Posts Tagged: "Risk Management"

Privacy and data security issues can scuttle a deal or at least cost the parties a lot of money. For example, in the due diligence process involving the 2017 acquisition of Yahoo by Verizon, Yahoo disclosed two serious data breaches that compromised over a billion accounts. Yahoo had previously attempted to cover this up. The deal went ahead for nearly $4.5 billion but not before Verizon knocked $350 million off the transaction price and Yahoo paid over $100 million to settle SEC fraud charges and class action lawsuits.

The business world has fundamentally changed, but most business people seem not to have noticed. Intangible assets and investments are increasingly dominating the leading economies. The world’s largest retailer holds no inventory; the world’s largest taxi service owns no cars; and the world’s largest hotel chain has no rooms. Property, plant, and equipment are no longer a company’s most vital assets. Intangible assets are swallowing the collective balance sheets of the strongest and most successful economies throughout the world—and are increasingly dominating investment and growth in such economies. Because the intangible revolution is only a few decades old, many companies have yet to develop or otherwise obtain robust intellectual capital management capabilities, including effective risk management of their intangible assets. Though virtually no mature businesses would consider operating without the protection of property and casualty insurance, very few companies effectively insure their intangible assets, despite such “assets that cannot be touched” often representing the most critical components of companies’ success and survival. This is partly because traditional IP insurance solutions have generally failed to meet the needs of corporate buyers.

Looking first at patent litigation, approximately 20,000 companies have been sued for patent infringement in the U.S. since 2010; even your neighborhood restaurant is at risk. A particular global fast food chain is sued, on average, at least once a year for patent infringement. Those suits aren’t over hamburger recipes or kids’ meal toys: They’re over its mobile apps, point-of-sale technologies and other software that have nothing to do with food. Even financial and management consulting firms find themselves in the middle of trade secret, patent and copyright disputes over issues ranging from talent acquisition to website display carousels to website functionality to software the firms themselves developed.

LOT Network markets itself as a non-profit consortium, which offers its members a legal mechanism affording them protection from patent assertion entities (PAEs) and immunizes its members against patent suits from non-operating entities for about 1.2 million worldwide patent assets currently owned by LOT members… The LOT Network conditional license only applies to patents that are in network at the time that a firm joins the consortium. If a business joins LOT after a LOT member sells a patent, previous LOT members are protected by the conditional license whereas the new member still faces the potential of an infringement suit down the road on that patent.

Today’s pace of innovation and competitive intensity demand greater protection of new ideas and inventions. Yet intellectual property (IP) management is not a high business priority for many companies. Organizations that fail to recognize IP as a strategic asset put their competitive advantage and profit margins at risk. Companies can circumvent these potentially adverse impacts by maximizing the value of their creativity. Prioritizing and protecting IP assets helps organizations stay in front of competitors and drive greater growth.

A well-developed patent portfolio offers you the ability to defend your R&D investments against competitors, creates freedom to move into new markets, deters corporate asserters and can eliminate licensing fees. How do you produce such a portfolio? Start by identifying potential threats, then balancing reasonable patent portfolio investment with revenue retention, and finally calculating your risks. This post presents an approach for modelling the value of a strategic patent portfolio for companies in the high-tech market (eg, cloud computing, semiconductors, mobile and networking). The biotech and chemical models are similar, but require modification for their specific patent risk challenges.

The engine that made America a greatest economic power was a patent system that led to tremendous innovation by incentivizing entrepreneurial inventors.