Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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5/7/10

The Value of Intellectual Property - a 'rough' guide


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Penny Gibson - Quedo Limited

‘No patent brings its holder any immediate pecuniary right. He can only sue people who infringe his patent and the costliness of patent suits is such that he is seldom able to protect himself. To make the property worth anything a capitalist must take it up...’

So wrote Thomas Edison in The Spectator, 5th June, 1869. In fact, the debate over the value of patent rights is almost as old as the patent attorney profession itself. Amidst pleas for reform of the system in the early 1800s, engineers, economists and lawyers were divided over who encouraged more innovation and economic progress – James Watt with his patented steam engine or Trevithick with his ‘open source’ (non-patented) high pressure engine.
The cost/benefit of confidentiality, copyright, registered designs and trademarks is difficult to dispute. Confidentiality and copyright are ‘free,’ international non-registerable forms of protection; and registered designs and trademarks can be acquired for around $100 in New Zealand, and 350 Euro ($650) for registration in the 27 countries of the European Community, with foreign jurisdictions offering exemplary on-line support, pre- and post-application. Annualised, trade marks cost $10; and 90 Euro ($166) per year for 27 countries of Europe. The cost of patents, however, remains contentious. Although official fees are akin to those of registered designs, patent applications can run into thousands nationally, and tens of thousands in a handful of international territories. Poorly managed, patents represent a drain on cash flow and a significant (if not the majority) of a small company’s profit.
According to research, over 95% of patents are worthless. In fact, 2% of patents hold 80% of the aggregate value and the top 1% of valuable patents are 5,000 times more valuable than the median. And although it is a popular assumption that a patent leads to a license, licensing is an unreliable ambition: resorting once again to statistics, 11% of patents are offered for license; 80% of those attempts fail. Meanwhile, ever reducing product lifecycles have rendered at least 50% of a company’s patents irrelevant to their business.
New Zealand is particularly disadvantaged by outdated legislation and a novelty criterion which immediately devalues New Zealand patents or, at best, incurs significant cost of amendment when New Zealand patents begin their international journey and are subject to examination in territories such as Europe with an ‘absolute novelty’ criterion: the most exacting standard. The cumulative disclosure of prior art relevant to this exacting standard leaves patentees relying on ever narrower, more incremental degrees of novelty.
To reject the value of intellectual property protection entirely, however, is naive. Intellectual property rights are an international ‘yard stick,’ integral to dynamic business. They afford ‘national status’ to foreign firms. They have monetary and strategic value. In fact, intellectual property is as integral to good management as tax planning.
In fact, such is the perceived value of intellectual property to national economies, especially in times of economic downturn, that governments in leading innovation nations have spent huge sums on supporting and facilitating use of intellectual property by businesses. And America – only a respecter of others’ intellectual property since the late 1980s – now allows their ‘Special 301 Report’ to guide their foreign trade agenda. The Report is named after s.301 of the US Trade Act, 1974, which allows the US to take retaliatory action against countries which don’t respect US IP: such a country is “an export killer of American businesses and a job killer for American workers.”
So how can companies gauge whether their intellectual property is valuable?
Myriad consultants around the world offer assorted solutions: complex algorithms manipulate hypotheses according to the cost method, the market method, the income method, the ‘disaggregation method/’knowledge capital scorecard,’ ‘discounted cash flow,’ the ranking method, surrogate measures, ‘rule of thumb,’ and the option method. ’
Cliches abound, apportioning 70%-90% of a company’s value to ‘intangible assets. ’ And ‘intangible’ is often confused with intellectual property. Until relatively recently, technology wasn’t separated from its associated business.
Certain characteristics have been attributed to ‘valuable’ intellectual property. For example, a valuable trade mark might be one which is generic, denoting a group of products and registered internationally (e.g. Apple and Virgin) or be associated with a ‘trend’ such as ‘innovation’ (e.g. 3M). Valuable design might comprise components or a consistent stylised ergonomic form as the brand differentiator. Valuable copyright might relate to profile of the ‘author,’ and scope of ownership whereby the ‘content’ is able to be productised in part as well as whole. And of course, the burgeoning ‘jewel in the crown,’ ‘know-how’ can be ranked according to the caliber of the instigator or team.
Patents are less prescribed. Ascertaining novelty, validity and potential scope pre-application can raise the value of the patent application for investment. Value is also indicated by the number of citations (especially ‘self’ citations), sector, and stage in lifecycle. And it is commonly accepted that litigation is and even more tangible proof of value: a patent which has withstood the scrutiny of challenge and litigation is assumed ‘proven. ’
In reality, the value of intellectual property, as with technology, can differ according to the context in which it is leveraged. To quote from Thomas Edison’s 1869 article once again: ‘The value of an idea lies in the using of it’.

PENELOPE GIBSON PhD MPhil MSc (Lon) MCIL MLESI MRSNZ

PROFILE:

Penny combines legal and commercial expertise. She has 25 years’ international commercial experience, holds a PhD in Law (patent law, and its optimal commercial and strategic use by technology based enterprise), an MSc, a BA Jnt Hons and UK patent and trademark attorney papers.

Originally working as technical author and translator in the field of electronics, in particular music technology, Penny went on to set up and run two highly profitable multi-million dollar businesses, which revolved around the creation, acquisition and exploitation of intellectual property rights. She also served on the main board of a Group of companies during a 7 year period of growth from NZ$12 million to NZ$280 million.

Over the past 6 years Penny has advised over 400 high-growth, technology enterprises, whilst pioneering IP programmes for SMEs in Europe and New Zealand. Under contract to the UK government, she created and delivered the intellectual property commercialization component of a programme which added NZ$6.8 billion to the regional economy. Since arriving in New Zealand in 2008, she has completed 2 strategic plans relating to commercialisation of RS&T and has now set up her own company – Quedo – to help companies optimise their use of IP for international growth.
 


 



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Please play the ball not the man.