Monetizing R&D intangibles

In my job, I work quite a lot together with medical doctors and professors carrying out research projects where some form of commercialization potential has been identified. Often it is my role to come in as a business developer and by an initial intellectual asset due diligence process distinguish which of the R&D building blocks that are truly value creating and how these potential values may be extracted. As a part of this, I get to see quite a number of grant applications and discuss how these can be re-designed for effective communication of a project's value with a basis in their intellectual assets.

Tacit valuation model for early stage research

I think that it is interesting to think that a grant reviewer will (although probably to a large extent tacitly and indirectly) value the underlying potential of research activities and new technologies, and eventually determine whether the sought amount is a feasible investment. Certainly there are parallels with such an implicit valuation model to patent valuation where a challenge is to identify suitable metrics for estimation of the value of a technology.

So what are some of the soft metrics that could determine the value of a technology for a grant reviewer?

Value of scientific excellence

Most grant reviewers probably would like to say that their sharp eye spotted the Nobel Prize candidate long before its nomination and that it was that particular early-stage grant that enabled the discovery. However, in reality scientific brilliance may be difficult to determine. Especially so, if the grant reviewer's expertise happens to be in another area than what the application is describing. One way to "outsource" this determination is to rely on citations in scientific journals. A citation count corresponds to the number of times other research papers reference the results of a publication-of-interest. But it is not self-evident how to value citations solely based on the number. How would you distinguish between?

• A higher number of citations due to a rather basic discovery
• A low number of citations in highly respected journals
• A high number of citations but none within the same research area
• A low number of citations

Value of personal brands

Another aspect that is often quoted as high perceived value in the eyes of grant reviewers is to have successful competences associated to a project. Metrics to measure the significance of human capital include;

• Curriculum Vitae (e.g. previous positions and experience)
• Academic titles
• Citations (e.g. H-index, citations per year, total citations)
• Publications (e.g. how many, in which journals, co-authors)
• Previously raised financing through grants and commercialization

Value of association to other trademarks

Association of research projects with other entities and initiatives can be interpreted as different identities and perceived values for projects. Here are some examples;

• Market closeness: Letter of intent from a collaborating company
• National/regional importance: Proof of participation in research platform (e.g. IMI, FP7)
• Societal value: Grant approval letter from major foundation (e.g. B&M Gates Foundation)

Value of legal clarity and technology transferability

For grant reviewers that are interested in seeing research results being utilized and commercialized, value metrics may include;

• Patents (e.g. number of patents, coverage, assignee/inventorship)
• Agreements (e.g. consortia agreements - ensuring that rights to results are governed)
• Freedom-to-operate evaluations

However, there are also newer metrics in the knowledge economy such as quotes on how many registered unique users one's database has. Other interesting metrics could for example be generated in open innovation projects such as Folding@Home (where a complex biological computation is distributed on 250 thousand CPUs of personal computers) where the project could claim to have access to 25 000 CPUs (assuming 10% usage of each CPU).

Will we see the numbers of "Digg it"-clicks, twitter hits and LinkedIn connections in future grant applications as metrics for societal interest and networks?

Tobias Thornblad

(Contact via Twitter)

Intangitopia Picks - Google books

Intangitopia has previously written about the Google Books project and its effort to digitize all books available. The full scale of the project is probably not seen yet, especially since Google still is in legal dispute around the digitization efforts. To me it seems quite inevitable that they will be able to digitize most books, at some point, the relevant question will then be who can get access to the information and on what terms.

The Economist has interviewed Paul Courant, librarian at University of Michigan, on the subject and the impact for research to have, at least, all orphan books digitized and searchable. One of the points he makes is that the book project gives different universities access to each other's libraries digitally, for the benefit of research. But as he also points out, Google is not doing this only to be nice, but rather to get more eyeballs to browse their webpages and adverts.



They have recently given On Demand Books access to their digital library to print books for customers. This posts interesting questions to how other actors in the digital/physical distribution of books should react. Even though the currest deal with On Demand Books only covers orphan book, books without rights holders, it is most likely that it at some point also will cover books with rights holders.

