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Business getting clever about IP?

PwC report tells a tale of two economies

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In the West, litigation is so last century. These days, intellectual property is all about the value and the strategy.

So says a new report from consultants at Pricewaterhouse Coopers (PwC). But in the emerging economies, protecting intellectual property is a battle on the most basic levels: warehouses are being raided to supply the black market.

The report acknowledges that intellectual property (IP) has long been regarded as a business asset, but one that needed protection, primarily through the courts. Almost half of those surveyed (and 63 per cent of North American executives) said they thought a significant percentage of lawsuits are "spurious", intended to harrass the competition.

Now it is losing its "legal issue" tag, and becoming part of the business plan. And ironically, the increasing strategic importance of IP could be driving some firms away from widespread patenting.

PwC says IP is starting to matter more and more in acquisitions: firms are being bought for what they know as much as anything else. This means working out the value of IP as an asset is becoming a serious consideration: it'll have tax implications, even if you're not buying anyone this year.

"Knowledge assets now comprise a greater share of public companies' market valuation than hard assets...this is particularly true for technology companies," the firm says on page four of its report.

And once you put a price tag on something, then you can start to weigh up the return you are likely to get on your investment.

One Siemens executive said: "So many companies are prolific in patenting, but we ask ourselves, what is the value in that? To obtain a multi-jurisdictional, international patent - the cost could exceed €200,000...We can't patent everything, so [we are] trying to evaluate the value of each potential patent. How unique is it? How advanced is it? What can be done with it?"

But executives still think they are not "extracting the full value" from their stashed IP. They also report they are not "as competent in the management of intellectual property as they need to be".

Nor is it always clear within an organisation who should be responsible for managing IP. Only 21 per cent of firms say they have dedicated specialists in charge of their IP.

Meanwhile, in emerging economies, it is all about stolen and pirated goods. Many respondents say the protection regimes that exist for IP in the newer economies are simply inadequate.

One executive told the PwC researchers that it is so bad you end up competing against yourself. He claims as much as three quarters of any given production run ends up being sold on the black market. In software, the figures are worse: "You're fortunate if you're receiving 10 per cent of the revenue due to you", he says.

Another says: "If it's core technology, you don't ship it to an offshore contract manufacturer or licensee or partner of any kind. You just don't. It will be stolen."

You can read the report here. ®

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