“I am continually fascinated by audience perception and attitudes towards IP rights, which appear to be more negative today than in the past. Similar to shares of stock, the premium between book and market value for patents and other IP rights often is based more on perception than actual performance.”
Starting this week, Bruce Berman, author and CEO of Brody Berman Associates and founder and chairman of the Center for Intellectual Property Understanding, an independent non-profit, will publish his well-known column, the “Intangible Investor” with IPWatchdog. The column ran for 17 years in IAM Magazine and will continue to focus on trends and observations in the realm of IP valuation and investment. Berman spoke with IPWatchdog about the history of the column and what readers can expect going forward.
What are the origins of the “Intangible Investor” column, and why have you chosen to migrate it to IPWatchdog?
In 2002, still reeling from 9/11, editor Joff Wild and I had discussed starting a publication focused on the business of intellectual property. I ultimately decided not to become a co-founder, but I was asked if I would write a column for the magazine. I figured I would contribute a few, but it turned out to run every issue over 17 years—98 in all.
The name “IP Investor” was changed to the “Intangible Investor” in 2010 to reflect higher patent valuations, as well as developments in how IP rights were being monetized and deployed as financial assets. At the time, more patent licensing companies were starting to go public and were subject to greater scrutiny. Google’s purchase of Motorola for $12.5 billion, primarily for its patents, was on the horizon. IAM is now quarterly and behind a pay wall, which is fine. I believe that IP Watchdog will give the “Intangible Investor” greater visibility among more diverse audiences, especially those who invest in technology, brand and content.
How did you come up with the name and how has the meaning and significance of the “intangible investor” changed over time?
The name is a play on Benjamin Graham’s enduring treatise, The Intelligent Investor, which, after 70+ years, remains the definitive book on value investing. It is also a reminder that while innovation rights are assets, their classification and impact often are “intangible” and cannot be readily seen or discerned. IP stakeholders, while impacted by IP value and performance, often are unseen.
I suspect that the Columbia University Professor Graham is looking down from on high, watching us feel our way with IP as an asset class. Far from being an ideologue, Graham wrote that he “wished every day to do something foolish, something creative and something generous.” Warren Buffett, a disciple of Graham, says that he excelled most at the last.
What are some of the key trends you’ve covered over the course of the column and how do you see those trends evolving going forward?
Determining IP performance, what I call ROIP (return on IP), especially for patents, continues to be elusive. Outside of pharma, where one or a few patents cover a specific drug whose revenue and profits can be readily modeled and measured, it is difficult to discern the role many patents play in performance. The growth of patent analytics and performance metrics is an important area that will continue to command our attention. Other areas I am interested in include how brand influences patent value and how strong patents can constitute a brand. I am continually fascinated by audience perception and attitudes towards IP rights, which appear to be more negative today than in the past. Similar to shares of stock, the premium between book and market value for patents and other IP rights often is based more on perception than actual performance.
With greater dependence on IP for return, investors of all types are becoming more IP-aware. They want to know what IP and IP rights achieve, how and for whom.
You first coined the term “PIPCO” – what is it, and how has it evolved from then to now?
PIPCOs are public IP companies. The term became synonymous with publicly held patent licensing companies, NPEs that went public, but it was never meant to be that specific. A PIPCO is any public company, big or small, that is IP dependent (e.g. Apple, L’Oréal, Johnson & Johnson, Amazon, HBO, The New York Times, Sony Music, Xperi, Scholastic Publishing, et al.) IP/IP rights are a major part of many businesses’ performance. Investors need to be better informed and attuned, and in a better position to identify opportunities.
You’ve written a number of books over the years on IP and innovation – how did you become interested in IP to begin with, and particularly in IP as an asset/ monetization?
In a Curious Journey, I explain how I went from “frames to claims.” Earlier in my career I was a film scholar teaching at Columbia University, where I completed all but the dissertation for my Ph.D. (I had previously earned a Masters’ degree there.) I was always interested in the creative process and defining creativity, and the dynamic between fact and fiction, reality and perception. There is an incredible amount of information contained in a film shot or photograph. A similar abundance of detail exists in dependent and independent claims associated with a patent. Despite the high level of specificity, both require context, a frame within the frame, if you like, to give them meaning. For me, putting difficult concepts into context for different audiences is both a challenge and responsibility.
Do you think IP is more or less valued today than when you first started writing about it, and are you optimistic about the future of IP as a business asset?
More valued in some ways, less in others. For example, one-off technology patents, no matter how thoroughly vetted or how strongly they read on a product, seem to be worth less. Patent and other IP portfolios in M&A, however, appear to be worth more. Patent licensing has become arduous to the point many inventors, and some investors, no longer care to engage in it. More audiences are able to see the value of IP, but hostility to patents, copyrights and trademarks – and doubt about their contribution to the economy and society – is a hurdle that has yet to be overcome. Some people believe that the Internet made content free, or that it should; that counterfeits are at times permissible and the patent infringement is not really stealing.
I am very optimistic about the future of IP as a business asset. As more audiences understand what IP and IP rights mean, how they work and their impact on business, innovation and competition, respect for IP and IP value will grow and so will value. Europe has been stronger on content protection and counterfeits, and China is headed in a better direction, at least when it comes to understanding the importance of IP. More senior executives are stepping up to provide leadership and respect for the intelligence of stakeholders by increasing IP transparency. IP and the best IP rights are poised to play a leading role in addressing the incredible challenges that we face, especially COVID-19 and climate change.
Stay tuned for Berman’s first column – on “IP Consciousness” – later this week.