Rembrandts in the Attic: Unlocking the Hidden Value of Patentsby Kevin G. Rivette, David Kline (Joint Author), Rivette
From "Forbes" and "Fortune" to the "Wall Street Journal" and "Harvard Business Review", the pundits are calling it the next corporate strategy challenge: how to use patents and other intellectual property not just as legal tools but as weapons of business competition. With "Rembrandts in the Attic", authors Kevin Rivette and David Kline provide the first
From "Forbes" and "Fortune" to the "Wall Street Journal" and "Harvard Business Review", the pundits are calling it the next corporate strategy challenge: how to use patents and other intellectual property not just as legal tools but as weapons of business competition. With "Rembrandts in the Attic", authors Kevin Rivette and David Kline provide the first practical and strategic guide that shows CEOs and other managers how to unlock the enormous financial and competitive power hidden in their patent portfolios. Writing engagingly and citing numerous case studies, the authors warn that firms can no longer ignore the growing power of patents in business competition. The competitive battles once fought for control of markets and raw materials are today increasingly being waged over the exclusive rights to new ideas and innovations. Where once executives may have feared that their competitors might out-market or out-produce them, they must now be concerned that rivals - especially in the booming e-commerce sectors of the Internet - may secure exclusive patent rights to the essential technologies or even to the fundamental business concepts that they need to be in business in the first place. "Rembrandts in the Attic" lifts the veil of secrecy surrounding the use of patents in business competition today, showing how some of the world's most successful firms - market leaders such as Intel and Microsoft, Lucent and Gillette, IBM, and Priceline.com - have used patents to capture and defend markets, outflank rivals, boost bottom-line revenues and shareholder return, and enhance the commercial success of their enterprises. "Rembrandts in the Attic" is a superb strategy guide that demonstrates the cross-functional value companies can gain by using patents and the gold mine of competitive intelligence that they contain. The book will enable readers to map out technology trends and convergences, uncover the strategies and capabilities of friends and foes alike, and strengthen the competitive efforts of every functional unit in the enterprise, from R&D and marketing to finance, human resources, and mergers and acquisitions. CEOs will learn how to use the authors' patent-enhanced 'Grow-Fix-Sell triage' to help them better allocate corporate resources and build a higher growth portfolio of businesses. R&D managers can employ the authors' 'IP-3' strategy to help build category-leading products, amplify the branding and marketing efforts devoted to them, and secure the key 'choke points' that sustain their product or service advantage. And business development executives will discover how to use patents as competitive intelligence tools to uncover the most attractive M&A opportunities, strengthen valuation and due diligence efforts, and configure asset sales and transfers to greatest advantage. If patents are the 'smart bombs' of tomorrow's business wars, then "Rembrandts in the Attic" is the definitive guide to deploying them for profit and competitive advantage.
- Harvard Business Review Press
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- 6.38(w) x 9.52(h) x 0.92(d)
Read an Excerpt
Chapter 1: The New Competetive BattlefieldNo Patents on Wall Street?
Even the old saw about there being "no patents on Wall Street" has now gone the way of the passbook savings account. On July 23, 1998, the Federal Circuit U.S. Court of Appeals set a major new precedent when it upheld the patentability of Signature Financial Group's "hub-and- spoke" system, which enables multiple mutual funds (the "spokes") to pool their assets into a single portfolio fund (the "hub") for investing, thereby generating both economies of scale in administering the fund as well as the tax advantages of a partnership. With this ruling, the court established for the first time the principle that trading practices and investment strategies could be patented. And it settled once and for all the debate that has raged for 18 years-ever since Merrill Lynch received a patent in 1982 for its cash-management account-over whether there is, indeed, a place for patents on Wall Street.
The decision naturally sent shock waves throughout the financial community. "Patent War on Wall Street!" screamed one headline. Business Week complained, "What's Next-A Patent for the 401(k)?" But like it or not, warned one report, the ruling is sure to force "an immediate re-evaluation of the intellectual property strategy of every major company in the banking, insurance, and financial industries doing business in the United States .
Patent Asset Management: A New Corporate Strategy Issue
Capital formation and asset exploitation, of course, are major strategy issues for CEOs, so it's no surprise that management consulting firms have begun to devote considerable resources to helping Fortune1000 clients develop IP management capabili- ties. When Coopers & Lybrand (since merged with Price Water- house to form PriceWaterhouseCoopers) announced its new IP management practice in late 1997, it noted that globalization, shortened product life cycles, and the high rate of technological change "pressure high tech companies to take a closer look at exploiting and protecting their intellectual property rights. Yet many companies are completely unaware of [their] true value and potential competitive advantage. "
Not any more. The research and consulting firm Delphi Group reports that 75 percent of businesses surveyed identify intellectual asset management as a new corporate strategy issue. 17 And according to PriceWaterhouseCoopers partner Aron Levko, who manages that firm's Intellectual Asset Management Practice, "Companies are taking the first steps to organize the disparate pieces of their intellectual assets" in order to transform these into CC engines of corporate growth."" Even allowing for a certain amount of exaggeration born of self-interest, it is clear that the management of patent assets is becoming a major new strategy challenge for corporate America. In addition to the firms mentioned previously, Arthur Andersen, Arthur D. Little, McKinsey & Co., KPMG Peat Mar-wick, and Deloitte & Touche are also launching IP management practices.
From Academia to the Low: Patents Mean Business
Intellectual property asset exploitation has also become a hot topic in the halls of academia, a realm that generated $611 million in licensing fees from university- owned patents in 1997-an 89 percent jump over 1993. University patents also helped jumpstart 333 new entrepreneurial ventures that year. Debates rage, of course, over the potential conflict of interest between academic freedom and the desire to profit from the research fruits of that freedom. But however these conflicts are ultimately resolved, universities are unlikely to go back to the days when research ideas were regarded solely as items of academic, and not also economic, interest.
Meanwhile, never ones to ignore a potential profit (or, for that matter, a potential loss), insurance companies have also gotten into the act. Dallas, Texas-based Summit Global Partners has joined with underwriters Lloyd's of London to offer coverage against patent infringement lawsuits. "There are thousands of new companies that are creating all sorts of new products, and many are being challenged on the grounds that they have infringed on someone else's patent," explains Summit Global's managing partner for intellectual property risk management, Ronald Reshefsky, who expects such coverage to also help firms attract venture and other investors...
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