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Carel Smit

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IP Monetizers and how they can help you

June 11, 2015

 

 

IP is nothing more than information – mere words or drawings on paper, but arranged in such a way that, ounce for ounce, they make the paper it’s written on worth more than just about any other commodity on earth.  It’s a remarkable thought and one that I will be returning to repeatedly during the course of this book.

 

Patents and other forms of IP can and should be treated just like other assets and tangibles.  In other words, they can be sold (assigned), leased (licensed), mortgaged, or used as security, like other high value property.  All of this means that, for the first time in history, IP is becoming more liquid, easier to trade, and hence easier to value.  This means that companies which ensure that they have mechanisms in place from the very beginning to identify, capture, and exploit their IP will be at a considerable advantage to other players in their market.  It adds a whole new level to the bottom line, can be used for tax purposes, and can be depreciated, just like other business assets.

 

And once sufficient levels of IP transactions have occurred, we’ll start seeing the rise of the IP investment bank, patent exchanges similar to stock exchanges, IP-based securitization transactions where IP forms the basis for remarkable funding agreements, and other structures and players who will make the most of the increased tradability of these commercial instruments.  The first versions of these are starting to appear and hold great promise in creating a whole new asset class and a meta-economy based on those assets.

 

The late 2000’s saw the rise of a new class of person: the IP intermediary.  These are people who neither create IP, nor consume it.  Rather, the IP is the medium through which they do business. They are the IP market makers. 

 

These individuals and companies act as IP brokers, patent auction houses, IP clearing houses, specialized patent assertion funders (also known as patent litigation funders), licensing specialists, and they ensure that the value locked in traditional forms of IP is unlocked and becomes more liquid.  They are starting to play a valuable role in ensuring that IP is moving from the shadows of the business world to the front pages of newspapers everywhere, and that IP is no longer seen as an expense but as a revenue generator in itself.  The recent spate of mobile phone patent wars between Samsung, Apple, Google, HTC, Sony, Ericsson and just about the whole of the telecoms community has served as a wake-up call to companies that the ideas captured in formalized IP rights form the very basis of what we pursue in business today and ultimately serves as the ultimate business multiplier.  And the best part is that these business tools are readily accessible by even the smallest players if they take appropriate steps at the start-up stage.


IP and the Small Guy

 

So if big companies struggle with this, what chances do the small guys have?  Well, these recent developments and growth in the IP industry represent an enormous opportunity for smaller players if they follow the key steps that form the basis of this book.  When you’re starting up, you don’t need hundreds of patents or trademarks, and you certainly can’t afford them either.  But if you need to engage funders, investors, business partners, co-developers, or distributors, then having your intangible assets (your ideas, schemes, contacts, business methods, supplier lists) concretized in some form of formalized IP rights is much better than nothing and will give you a significant advantage over other players in your field.  Having your intangible assets formalized, captured and protected is always better than having them floating around in a big lather of uncertainty over whether you actually own the idea, brand, name, invention, database, or other information that you have created and need to share with potential partners.  Having a legal monopoly providing you with an entitlement to a field of technology is the best possible form of leverage you can have and can be a near-insurmountable barrier to entry.

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