Thursday, 18 September 2014

The trillion dollar tipping point: a report, and a product launch

Not just "a" Westbury ...
Later today this blogger will be wandering down Mayfair to London's (The) Westbury Hotel to join the formal launch event for CIPHER, described by its creators at AISTEMOS as "the world’s first intellectual property analytics tool for the business community".  This launch coincides with the release of The trillion dollar tipping point: Exploiting the untapped value in patents, a report [edited by this blogger, who is a member of the company's Advisory Board] assessing the barriers and solutions to the monetisation of the intellectual property assets which are now said to account for up to 70% of enterprise value. 

Not all data is digestible --
nor can everyone digest it
The origins of CIPHER are quite interesting: it is the fruit of a pilot project involving over 60 organisations, which include BAE Systems, Marks & Clerk, GE, PwC and Slaughter and May. Their objective was to develop a business intelligence product that could aggregate, analyse and visualise data relating to patents and related events including litigation and licensing.  This data was already available in one form or another -- but it could be indigestible or hard to assess in the hands of people who needed it in order to take business decisions.  Using databases licensed from Thomson Reuters, Lex Machina, Patent Freedom, ktMINE, 1790 Analytics and Relecura, the CIPHER tool has the capacity to search across 30 million patent families and all the world’s patent-owning organisations in real time.

This shouldn't be the standard response
to a request for a patent-backed loan
This post does not seek to promote CIPHER: if it is any good, people who try it out and find it useful will continue to use it; it will become successful and no doubt breed competitors, as is only natural.  Rather, this post seeks to draw the attention of readers, particularly those in the financial sector, to something mentioned in The trillion dollar tipping point and which has become increasingly a matter of concern: there seems to be a disjunction between the high value of intangibles such as patents in court and in transactions, on the one hand, and their relative lack of appeal as security for loans on the other. Faced with a request for finance backed by such intangibles, banks sometimes appear to behave as though the choice before them lies between taking a bad risk and making no loan at all. This is not the result of malice or wilful blindness, but stems from the paucity of information on which banks can assess the nature of the risk they take in lending on intangible securities. CIPHER is one way in which banks can better calculate risk and make their loan decisions with confidence based on understanding, not caution based on ignorance.

If anything interesting is said at the launch, this blogger will do his best to relay it to you tomorrow.

The trillion dollar tipping point: Exploiting the untapped value in patents [which also contains a Foreword from Professor Sir Robin Jacob] can be accessed here
If you are too busy to read the whole report, there's a short summary of it here
If infographics are your scene, there's one here for you

2 comments:

Anonymous said...

I don't want to criticise CIPHER at this early stage, but building 'templates' and 'standardising' is not easy to do when trying to value a patent. Reliance on algorithms can sometimes hide what we are unable to know, and so it's very important to objectively investigate what CIPHER cannot do. The problem here is that we don't have an independent body that would do that. I've seen how naïve many investors are, and they won't be able to see the weak points of CIPHER.

James Wagner said...

Banks may be reluctant to loan on IP in part because unlike many other forms of collateral such as real estate, equipment or inventory, the value of most IP assets tends to be heavily connected with the ability of the current owner to be a going concern.

Trademarks from once famous brands do often have a value, but they seem to be a fraction of a percentage of what the value to the business was at its height.

A patent that provides an injunctive threat to maintain a competitive edge for a manufacturer can be of significant value, but useless if that manufacturer collapses; if a damage award wouldn't justify litigation.

And some of the most valuable IP of a business may be things such as trade-secrets + know how, which rapidly run out the door or become obsolete upon the collapse of the business.