February 11, 2011
Despite the apparent value of their IP assets, most companies fail to manage well on two levels. Not only do they leave value unrealized through dormant IP, but most fail to economically manage the revenues from IP they currently realize through licensing. In fact, researchers at Harvard University estimate that 67% of companies own technology assets they fail to exploit, and estimates put the value of those wasted technology assets between $115 billion and $1 trillion.
There are no standards, processes or best practices capabilities within industry to help companies get control of and monetize their IP. Recent estimates from the Financial Times estimate that companies are currently using less than 25% of their current IP portfolios and are just now beginning to focus on getting value from these underutilized assets. In addition, a recent Gartner Research report noted that IP rich enterprises are projected to increase IP revenues by at least 50% through 2004 through proactive Intellectual Capital Management (ICM) and IPAM programs. In addition, they stated that 80% of the Global 2000 will have major IPAM projects underway by 2002. This new business focus brings huge challenges involving commercialization management. IP Commercialization management includes:
- obligation management
- royalty management
- alliance management
- asset monetization
- intellectual capital management
- asset management.
To properly commercialize their IP, companies must first collect and organize what IP they have. Today, most companies have no centralized location for their intellectual property information. Worse, they have little or no ability to insure that they are collecting revenues on the IP-related agreements that currently exist. Literally hundreds of millions of dollars per year are lost or wasted due to the lack of a corporation’s ability to pro-actively collect, manage and maintain the IP licensing agreements they know about. Conversely, companies which license in intellectual properties need to ensure they are not making payments they need not make on properties which are not being used, or on agreements which have expired. A recent study by Deloitte & Touche reports that 80% of their royalty audits find errors ranging in value from 8-45% of the total revenue reported. This amounts to billions of dollars a year in cash flow and revenue reporting problems.
While many corporations have focused on some of the larger commercialization agreements that they have, due to general inefficiencies in the process, they are unable to spend any time on the much more numerous but less lucrative agreements in the rest of their portfolio. Due to the completely manual process of managing these agreements, they often miss obligations and royalty opportunities in these agreements. There is a tremendous need to automate the management of these “non-homerun” agreements and transactions to better insure minimal liability and maximum return.