Let me lay out my cards on the proverbial table. My primary involvement in IP is as an IP lawyer, inclined to dealing principally with non-contentious matters. In so doing, I usually engage with middle level managers, engineers and other technology types. On occasion, I have dealt with the CEO, ranging from small start-ups to publicly-traded companies. I have reported to a number of boards on IP-specific questions, but I have never been physically present a board meeting. I am IP-centric, but hardly IP myopic. I know my way around a balance sheet and a board resolution.
Against this backdrop, my question is simple—just how frequently is IP an agenda item for a company board or a policy matter for the CEO? Stated otherwise, how many CEOs have ever actually been fired because they mishandled their company's IP? I am not talking about the small number of mega-patent portfolio transactions of the last year or so, such as the sale of Motorola Mobility or Kodak patent portfolios. I would assume that when hundreds of millions, even billions of dollars, are at stake, senior management and the company board are involved in the relevant decisions. But while such high profile transactions have grabbed outsized media attention, they are extreme aberrations in the patent firmament. Almost 100% of companies will never deal with a patent transaction of this scope.
Nor am I talking about companies, such Intellectual Ventures, whose primary asset is patent-related rights. If patents are not the central focus of the attention of a company such as this, one would imagine that management and board meetings would be the corporate version of a vow of silence. Nor am I talking about a company that is the recipient of a legal claim for IP infringement (or even the decision to initiate such an action). These are one-off events, sometimes proactive, more typically reactive, but seldom part of a company's broader business strategy. No, my question refers to the overwhelming number of companies, from the publicly traded to the privately held and to the start-up minnows hoping to enjoy the next big exit. We are told and read about how IP (or its conceptual cousins, such as "intellectual capital" or "intangible assets") is more and more "a", and perhaps "the", central part of the activities of many companies. Reading business-oriented magazines and the business section of leading newspapers, I encounter discussions of IP issues almost on a daily basis.
But I also know that IP-related topics form only a minor, usually elective part, of most management education programs. When this occurs, the usual orientation is to treat IP as simply another asset of the company (or, with the increasing involvement of the financial community with IP rights, as an "asset class"). And while most management education programs know, in their heart of hearts, that they are principally instructing present and future middle managers, such programs strive to maintain the persona that they are directed to training the next generation of inhabitants of the C-suite. Based on this ideal, and the relative lack of IP content in the curriculum, the reasonable conclusion is that most managers do not receive systematic training regarding IP issues. And when they do receive attention, the treatment focuses on IP as another form of company asset, incorporeal and imperfectly understood at best.
As such, and circling back to the questions above, inquiry is made once again. Just how much has IP entered the boardroom and the corner office on a regular basis? Unless the answer is--"a great deal", then there is a material disconnect between what goes on in a company as a matter of IP at mid-level and the IP policy issues that guide a company at the senior managerial level. If any readers are aware of publications that discuss this question, or themselves have insights, anecdotal or otherwise, that can shed light on this question, we would be grateful.
Katnote: the documents mentioned by Len Ruggiero (LaMarch Capital) in the comment posted below can be accessed here and here.
Please contact me directly so I may send you pdf documents relative to your comments.
I've worked with small biotechs in the UK. I think most simply do not have the people or the resources to properly consider IP issues. The ones that do consider IP more seriously will normally do so in a very fixed and rigid way, sometimes making it more difficult for the patent attorney to carry out the best strategy. I don't think there's any simple answer to this though.
I suppose I should also add that not all patent attorneys would put their client's interests before charging them as much as possible. That makes things more complicated as a company will need to independently keep an eye on whether the best strategy was being followed.
I work for Intellectual Ventures, and believe that you’ve raised a good question. While the headlines focus on billion dollar patent settlements and portfolios primarily in high tech, Intellectual Ventures was also curious how the “average” executive perceives patents.
We recently commissioned market research of more than 200 CEOs, CFOs, and CTOs across 30 different industries in the U.S. (no international markets unfortunately) to better understand how they view patents and the growing IP industry. The majority of the C-suite we surveyed value patents in general, but they did not distinguish how patents’ value is relevant to their business in the specific. Only 33% ranked patents among their top business priorities.
Perhaps even more interesting is that the study also found that 75% of these executives are the primary decision makers regarding patents, but only 24% consider themselves very informed on the topic.
It looks like the IP industry as a whole has an opportunity to raise awareness among the C-suite about the role patents can play in their business strategy.
For more data from the study, please do visit: www.intellectualventures.com/patentsmatter.
Thanks for the comment and the link to these intriguing results. I don't think that the doorstop to greater IP awareness belongs only to the IP Community; IMHO management education is not doing a very good job (nor do I find that they are particularly interested).
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