From Ideas to Assets TEAMFLY Team-Fly ® From Ideas to Assets Investing Wisely in Intellectual Property Edited by Bruce Berman John Wiley & Sons, Inc. This book is printed on acid-free paper. ∞ Copyright © 2002 by John Wiley & Sons, Inc., New York. All rights reserved. Published by John Wiley & Sons, Inc. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authoriza- tion through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQ@WILEY.COM. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assis- tance is required, the services of a competent professional person should be sought. ISBN 0-471-40068-8 Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 v About the Editor Bruce Berman, editor, is president of Brody Berman Associates, Inc. in New York, the leading marketing and communications firm for intellectual property owners and investors. He conceived and edited Hidden Value: Profiting from the Intellectual Property Economy (Euromoney-Institutional Investor), a critically acclaimed anthol- ogy that was published in 1999. Mr. Berman is a member of the editorial advisory board of Patent Strategy & Management, and works closely with technology and life sciences companies, consulting organizations, law firms, and financial institutions. vii Acknowledgments A unified vision of intellectual assets lends itself to diverse perspectives. In addi- tion to each and every author who devoted significant time and care, and without whom this book would be impossible, I am indebted to a number of people, sev- eral of whom should be singled out. Their thoughtful comments, counsel, and en- couragement made a great deal of difference in the final product. They include Sam Adler of American Lawyer Media, Christopher Fine of Goldman Sachs, Stephen Fox of Hewlett-Packard, Thom Goodman of Corporate Legal Times, James Gould of Morgan & Finnegan, Dooyong Lee of LPS, Russell Parr of Intellectual Property Research Associates, Alexander Poltorak of General Patent Corporation, Kevin Rivette of Aurigin Systems, Dan Scotto of Banc Paribas, and Darlene Slaughter of IFI CLAIMS. Producing From Ideas to Assets required almost two years of research and hundreds of telephone conversations, e-mails, voice messages, faxes, arguments, and revisions. One person deserves special mention: Dr. James Woods of Deloitte & Touche was a constant source of information and sober analysis. I am indebted to him and his crisp perspective for helping to keep objectives and audiences in clear sight, even when they appeared distant. Another source of eternal light was Samson Vermont of Hunton & Williams’ IP practice, editor of Patent Strategy & Management. Not only did Sam write a significant chapter, his patient comments on various aspects of the book helped to make it stronger in many ways. Jennifer Liu provided exhaustive research and organizational support on the Data Bank section of the book; Mary Sexton, the cover concept; and Maya Smith, editorial oversight. Not to be forgotten are Susan McDermott, my editor at John Wiley & Sons, and Associate Managing Editor Sujin Hong, whose editorial and organizational skills are in evidence throughout. Both bore the slings and arrows of my candid memoranda. Finally, hugs for my wife, Sharon, and daughter, Jennifer, who in the course of compiling this book have come to recognize and, thankfully, tolerate the vicis- situdes of lofty goals and untimely deadlines. They are my most tangible assets. For Sandler, O’Neil & Partners, and the victims and heroes of September 11, 2001 [...]... us is not in some manner an investor, From Ideas to Assets provides the background and context necessary to put today’s innovation into tomorrow’s financial perspective John B Jones, Jr Managing Director, Salomon Smith Barney John B Jones, Jr has been following computer hardware, servers, and other technology sectors as a stock analyst since 1985 Institutional Investor, Greenwich Associates, Reuters,... is far too important to ignore From Ideas to Assets is not a textbook or an instruction manual about picking stocks It is, however, an overview of information and strategies designed to help demystify IP rights and the innovation they protect for those affected by them It is best thought of as a beginning step, not an end, in understanding the inner workings of IP From Ideas to Assets attempts to answer... do I need to know about IP to be effective?” From Ideas to Assets is organized into four general sections: Identifying and Understanding IP, Exploiting IP, Measuring IP Performance, and IP Transactions and Finance These sections are intended not only to provide readers with a useful background, but also as a perspective on recent IP trends and developments The authors have been encouraged to render... only need to know more, they need to get more involved Their questions and concerns about IP make a difference, and encourage companies to better understand, monitor, and exploit IP assets Managements that believe IP is too complex to present to Wall Street and other key audiences may be underestimating the motivation and needs of investors, and the potential for IP to move industries as well as individual... began A company’s ability to innovate, protect, and maximize innovation faster and more effectively than its competitors will play a key role in its ability to prosper Proprietary rights, such as patents, copyrights, trademark, trade secrets, and intellectual property-related licenses, already integral to the performance of public companies, are taking on new meaning From Ideas to Assets is the first multidiscipline... business The predominant focus of From Ideas to Assets is on patents, because of the unique challenges these proprietary rights present and the limitations of time and space in this book This book required more than two years to research, organize, write, and edit, and is intended to be interesting to read as well as purposeful As in a compendium of this nature, some topics may have been left out or... planned capacity and have cut staffs by 5 to 10 percent, R&D has remained largely untouched Some equity analysts are starting to attempt to monitor intellectual property productivity Their goal is to go beyond a mere tallying of patent numbers and to look at how patents and other IP rights are actually being used by companies IBM xxiii xxiv Foreword appears to be among the most effective in this regard... Hidden Value: Profiting from the Intellectual Property Economy for EuromoneyInstitutional Investor in 1999, contributors were still trying to prove to those who run businesses and advise on transactions that the information economy had taken xxviii Introduction IP rights out of the file cabinet and onto the business page Today, with that notion more widely accepted, we have moved on to the next question:... in their success H-P and Sun each spend 5 to 10 percent of annual sales on research and development Over the long haul businesses must continuously innovate to sustain product leadership However, many are still practicing or analyzing innovation in an undisciplined or irrelevant manner I believe that Bruce Berman’s perceptive From Ideas to Assets offers investors, managers, and others involved in business... interests of inventors In general, patent systems help to secure an inventor’s exclusive right to an invention for some period of time in return for disclosing the invention to the public If patent systems were not in place, much technology would be kept in secret and hidden from public view Therefore, patent systems also help disseminate information about new technology, which helps to promote innovation . From Ideas to Assets TEAMFLY Team-Fly ® From. Smith, editorial oversight. Not to be forgotten are Susan McDermott, my editor at John Wiley & Sons, and Associate Managing Editor Sujin Hong, whose editorial