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Fortifying corporate capital:IP management moves beyond patents

Many firms are broadening the concept of intellectual property management from the traditional focus of patents, trademarks and inventions to also include intellectual capital, which encompasses databases, business processes and customer information.

By Kim Ann Zimmermann

The value of intellectual capital is becoming increasingly important as businesses become more knowledge-driven, and the true measure of a company rests in its people and ideas rather than in its equipment and real estate.

"Intellectual property management used to be arcane stuff that patent attorneys with secret decoder rings would use," says Kevin Rivette, CEO and co-founder of Aurigin, a vendor of intellectual asset management (IAM) systems. "We've seen the market change dramatically, and there is an increasing interest and need in sharing knowledge about patents, inventions and such with many departments in an organization."

Managing intellectual capital is increasingly important during tight economic times. According to a report released in October from the research firm Gartner, U.S. companies have $1 trillion in intellectual assets. "When you are in an economic crisis, it becomes useful to look for any source of revenue you have," according to Debra Logan, senior analyst at Gartner, author of the report.

KM/collaboration merge

The report notes that companies such as IBM, Eastman Kodak, DuPont, AT&T, Lucent and Xerox are beginning to institute systems for managing intellectual property. Intellectual property asset management systems (IPAMS) can make it easier to share intellectual capital among different departments in an organization, including research and development, marketing, competitive intelligence and strategic development groups. Active portfolio management using IPAMS can help companies identify new sources of revenue and target emerging markets where existing intellectual property can be leveraged, the report says.

"What we're really seeing is a merger of knowledge management with collaboration," says Jim Jacobs, research director for Gartner. "Intellectual property management is being intentional about knowledge and its role in your organization."

According to the Gartner report on IPAMS, half of Global 2,000 companies will have hired an intellectual capital officer by 2005. That executive will be responsible for linking intellectual assets to enterprise value.

"We're starting to see the human resources departments within organizations ask questions around human capital," Jacobs says. "They are looking for ways to track expertise of the knowledge workers in a company and other things that relate to the intangibles in an organization." One key trend, he adds, is developing centers around the innovation value chain--the process within an organization for nurturing ideas and bringing new products to market.

Enriching ideas

"It really is becoming about managing ideas," Jacobs says. "Where do they come from and how does an organization make the most of innovations. Ideas need to be shared across the board. Sometimes it is a cost-saving idea. Sometimes the idea is a new opportunity for revenue. In a shifting competitive landscape, companies need to be able to respond with agility."

Corporations are increasingly acknowledging that a major portion of their intellectual capital is invested in people. "Companies are realizing that there is real value looking at what their people know and how they nurture and share that intellectual capital. It is not simply a matter of encouraging group hugs to share knowledge by osmosis," according to Jacobs.

Sharing intellectual capital goes beyond sharing ideas developed within an organization. "When a company looks to develop a new drug or a new product or a new twist on an old product, they need to gather information about the competition," Aurigin's Rivette says, adding that sharing that information becomes crucial to getting a product to market.

"The challenge becomes not only finding the information, but sharing it with 10 of my team members," he explains. "If I send it in an e-mail and we start a discussion back and forth, some of the thought thread can get lost." The need to capture all information in the research and development process is spurring the trend toward intellectual asset management systems that enable documents to incorporate electronic notes from multiple individuals.

Browsing Patents

"A system that allows for collaborative annotations on multiple documents by multiple people is really key to being able to follow the entire process," Rivette says. Another trend is toward visualization technologies--bar charts, pie graphs, analytical tools--that visually represent the data.

"There is a need to incorporate tools that represent graphically what everyone represents in a tab report," he says. And it’s important to be able to do a search by company, product or other key identifiers.

Once the search is complete, the ability to drill down for more information, much like hitting a link on a Web page, is crucial to speeding research. "No one wants to or has the time to look through 10,000 patents. But if they can do a search and then quickly access the information they need, that will improve efficiency in the management of intellectual capital," Rivette says.

IPAM systems are also helping companies make business decisions about which patents to pursue and about whether patents the company holds are making money.

IPAMs help chart course

"We're seeing these systems being used as a business development tool. Companies are looking at this data to analyze the revenue they are generating from current patents and the likely revenue to be generated from pursuing a new patent or renewing a patent,” Rivette says. “It helps them get answers as to the value of their patents and if they are making enough money from their current and potential patents. In some cases, our customers have done a business case analysis and decided that they should turn over certain patents to the public domain and get a tax write-off."

IPAM systems also can help companies make business decisions about whether it is profitable or viable to build a new product or part of a product from the ground up, or license a patent from another company.

Rivette says, "In one case, a company found that there were 64,000 patents for a battery tester strip. Does it make sense to develop something new, or should they just take a look at who are the leaders in this area and try to license their technology? An intellectual property management system can help put this into perspective."

While pharmaceutical companies have been heavy users of IPAM systems for years to manage the process of getting a drug to market, other industries are making use of them now. Sonoco Development, a research and development division of Sonoco Products--a $2.7 billion manufacturer of industrial and consumer packaging products and provider of packaging services--is using Aurigin's software for intellectual asset management and competitive intelligence. Sonoco has used the software for nearly two years to make patents more accessible to both division and corporate executives while improving licensing opportunities through competitive intelligence. The company had purchased a patent database of relevant patents to be loaded on its own server, but it struggled with ways to make the data readily available to researchers and other in the company.

Sonoco takes a broader view of intellectual capital--moving beyond patents, copyrights and legal documents to include business processes and trade secrets. It needs to track patents in several disciplines, but primarily the chemical and mechanical fields.

"We first began to proactively use our intellectual capital through an internal server system, importing patents for searchable use. But we had trouble getting the compete picture of how our IP assets fit into our market space," explains Larry Renck, VP of Sonoco Development. "The IP software lets us control the results of a patent search, store those results and get them to the right people around the company. That's where [intellectual property management] really gives us value, by getting the right information to the proper decision makers."

Kim Ann Zimmermann is a free-lance writer, 732-636-3612, e-mail kimzim2764@yahoo.com.

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