The debate about risk, technology and the value of IP outside of a business context is heating up. After the Nortel patent auction and many subsequent, eye-opening, IP-related transactions chronicled in the lay press and elsewhere, technology (and its enabling IP) has begun to take on a presumed life independent of its hosting business. A recent article at SeekingAlpha frames the debate from technology’s perspective:
“Technology is real and business is just a man-made notion to which we give real-world life. Technology brings to the world something that has real value. The business is more of an arbitrary construct in order to extract the real value of the technology.”
The article further states, “So why is it that we live in a world where when a business fails, it can result in the death of a technology? Technology is what had the real value, and a flawed business model or failed execution of a good business model shouldn't get in the way. Over the last few years, people are starting to understand this.”
Though valuation analysts see what has happened to date and are rapidly moving to improve their skill sets in understanding and valuing IP, there has to be a collective cringe when fundamentals of valuation are recklessly cast aside, a cringe that should serve as a warning to investors. That is not to say that good IP isn’t thrown out with bad business models. More to the point, IP requires “a” business context in order to have value, though perhaps not “the” business context currently engaged.