Capitalizing on Unused IP

September 6, 2011 By Aminda

An interesting article in the Ottawa Business Journal offers tips to companies wishing to capitalize on unused IP that doesn’t have a path to market within the company. The authors point to the trend of buying and selling unused IP, citing the case of Nortel which, earlier this summer sold a portfolio of patents at auction for twice the amount analysts had expected.

This method of selling is not the only means of levering IP as a resource and the article outlines a strategy for commercializing unused IP through spin-out ventures. As the article says, “in a world of widely distributed knowledge, companies can’t afford to rely entirely on their own research, nor can they afford to let internal innovations sit idle. They have to open their doors to let innovation in and out.”

To make a successful spinout, a technology must still be given due diligence to ensure there is a market for the technology. The authors cite cases of companies too eager to cut costs while in crisis mode due to the recession. As a result, those liquidated assets did not get the attention needed to make them viable. Success strategies also include developing the right mix of team members. This team includes those that were involved in the development of the technology and are passionate about it as well as outsiders who can provide necessary business savvy.

Finally, it’s suggested that the parent company choose payout in the form of pre-market equity in the new venture, which will give them a more vested interest. Demanding royalty payments, on the other hand “takes money out of the hands of a startup when they desperately need it.”

 



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