The role of the university - in the Future of Early Innovation

Ulf Petrusson opened up the second day of the Early Innovation and Knowledge City/Region track at CIP FORUM, on Tuesday afternoon. The theme of the talk was about how innovation and openness can be safeguarded in research platforms. The full panel included;

Arundeep Pradhan, President, AUTM and Oregon Health Sciences

Boo Edgar, Chairman, MedCoast Scandinavia and Director, GIBBS

Karen Hersey, fm Senior Counsel IP MIT and Professor, Franklin Pierce Law Center

Michael Cleare, Director TTO, University of Pennsylvania

Philippe Cupers, PhD, IMI European Union

Ulf Petrusson, Professor of Law, University of Gothenburg and Director, CIP

IP as discussion topic is often focused on the commercialization aspect on the underlying technologies but this was a discussion focused on the ability to use instruments such as IPRs, policies and technology transfer functions to stimulate research and knowledge dissemination. Universities face major challenges as increasing complexities of new technologies demands more extensive developments before research results can be readily utilized and provide societal benefits. In order for universities to not being risked to be blocked further down the line of the collaboration, there is an increasing need for intellectual asset management capabilities (e.g. for managing research processes, research collaborations, contract research, research funding, development processes, project selection, etc.).

A model was also presented where the role of the university was tracked over time from being a pure educational platform based on solely contributing to the public domain. Over time, this has also started to incorporate an increasing licensing and collaboration model where its responsibility has also started to include supporting the industry and society by transferring its research. As the importance of providing societal value has increased the university has also engaged in more entrepreneurial activity through a venture creation model. As all of the functions above have been incorporated, a new role for the university has emerged - the Intellectual Asset (IA) platform university.

Tobias Thornblad

(Contact via Twitter)

Third day at CIP Forum 2009

The third day of the CIP Forum 2009 in Gothenburg, Sweden, has got halfway through the morning session and Ruud Peters of CEO of Philips intellectual Property and Standards has just finished his keynote speech on "Communicating value - Putting IP in the boardroom once and for all".

Ruud Peters.

The audience.

Peters talked about the challenges in how to put IP in to the boardroom and some of the advises he gave were: "Create IP Solutions and not only IP Problems", "Create a customer focused IP organization", "Responsiveness IP organization needs to match the dynamics in the business", "Run your IP organization as a business in itself".

But from his point of view, the most important point advice is to create a workforce that has a mix of three important knowledge insights;

• basic IP knowledge
• market/business insights
• economic/financial knowledge.

"CIP is doing a great job through their educational programs in meeting those needs."

Now on stage "The Jedi Counsel of IP" as introduced by Ralph Eckardt. The talk is about "Why industry needs IP but fails to realize it".

The panel, Consisting of Ruud Peters (CEO, Philips Intellectual Property and Standards), Béatrix de Russe (Executive Vice President, Thomson), Ian Hardvey (Chairman, Intellectual property Institute), Kasim Alfalahi (Vice President, Ericsson), Mark Blaxill (Managing Director, 3LP Advisors) and standing, Ralph Eckardt (Managing Director, 3LP Advisors).


Johan Örneblad
Follow me on Twitter.

Spotify cleared for iPhone

The CEO of Spotify, Daniel Ek, Twittered this message a couple of hours ago.

Yes, I can confirm that Apple has approved the app. We're happy but have had a great dialogue with Apple all the way. They've been great!

If this is true, which it seems to be, it means that Apple is letting direct competitors in to the iTunes platform. This is an interesting shift from previous quite harsh approval process. But it might also prove to be a natural result for Apple to actually be able to keep the control over the platform, not being forced by anti competition authorities to open up a bit of their dominance on the online music market.

The Spotify for iPhone app has previously been reported to include a function for offline music listening as well as online, which would then mean that the service would be in direct competition with Apple's iPods. A circumstance that indicates that Apple will get a bigger piece of the Spotify pie. It has also been reported that the service only will be available for paying customers, this is either an indication of that they would like to get more users signed up for the premium version. But it could also be the case that the fees to be paid to Apple could not be covered by the advertising revenue gathered by the ads sold on the Spotify platform. Ads which to a large extent are about Spotify itself or collaborating record labels.

Nontheless, I will download the app as soon as it is available.

Johan Örneblad
Follow me on Twitter.

Utilization models of early-stage research

Long time no blogging...

Switching jobs makes you re-think some of your preconceived theoretical frameworks of how the world works. This was certainly the case for me when I switched from a more traditional intellectual property right (IPR) focused job to one where the core is in identifying intellectual assets (IA) and managing (IAM) these to create knowledge-based business models. Obviously still considering intellectual property and capital, but with an emphasis on the actual core of value creation (i.e. understanding the building blocks that collectively can generate IP/IPRs/IC etc.). With this as a basis, it is interesting to reflect over how early-stage research results (e.g. ideas, technology, etc) can be effectively converted into objects ready for utilization. Since there seems to be no magic recipes, my intention with this blog post is to explore some interesting models that are designed to promote societal utilization and technology dissemination of research results.

