IP Cleanup

Perhaps you lack Jim Clark’s knack for coming up with profitable new ideas. Not to worry-your company may have plenty of old ones lying around. According to the authors of Rembrandts in the Attic, it pays to root around in your company’s patent portfolio and dust off drawings and formulas you thought you’d never look at again.

David Kline is a former war correspondent who now consults on business strategy. Kevin Rivette is co-founder and chair of Aurigin Systems, a company seeking to develop “intellectual property (IP) management solutions.” The two are attempting to convince CEOs to manage their firms’ IP just as carefully as they manage operations and finance. Surprisingly, it seems that many companies underestimate the worth of their own patent portfolios. And in an era when successful companies are set apart more by their ideas than by their resources or equipment, that can be a costly oversight.

A patent needn’t be turned into a commercial product in order for it to pay off, Kline and Rivette advise. Dow Chemical, for example, once suffered from patent schizophrenia,with each division asserting its own patents in different ways. But after an “IP audit” in the early 1990s, Dow began to coordinate the licensing and commercialization of the firm’s 29,000 patents (see “In Search of Innovation,” TR November/December 1999). The firm immediately saved $50 million in taxes and administrative costs by abandoning or donating unneeded patents, and watched licensing revenues grow from $25 million in 1994 to $125 million in 1999.

Other encouraging examples fill the book, and executives looking for ways to exploit their patents will find many options. But much of Rembrandts in the Attic is just advertising for “IP landscape maps,” “patent citation trees” and other tools used by Aurigin Systems to show how a company’s patents overlap, complement or infringe those of competitors. And the authors sidestep the ongoing debate on the morality of the patent system, especially when it comes to the patenting of broad concepts such as Dell’s continuous-flow sales and distribution model or of scientific knowledge such as a gene’s sequence.

In Owning the Future (reviewed in TR, May/June 1999), Seth Shulman argued that today’s patent practices boil down to “an uncontrolled stampede to auction off our technological and cultural heritage.” (See “Software Patents Tangle the Web,”) Kline and Rivette dismiss this as Luddism. “The expansion of patentable subject matter into new and ever more abstract realms has always met with resistance,” yet scientific discovery and innovation have only intensified, they assert.

This is a book about maximizing profits, not about morals, and on that level it is a success. But inadvertently, it also opens a window on a disturbing world, one where ideas can be bought and sold like chattel and executives would rather sue each other for patent infringement than think an original thought.