What to do with IP

Here’s an interesting thing: the most prolific inventor currently in the world (by number of US patents lodged) is actually an Australian by the name of Kia Silverbrook. Kia runs an outfit called Silverbrook Research out of Sydney.

However, the most prolific companies are the usual suspects. According to CNET in 2009 the most prolific companies for the year were:

• IBM with 4,914
• Samsung with 3,611
• Microsoft with 2,906
• Canon with 2,206
• Panasonic with 1,829
• Toshiba with 1,696
• Sony with 1,680
• Intel with 1,537
• Seiko Epson with 1,330
• HP with 1,273

Unfortunately, the vast majority of these patents will never see the light of day, as their commercialisation is not expected to meet their internal ROI requirements.

Which got me wondering, “What could they do with all theses patents?” Now if you were someone like Dr Terry Cutler or Henry Chesbrough you would be arguing for open innovation, or allowing everyone to access to each other’s IP. However, the thrust is way too “trust me you will make money in the end” for my liking and the focus is also on intermediary services such as IXC that allow behemoths to talk to each other.

It has occurred to me that maybe these patents could also be made accessible to Australian SMEs. I would argue that the role of the start-up in a market is to validate if an idea, product or service is valued. If it’s not valued, the business will fail, but if it is valued, the start-up will be snapped up by a large enterprise that’s in the market to purchase validated solutions, not take commercial risks themselves.

So here’s my idea – perhaps I should approach the guardians of this IP and make an offering along the lines of the following.

1. I would like a non-transferable licence for some of your unused IP, that looks good but is not estimated to meet your ROI requirements, for say $1,000 and potentially 10% of the equity in my business.
2. You have the right to purchase the remaining the equity in my business for five times the net tangible assets for one year.
3. You have the right to purchase 10 times the forecast of the next years revenue, for up to three years.

It seems to me that this type of purely commercial solution allows the big end of town to open up their IP portfolios in a win/win scenario, as well as winning kudos for not being a knowledge fortress.

The other side of the coin is that small dynamic companies can do what they do best, and validate whether the IP actually has value. They will be rewarded if it does, without having to commit largely to their own R&D spending.

Perhaps then those with the largest numbers of patents can win in other ways as well?

To read more Brendan Lewis blogs, click here.

Brendan Lewis is a serial technology entrepreneur having founded: Ideas Lighting, Carradale Media, Edion, Verve IT, The Churchill Club, Flinders Pacific and L2i Technology Advisory. He has set up businesses for others in Romania, Indonesia and Vietnam. Qualified in IT and Accounting, he has also spent time running an Advertising agency and as a Cavalry Officer with the Australian Army Reserve.