Technology Transfer Office (TTO) model

This is the traditional, often totally IPR-focused, model where universities have an internal system where they track inventions and patentable objects and have a number of strategies to ensure utilization and technology dissemination. Typically the personnel at the TTO employs a process to scan the internal R&D activity to identify research results of commercial interest. Protection strategies (e.g. patenting) can then be implemented in close collaboration with the researcher.

Exploitation strategies are then pursued where the three most common probably are;

• Licensing: A license agreement is negotiated to offer rights to the patentable invention (access/ownership) according to the claims made in the written IPR. This is sometimes complemented by a knowledge transfer model where the researcher provides consulting to the licensee to transfer required know-how.
• Spin-out: A startup is formed around the invention where often the inventor is one of the entrepreneurs managing the company or at least gets some sort of ownership stake in the company depending on the circumstances and complexity of the technology. This vehicle often relies on access to external funding, e.g. venture capital.
• Joint-venture: An entity is formed jointly between two (hopefully) complementary partners to create synergies while sharing risks and rewards.

Examples of successful technology transfer offices include; MIT Technology Licensing Office, Harvard University Office of Technology Development,

Examples of spin-out models where the created venture are managed by students educated in innovation and entrepreneurship; Gothenburg International Bioscience Business School, Chalmers School of Entrepreneurship

Cluster of specialized entities

This model can consist of;

1) one entity with multiple specialized divisions,

2) a network of specialized companies/organizations, or,

3) a combination of 1 and 2.

There must be at least one entity dedicated to research that can provide results to the others for commercialization. For utilization effectiveness, it is convenient if certain types of innovations, e.g. all results with medical applications, always goes to the same entity for commercialization. This does not have to mean that ownership is transferred but rather that rights are granted for further development and marketing. As you are probably already thinking, this model builds on proficiency in managing one's business model by using open innovation platforms and platforms can be created on all levels; international-, national-, regional-, company-, project level.

Examples of company models (1) are big corporations such as IBM that has several R&D departments and specialized units to handle commercialization through different applications with activities ranging from aerospace to healthcare.

An example of a network model (2) is SweTree Technologies: IP from 44 cutting-edge researchers is transferred to a privately held holding-company that in turn holds shares in a company specialized in commercializing plant- and forest biotechnologies.
An example of an international combined model (3) is SRI International that creates utilization through licensing, contract research and spin-outs through its specialized divisions and subsidiary Sarnoff.

Combined dissemination and commercialization model

This is a model that can be applied as a strategy to ensure technology dissemination onto the model above (i.e. as a platform strategy or business model) both on multiple and single entities. Core to this model is the separation between commercialization for-profit and technology dissemination for-societal-benefits. However, separation does not mean that only one of these paths should be pursued. On the contrary, a successfully designed model should be able to support simultaneous implementation of both. This is an interesting model from the standpoint of considering how to balance profit-making incentives with knowledge-disseminating incentives, in an ethical way.

An example of this model is the Human Proteome Resource (HPR) program publishes antibody profiles in the Human Protein Atlas based on proteins mapped in the program, while Atlas Antibodies is the commercial vehicle that produces, markets and sells antibody products developed and validated in the HPR Center.

These are all widely different models for utilization of research results but I think that it is interesting to see that some of the same underlying principles of these models can be applied in a number of different settings and contexts (e.g. universities, companies, innovation systems, individuals, networks, etc.). There is obviously also a whole range of pros and cons associated to these models but I won't go into detail in this post. Platform building, technology transfer and management of early innovation is just some of the subjects that will be discussed at CIP FORUM (6th-9th Sep) that I encourage you to register to, for a continued discussion.

Tobias Thornblad

(Contact via Twitter)

Book Review - Free by Chris Anderson

I have just read Chris Anderson’s book Free. Or to be fair, I did not actually read it. I downloaded it as a free audio book. One of the free versions of which you can reach the book Free.

Chris Anderson is, for those of you that do not know him, the author of the book The Long Tail and editor-in-chief of Wired Magazine.

Though Chris does not make any direct money on the audio book I consumed, he has a shortened (3h instead of 6h) version for sale. This is exactly his message in the book, that when the marginal cost of distribution reaches for zero, the prize will inevitably follow. This it at least true in the intangible economy where his two versions of audio books clearly show one of the several business models containing an element of free, which he lays out in the book. This model, freemium, is based on that you get something for free (the audio book) and you or someone else pays for a premium version (the shortened version).

The book Free also makes example of other ingredients in the complicated business model web. Since Chris is not only giving away the audio book, he is also giving away a pdf version, even though selling the paper book he must make money elsewhere. And yes he does, and do not make any secret of it either. One could almost see the whole book project as a conceptulizer and facilitator for his more lucrative business in selling his time. This through speeches or workshops for instance.

