July 8th, 2020 – By – Zoe Chen, John Perraut, Doron York
Those of us that have been around since the tech boom in the early ’90s through the 2000 tech bubble to today’s technology evolution have witnessed a few defining moments. Through the many adaptations and accelerating use of technology in everyday life, we are facing the next tech trend – the IP Gold Rush!
The Brief: – Most companies realize that no matter what industry they are in they must be first and foremost be a tech company. While not necessarily starting that way, a large number of them have had to go through a transformation process which turns them into a high tech company, deploying and implementing technology into their business, and for some, it becomes their core business.
The next trend is to take new patented ideas and license them to corporations that already have the footprint, market access, and patent portfolios. Entrepreneurs marketing patented concepts can result in less risk, effort, cash, and time with great ROI.
The basic understanding that a patent protects an idea and makes a company investable. A Patent is a legal right to monopolize that idea in the market for 20 years in exchange for publishing the invention to preserve the technology for posterity. The second basic understanding is a patent that gives one the right to prevent someone from making your Idea. It does not give the right to make the invention, one needs to check for freedom to operate to ensure there is no infringement on someone else’s patent. This can be expensive and rarely 100% conclusive.
The big shift in wealth generation from products, manufacturing, and high capital equipment industries to high tech, software, apps and data have resulted in phenomenal returns on investment, ROI. This has spond a whole generation in start-up going from nothing to unicorns. Today, there are major players whose only product is IP such as Softbank’s ARM Holdings who was bought for $31 billion in 2016.
Most large corporations transformed technology from a mere influence to a strategic center seat at the big table. The evolution has resulted in a much higher TechIQ workforce that is able to handle more complex technology development and deployment of large scale projects than any time before and many of them have internal globally networked development capabilities. Business application development in today’s tech world becomes much less complex and easier even for people without deep coding experience. And the transition into a cloud base storage and deployment and the emergence of the IoT infrastructure make large companies less and less dependent on outside vendors, especially the smaller ones in the supply chain.
Entrepreneurs and mid-market companies should be wary of patent trolls. Companies that possess large inventories of patents and troll for unwitting companies who possibly infringe on their IP. Large companies buy license subscriptions just to keep them at bay.
The standardization of development application base business models, SaaS, DaaS, and others. The ability to quickly deploy microservices to an existing platform that relies more and more on software vs. hardware makes it more difficult for start-up and smaller organizations to penetrate the market or have the reach of the large tech corporate systems.
The speed and velocity of technological evolutions make an investment in technology risky. Today’s breakthrough technology is yesterday’s news and may pass very quickly. So the ROI needs to be almost immediate to convince investors and or companies to invest. Many large corporations expect and put tremendous effort into their core technology suppliers to innovate and evolve constantly to provide better and more advanced solutions. This demand leads to an increased level of M&A and purchasing of IP Portfolios around the globe as many leading tech providers drive to keep up and stay relevant to their clients and according to our study will explode in the next decade.
The Market Opportunity: – So IP is the New Gold Rush. As large companies through active tech scouting are rushing to find the next big thing and they are willing to pay top dollars for it. Your startup might be or can be in a very interesting position to take advantage of it. (For large companies the next best thing may be the IP at a tech start-up near you. You had better get it before the trolls do. )
Entrepreneurs and Startup founders in all shapes and sizes will be forced to ask the following questions.
Do you know the market value of your IP portfolio?
How are you going to dominate a market and mitigate risk?
Who is playing in your tech space and are they a threat or potential ally?
What are your options?
What is your IP strategy?
The Conclusion: –
If you are a tech-based startup trying to raise venture money, which will be increasingly more difficult in today’s economic environment, the option of partnering, selling, collateralizing, or licensing your IP can be more profitable or in many cases, much quicker. By the end of the day, it can in some cases even be much more profitable.