Innovation MonetizationBy Matthew Kroeger and Cheryl Kysh

Innovation Monetization

• Financial leveraging of intellectual assets

• Increase either:• 1. Revenue streams• 2.Capital funding

Emphasis on patents.

Patent law

• Title 35 of the US code issued by the (USPTO)

• Patents issued to inventors/discoverers of a process, machine, manufacture, composition of matter, or improvement (paraphrase)

• Once issued, patents are personal property that can be bought, sold, transferred or assigned

• Infringement is the making, using, offering to sell, selling, or importing a patented invention without authorization and is subject to civil remedies.

Historical Perspective

• Historical methods for patent monetization:• Licensing• Enforcing patent rights and licensing

agreements

• However, patent holders have since devised new techniques:• Sale of patents• Middle men• Securitization

Licensing

• Common form of patent monetization• Example: Microsoft’s patent license with

Samsung for use of Android Software

• Risks include competition, obsolesce, or expiration• Example:

Obsolesce of floppy disks

and zip disks

Multi-Company Licensing

• Patent Pool and Cross-licensing

• Result of two companies with similar innovations, or inventions

that rely heavily on each other

• Negotiated in order to avoid litigation

Texas instruments

• First example of a patent holder taking a defensive position with regards to their patent licensing agreements- early 1990’s

• Used a litigation strategy to ensure that licenses were renewed- or else the licensors could face a patent infringement suit

• Forced royalties out of companies using TI’s innovation without authorization.

• (No innovation without authorization)

Changing Perspective

• IP monetization into important part of strategic management processes.

• Five changes for change:• 1. Utilizing the large, untapped potential of IT• 2. More expertise in structuring and executing IP

strategies• 3. Identification of IP suitable for financial

engineering• 4. Rise of non-practicing entities• 5. Avoidance of litigation risk

MiddleMen

• IP Aggregators• Acquire patents and patent pools• Provide capital• Provide financing

• Defensive Patent Pools• Offer protection for “high risk” patents

• Non-practicing Entities, aka The Patent Trolls• Big topic in current news• Very controversial

Patent Trolls

Patent trolls

• Do not create, provide, or innovate products or services (NPE)

• Buy patents and patent portfolios

• Receive revenues primarily through litigation, and threats of litigation

• Critics:• Exist only to sue others• Don’t use patents, or participate in innovation• Stifle innovation• “[Patent trolls] don’t produce anything, they just shake

down anyone who does”

False Marketing

• It is illegal to mark a product as “patented” if it is not

• Fines up to $500

• Does not apply for expired patents

Patent Management

• As monetization options have increased, so has the complexities of patent management.

• Integrate strategies for individual patents as well as in conjunction with each other.

• Keep future innovation in mind in addition to current monetization strategies

• Include patents and innovation as part of an overall business model

Concluding Remarks

• The environment, and therefore the options, for patent

monetization has changed

drastically.

• More options than ever

• Some companies use their patents for good,

some for evil