This brings us to one of the key factors in the (Anderson) Free model, except the zero marginal cost, the relation between scarcity and abundance. He argues that in a world, the intangible economy (or the economy of bits instead of the one of atoms), where the cost of producing one more copy of a specific product is almost none it will also be produced. So, this means that the seller has to find a business model where the scarcity comes in to play. Either if it is a constructed one as the premium service on for example FT.com or if it is the limited time of Chris Anderson.

What to learn from the book
I think the book has an interesting point in that we have to not just accept but to act on that free will be a key ingredient in many business models, and already is. This is especially interesting in relation to the new and emerging business models containing copyright, whether it is rights to music or to the written word, where I believe that the rights holders need to think hard on what they are selling. Is it a physical carrier of information or the information itself which is the valuable object?

The distinction between the physical carrier and the content becomes crucial in business model innovation and to actually see and construct the value proposition correctly to each group of customers, both in how if at all they should transfer money in return and also in what the product is and how it can be used.

Do I think you should read the book?
Well, Chris is sometimes repetitive and if you have the money but your time is limited, why not pay for the abbreviated version. The book has an interesting message and covers many innovative business models, which in themselves could be a reason to read it, but the main point might have been better off in a 30 page article.

In The New Yorker Malcolm Gladwell also writes about Anderson's Free and his conclusion is that not everything wants to be free. Chris Anderson responded to this in an interview with Charlie Rose (viewable online).

For those of you eager to know what he has to say, Chris Anderson gives an one hour presentation which is viewable through fora.tv.

[Update] Our Friend Anders Sundelin at TBMDB.com has written a post where he provides the full list of free bisiness models from the book.

[Update] For Swedish speakers, DN has written about the book here.


Johan Örneblad
Follow me on Twitter.

Intangitopia Picks - Brandinavia: Why Nordic Brands Rule

brandchannel.com, a part of Interbrand the brand managing firm, has a weekly newsletter that features different articles about branding. The latest issue dropped in to my mailbox early this morning with a lead story called Brandinavia: Why Nordic Brands Rule.

The story features why Scandinavia has nurtured such a strong branding culture. The writer, Barry Silverstein, finds arguments in such disparate phenomenon as vikings and social democracy. Even though there might still be more to explore about why the Scandinavians are good at design and branding, the article makes a good read.

Johan Örneblad
Follow me on Twitter.

Intangitopia Picks - Digital Europe

On Thursday, Viviane Reding, EU Commissioner for Telecoms and Media gave a speech on “Digital Europe”. An initiative for the next five years and how to boost Europe’s digital presence.

Have we really looked at the issue through the eyes of a 16 year old? Or only from the perspective of law professors who grew up in the Gutenberg Age? In my view, growing internet piracy is a vote of no-confidence in existing business models and legal solutions.

She asks herself an interesting question and the answer to it is in my view even more interesting. Think harmonized and easy ways of clearing rights between countries in Europe. Perhaps with only one internal market for all digital content...

First of all, we could facilitate the licensing of intellectual property rights for online services covering the territory of all 27 EU Member States . Today, right holders and online service providers need to spend far too much time and money on the administration of rights, instead of investing this money in attractive services. And consumers often cannot access online content if uploaded in another Member State. ... We had a similar problem when commercial satellite TV started more than 30 years ago. As right clearance for this per se cross-border service became increasingly complex ... I believe it is now time to develop similar solutions for the evolving world of online content.

The 1709 Copyright Blog also has a comment here.
A transcript of the full speech can be found here.

Johan Örneblad
Follow me on Twitter.

R.I.P. Ocean Tomo - Intangitopia Special Report

Last week Ocean Tomo sold their patent auction part to ICAP. This created some stir in the news and blogosphere, examples and very few (bloggers) actually seemed surprised. IP Law&Business , and Managing IP among others, have good pieces on the deal. That articles also feature commentary, also found elsewhere, by Ron Laurie from Inflexion Point who says that the major reasons were:
* The Ocean Tomo business model of targeting the low end of asset quality
* The difficulty to conduct diligence.
He also mentioned Intellectual Ventures' likely withdrawal from bidding at Oceant Tomo auctions as. That rumor, which fueled the debate of IV "puppetmastering" the auctions, led to another good IP Law&Business piece (pdf), an interview with IV chief of acquisitions Kevin Barhydt.

