense (ie the various classes of specific legal rights such as patents) is how the business world sees IP – a set of legal rights and rightfully the domain of lawyers. But when one listens to the excellent Mary Adams of i-Capital Advisors or to Kelvin King of Valuation Consulting, you get to a whole new language and perspective. Its about “intangibles” or “intellectual capital” not just the much narrower IP. It’s about humans and what they create.  It’s about the relationships that a business creates and sustains. I think the IP community needs to embrace this wider perspective. And to create a new and common standard language that applies to it.

For me I’d follow the accountants. “Intangibles” is pretty well defined in that market already.

2. The need for perspective. I do think that the IP community over-emphasises IP’s importance and thereby damages its own credibility. It is important but too often we hear the over-emotional exaggeration of its importance to every business, or the apparent importance as greater than other business fundamentals. It is not.

3. The need to educate. Duncan Bucknell and I agree on this. In the widest possible context those that don’t get it need to experience it so that they can. At a basic level. Remember that IP or intangibles are not taught at many business schools beyond the very basics. We need to pitch ourselves into education.

4. The need to de-emphasise the litigation effect. I think that the earliest evolution of our market over-emphasises the link between IP value and litigation. We are moving away from this, but with most of the prominent IP success stories being linked to litigation, the move cannot come fast enough.

5. The ability to clearly communicate. I agree with Joff’s point that many journalists have literally minutes to grasp a whole topic, and that getting a clear IP understanding in that time is hard. We’ve tried it in the last 6 months with a PR program at ipVA. Its hard but after 6 months you do learn what works and what does not. Jordan and I also had a great call with a major accounting firm a couple of weeks ago about the emerging areas of corporate reporting of intangibles. If we can find ways of drawing out comparables between good “IP” companies and bad, we would begin to bridge the communication gap. But it is not just in talking to journalists that we need this – it is about also talking to markets. CEO’s, banks, funders, chairmen, and so on in a non-legal, stimulating and relevant way.

I’m sure that there are other issues missing from the list but these are some of our thoughts at ipVA. Valuation is another key element for sure but I’m not a valuation specialist. All we do know from those who are, is that it is less nebulous than it was, and becoming more accepted.

Pick your own date by which these factors will merge and evolve sufficiently to be a part of business mainstream.

The IP ecosystem in Europe: IP generation, utilisation and anti-utilisation

We recently took part in a webinar, organised by Jordan on behalf of ipVA, where we showed a slide outlining the current state of what we called the “IP ecosystem” in Europe, with a particular focus on patents, and we just wanted to add a little commentary as to how the European IP ecosystem has developed in the way it has.

The US: generation, and utilisation

It would be fair to say that in the dynamic world of IP, the development of the IP ecosystem in Europe lags some way behind similar developments in the US.  There are many well-documented reasons for this, not least the fact that since the USPTO opened its doors in the nineteenth century, the US has possessed a plethora of both enthusiastic IP generators:

• Universities,
• Inventors,
• Large Corporations,
• SMEs, and
• specialised R&D labs

and also equally enthusiastic IP utilisers:

• Large Corporations,
• SMEs,
• new ventures, and
• strategic aggregators.

This dynamic interdependency between IP generators and IP utilisers in the US has of course also benefited from an inherent cultural acceptance of commercial opportunity – something of which the US can rightly be proud.

Europe: generation, utilisation, and…

Whilst Europe can be said to have broadly similar sets of generating and utilising organisations (albeit spread over different nations and jurisdictions), we believe the key difference is actually a lack of awareness and/or motivation by IP generators (with a few notable exceptions) in Europe as to the opportunities that their IP holdings give them; IP generation is thus not an issue, whereas utilisation most definitely is.

Traditionally, European organisations will utilise the IP they have generated either by making products based on that IP or else by licensing that IP to another party, or a combination of the two. Beyond that, other notions of utilisation are scant, and will often, in any case, be met by the immovable object of a “family silver” policy: no IP should ever be sold, to anyone, under any circumstances.

We have even come across large, IP-intensive organisations in Europe who routinely audit their IP holdings and then, with any group marked ‘non-core’, simply abandon them rather than sell or licence them. This is a very peculiar stance for a commercial organisation to take: generating IP is, after all, an extremely expensive business. We call such policies anti-utilisation.

… Anti-utilisation and misuse

In a public company, it seems to us that this kind of policy – in view of a company’s duties to its shareholders – is something very akin to wilful misuse of company assets. Having said that, there is some merit, of course, in such a policy as a defensive strategy, but the efficacy of such a policy does in very large part depend on the quantified defensive qualities of the IP in question, particularly if that IP has been quantified in view of its opportunity cost as a potential candidate for sale or licence.

Such anti-utilisation attitudes are changing, albeit slowly.  The growth of interest in IP from institutional investors, combined with the economic downturn and the downgrade of traditional “property” assets, means that there is now a growing awareness in Europe that within an organisation’s IP holdings there may be valuable, saleable assets (buried treasure, if you like) that will either never be otherwise utilised, or worse, abandoned or lost by mismanagement.

From anti-utilisation to utilisation

European companies who do have a good understanding of their IP holdings should therefore be considering what exactly is the optimum utilisation of that property: is it enabling the company to make product, to protect an existing line of business, to generate income from licensing or selling or to simply retain the IP for future development or as a general defensive instrument?

European companies who do not have a good understanding of their IP holdings should of course be asking themselves exactly the same questions, having first made use of the many specialist IP service providers who are expert in this area.

So are we in the buried treasure business? Not quite – as any IP auditor can tell you, organising IP into core/non-core/unwanted is but stage one in a long and complex process that can eventually lead to a successfully concluded transaction.  And yet the rewards can be significant; significant enough, indeed, to hold the attention of any CEO (certainly when the rewards are for resources that would otherwise languish, unused, or worse, lost.) Implementing a systematic process of IP audit and exploitation can therefore not only generate income (licensing/selling) and cut costs (obviating maintenance fees); it can also allow a company to really focus on its core business.  Of which, of course, expensively generated – but fully utilised – IP is central.

An extended paper on the IP ecosystem will shortly be available at www.exponentip.com.

One element that came out pretty strongly in both the questions and from the speakers was about the next steps, including Ben‘s suggestion that what may be needed to catalyse IP is a “database” of war stories about IP and its importance to businesses. So where do we go from here to put IP high on the list among businesses?

I think that another webinar would be a strong next step, and we’re looking into that possibility.  I’d like to even look into forming a more official group behind IP service providers with the mission of education about IP to the business community.

In the meantime, if you are on LinkedIn, please join the Golden Triangle IP group (especially if in the UK) or Duncan’s IP strategists group (or join both!).