Over recent decades, intellectual property (IP) rose from the backwater of the legal world, into the mainstream of business relevance and plays a central role in the modern economy.
IP, which is an intangible asset and a legally protected right, has become a key economic driver. More than 80% of the cumulative value of public companies is attributed to IP, being close to 100% in emerging or start-up ventures. Contributing about a third of the added value of the modern economy (meaning that, on average, a third of the value of a product or service can be attributed to intellectual property), IP is the single most important economic factor in today’s world.
The power of IP in shaping the economy, can best be seen in the Israeli example, where it played a decisive role in converting the country’s economy from a developing status into a first world economy. The export of IP (in the form of out-licensing and M&A deals) brought more foreign income into the country than any other type of export. With the highest per capita number of technology-based start-ups and of venture investments, and with major R&D centers of more than half of the Fortune 500 companies, the IP-based business boom in Israel may be expected to continue to play a decisive economic role for many years to come.
Extraordinary value
Patents, the most important IP of the technology world, is a driver of technology-based deals and became an asset class by its own rights. Patents may be monetized, mortgaged, enforced, or used as collaterals. The expected sale of the Blackberry 38,000 assets patent portfolio with a rumored price tag of several billion dollars, is but an example. The October 2020 huge $1.9B patent infringement damage award (the largest in US history) that Cisco was ordered to pay to the cyber security company Centripetal Networks, is another example of the extraordinary value of this asset class. Patent filing worldwide is increasing constantly and is expected to reach about 3.5 million patent applications in 2020, out of which about 1.5 million are in China and close to 700,000 in the US.
Patents became also critically important for academia as the only means for reaping benefit from their research. Yissum and Yeda, the respective technology transfer arms of the Hebrew University and the Weizmann Institute in Israel, have been awarded hundreds of millions of dollars in royalties and other financial instruments by licensing its patents and other IP to commercial enterprises. The $1.1B patent infringement to the California Institute of Technology (CalTech) in a patent infringement case against Apple and Broadcom, is another example.
As a result of the Covid-19 pandemic, industrial manufacturing and export dimmish in importance as economic forces. At the same time there is a marked increase in the exchange of ideas and export of knowledge; an activity that knows little borders. The pandemic has had some immediate positive reactions including some Covid-related open innovation initiatives, non-enforcement pledges by owners of patents of relevance to Covid-19 treatment or diagnosis, waiver of profits of patented products with relevance to treating or preventing this pandemic (such as Pfizer’s Covid-19 mRNA-based vaccine).
Increase in patent filings
However, there is, nonetheless a global increase in intellectual property-related activity hinting on the increased importance of these assets during and after the pandemic. The trend of increase in patent filings continues and in China, for example, after a decline in 2019, the cumulative filing of patent applications and of utility models (a 10-year patent-like right) has increased in 2020 (through the end of October) by about 11% and 33%, respectively. There has also been a marked increase in enforcement activity of IP rights in 2020 and IP firms throughout the world have reported a year of record activity.
The growing complexity of global IP challenges, including in healthcare and sustainability and the collaborative and open innovation initiatives intended to address such complex problems, hint on a change in the role played by IP from that of maintaining exclusivity, to one that supports collaboration and joint ventures, where each participant donates its IP to achieve a common goal.
Although with a modified business role and with increased complexity in choices that need to be made, IP will remain a key driver of economic activity. IP stakeholders would be wise to have available to them the right tools and expertise to permit them to successfully navigate this challenging road towards creation of intellectual property, registration, and its optimal utilization.
The author, Dr. Ilan Cohn is a patent attorney with expertise in IP strategy, building value and benefitting from and enforcement of IP rights. He is a founding partner in the IP firm of Cohn, de Vries, Stadler & Co.
Brandvoice is Forbes’ commercial content brand