The 5$ million in cash and possible 5$ million in stock is a fire-sale price for OT, which for long time where hyped as the saviours of IP liquidity (also by myself, as found in previous posts here and here). Personally I must admit that I believed in the OT model for a while, but in hinsight it was more likely due to lack of experience. Regardless if it was IV in disguise who bought the OT patents or not, it seems as if buying patents "blindly" is not something people are less interested in doing - also likely related to the recent drop in financial strength of many firms. Regardless of that, I still would like to cast some light, in form of Ocean Tomo statistcs, on what I believe to be the death of the public IP marketplace.

Please find a Intangitopia Special Report - where 8 full Ocean Tomo auctions are analyzed inside and out in order to provide you with a better and objective view on what once was the great Ocean Tomo.

Complete Ocean Tomo Auction Analysis

View more Microsoft Word documents from Marcus Malek.

// Marcus Malek

(Follow me on twitter)

IP as a financial asset will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden

Book Review – Trading TV Formats

Trading TV Formats – The EBU Guide to the International Television Format Trade by Christoph Fey



The book is published by the European Broadcasting Union (EBU) in an attempt (I reckon) to somewhat formalize and establish best practices for a trade, which almost dates back as early as the first TV programs. But it is as vital as ever, with international format licenses on smash hits such as “Survivor” and “Who wants to be a millionaire?”. The international format business is worth some €2.4bn.

The book
It is outlined in three distinct parts with the aim to help licensors in packaging and pitching their ideas to producers or broadcasters. The parts cover how to package a format, how to protect the format, and an overview of several different court cases.

The part that deal with the package and how to strategically arrange for the license deal is quite hands on with straight on suggestions for clause constructions. It also discusses hoe to relate to the IP in the deal, both so you do not transfer more than you intended but also from a protective perspective.

The part on protection provides a good overview over issues to be thought of not to unintentionally let go of your potentially valuable asset.

Takeouts
The part of the book which I found most interesting is the one that discusses the rights of the buyer; what is it he is licensing? It all comes down to the issue of that TV formats as such is an unknown concept for copyright legislation. There have however been attempts to actually award the creator of a format some sort of protection for her work. Either if this is through copyright or through different types of unfair competition legislation.

To me the issue of TV format protection shows the sometimes inaccurate or at least inflexible way IP legislation can behave. Formats have been licensed for half a decade with, I guess, quite good rate of success. But the more valuable the formats become, both in themselves for TV production but also for external merchandizing, the greater efforts are taken to circumvent the established practices. One other factor might be that the TV broadcaster market have gone from almost only state owned public service companies to a greater breath in broadcasters today.

I think this is an interesting area and will get back to it here at Intangitopia in the future. Especially since it in such clear way shows many of the interesting characteristics of IP; intangible but defined by a tangible transactional object (compare the “Format Bible” to a patent for instance), value driven by transactions and transactional structures can be custom made in almost any way.

Johan Örneblad
Follow me on Twitter.

Intangitopia Pick - Larry Lessig on Copyright

For the last couple of days, Intangitopia posts have been mostely by shorter posts. The mix of long and short posts will soon be restored. However, we would like to share the most important talks and reports via this blog as well. Enjoy Larry Lessig's exceptionary presentation skills and thoughtful but provocative message.

Intangitopia pick - Fred Wilson on Disruption

I saw this slideset and I thought that it was very insightful: the coming disruptive digital development.

Disruption

View more presentations from fredwilson.

Intangitopia Pick - The Future of Content

In relation to two recent posts by Mathias (here) and Johan (here) where they bothe highlight a new way of delivering content, stored digitally, but in a physical medium. To me the idea is great as people (including me) often have an easier time paying (or even prefer) paying for something that has a phyisical aspect. Nowadays technology makes this possible (as seen in the two examples) and the distribution chain is "skipped" in favor of on demand local production.

A Digital Library, Free to the world
Brewster Kahle speaks about this in an inspiring TED talk from 2007, sharing his vision of a unified enormous digital library, brining knowledge to developing countries and helping education. The ingenuity is that he applies pragmatic methods for scale at low cost (e.g. using the same production method as described in Johan's post) but also with a grand vision including audio and video. Best of all it is already started and actually feasible.


// Marcus Malek (follow me on Twitter)

New Addition - Intangitopia Picks

As you may or may not have noticed, we just added another tab on the right side "Intangitopia Picks".
This section is where we will feature shorter blog posts where we choose to highlight interesting performances, thoughts, presentations, reports etc. that are made by people we believe to be among the best.

As attention is the new scarce resource we thought this could be a way to firstly give credit where credit is due and secondly act as a filter for you, our readers. Hopefully you will find our picks as interesting, inspiring or just jaw dropping as we did.

Enjoy!