"Patent quantity remains a usable metric, but not necessarily the best ... metric." When valuing a company, counting patents can be a short-sighted and misleading. "Well-formed portfolios that possess both quality and quantity can be exceptionally valuable," and sustaining IP quality requires informed management.
How should business leaders lead? How should business schools teach leadership? Lewis Lee, partner at Lee & Hayes in Spokane, has a strong opinion on this. He's been in the IP trenches for leading technology companies, and he has some sage advice to CEOs, CFOs and CIOs.
For one, business executives should approach patents as strategic resources that are as important as revenue, rather than as an insurance policy against competition or litigation. The bulk of a company's corporate valuation may be directly attributed to intangibles; business leaders "should have a clear understanding of that linkage and an explicit plan for using assets like patents to further increase valuation."
Two, and equally important, business leaders should review and assess the patent landscape beforeproduct development, not after. Corporate decision-makers are thereby given a road map "to where unclaimed territory lies" (read opportunity). "The unclaimed territory may offer years of productive — and protectable — product development," indicating where prudent investment may be made. "The traditional model is for companies to innovate and then take those innovations to market. The new model will involve a symbiotic relationship between two players: innovators who specialize in generating ideas and implementers who monetize them by fashioning the ideas into products and marketing them."
Mr. Lee also calls for IP management to be a requirement in business school. "Business leaders need better tools to help them navigate and ultimately value the ever important asset class of IP."
We hope this message continues to resonate, and we feel it is not enough to address it to corporate executives and business school deans and professors. When Wall Street "gets it" that IP is a key business driver, the proverbial light bulb will go on in corporate offices.