IP Strategy 104 / How to extract values


Ekrem Ayhan Çakay

Intellectual Property (IP) Management
IP Strategy 104 / How to extract values

In general, one of the most basic factors in the analysis of value extraction from the patent is to make a classification according to the technology style. In its simplest form, two different technology styles can be mentioned: discrete and cumulative/complex.

Technology Styles

Discrete technology: Inventions from the pharmaceutical or chemistry fields mostly fall into this field. Where one molecular structure or active agent is often protected by few patents, and where in general the IP for one product is held by one single owner(Figure 1).

Figure 1

Complex technology: It is a field where multiple complementary patents, often held by different owners, protect technology necessary for one single product. A typical example is the consumer electronics industry. For instance a BluRay player incorporates several thousand patents held by different major players of the industry(Figure 2).

Figure 2

By contrast, in discrete technologies only few patents are directly associated to one product that can be brought to the market independently.

Another point to be considered is the length of time between the protection of internal top-secret information and the launch of counterfeit products after the products are released. Mostly in the chemical and pharmaceutical sectors, this period is between 3-4 years and provides an advantage much longer than the average of 1 year in other sectors.

Various strategies can be pursued when extracting value from your intellectual property portfolio. These can be examined under a total of six different categories in the practical examples of the European Patent Office(EPO).

1. Premium Pricing

It is generally established over a feature with marketing value, which is at the core of its business field and has a perception of technology in the market. A premium pricing is acceptable in the market in a situation where it is prevented from being a competitor and it has a medium-high value-added product feature(Figure 3).

Figure 3

Example: Aerogen's nebulisers turn liquid medication into a fine particle mist that delivers a wide spectrum of pharmaceuticals deep into the lungs of critically ill patients, resulting in drug deposition rates significantly higher than conventional aerosol technologies can produce(Figure 4).

Figure 4

  • Protected by 14 patent families
  • 60 % gross margin platform ‡ strong IP position allows considerable premium to competitors (priced 40 to 50 fold over basic products)
  • Cheaper products on offer are quite different and generally not patent-protected.

2. Entrepreneruial Use

Generally, the technology perception in the market is based on relatively high features that are not primarily related to the core of business field. It can be used as leverage to attract investors or start a new venture called a spin-off. It can be used to increase company value, find potential buyers, start a new company, or licensing opportunities on intellectual property. Intra-company entrepreneurship programs are also within this scope(Figure 5).

Figure 5

Example: Fractus' first idea was fractal-based antennas. Antennae and arrays for telecom mobile terminals, communicative wearables, and other applications continue to be the focus of today's technology. These multiband, miniaturized antennae have a limited visual impact(Figure 6).

Figure 6

  • Over 120 granted patents/ patent applications worldwide
  • 90 % of company revenues from licensing
  • 10 % from sales of products and services
  • IP portfolio became major asset for attracting new
  • Capital equity crucial to its turnaround, and its future

3. Revenue Generation

Extracting IP value to generate income creates different motivations for different institutions . This can be thought in three different levels.

  • Finding potential licensees for research institutes and universities
  • Generating license income for corporate companies
  • Patent evaluation for patent broker firms

Example: For asthmatics and other high-risk patients, Marinomed is developing further influenza medicines and combination regimens. The MARINOSOLV technology allows for stable aqueous solutions of chemicals, which can be used to develop new treatments for type I allergies(Figure 7).