February 1, 2021 By Erich Spangenberg 5 min read

Intellectual property is becoming one of the most valuable asset classes on the planet, with the pace of innovation being the ultimate competitive advantage across global technology sectors. Patents are one of the least understood and least effectively deployed asset classes. Intangible assets — which according to US research firms now represent more than 84 percent of the S&P 500’s market value — are notoriously difficult to manage, value and transact. Leading think tanks estimate that in the US alone more than USD 1 trillion in IP assets are going to waste because they are mismanaged and underutilized.

Business executives including CFOs, CTOs and Risk Managers are looking to use traditional business metrics to measure the performance of this critical asset class. IPwe and IBM are working together to create a new paradigm for patents.

IPwe has amassed a world-class team of patent, intellectual property and financial experts and AI and blockchain technologists to deliver leading-edge IP solutions — both as connected solutions on the IBM Cloud and bespoke, integrated solutions — enabled by AI and blockchain technologies. The IBM partnership with IPwe will help improve the performance of this critical asset class and unlock the value hidden away in patents and intellectual property on a global scale.

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The problem with patents

The pace of global innovation is ever increasing, with over one million patents granted worldwide every year. Yet the ability to capture a true measurable competitive advantage from the significant investment in patents remains elusive. Often the sole management metric applied to patents is “how many do we have” or “how many do we plan to get.” Performance metrics that are applied to traditional assets on the balance sheet, such as return on investment, have not been applied to intellectual property.

Financial accounting practices have not kept up with the dramatic transformation in most company’s balance sheets and as a result intangibles are misunderstood and undervalued by investors and the market. This is especially true for small and medium sized companies and innovation-intensive companies of any size.

The patent ecosystem is not business or management friendly. Because these assets can be difficult to understand, management is often put in the hands of staff who excel at creation but are not trained in asset management. Some of the challenges in the patent world include:

  • Understanding and determining the strategic, protective, financial and transactional value of the assets relative to the cost of obtaining and maintaining them is difficult.
  • Businesses often have no idea which patents are truly relevant to their business or their competitor’s business.
  • Metrics used for patent portfolios are often tied to quantity — “how many patents do we have?” — which is a relatively unimportant number since one important, groundbreaking patent is far more valuable than 100 incremental patents.
  • Ownership records are inaccurate up to 30 percent of the time.
  • Once business decisions are made, actually executing on a strategy or transaction can be extremely complex and expensive.

Companies pay a great deal of attention to managing physical and financial assets such as offices, property and equipment, cash and receivables , but they often neglect the intangible assets that represent the greatest part of their value.

A new age of IP Solutions

Applying the power of AI and blockchain to IP assets enables a paradigm shift in how IP is understood and managed. Companies that understand and adopt this new paradigm will be rewarded.

Last year, we announced the inclusion of IPwe — the world’s first AI and blockchain-powered patent platform, among our selection of the next wave of enterprise blockchain business networks. The Paris-based start-up has since deployed a suite of leading-edge IP solutions, removing barriers by addressing fundamental issues within today’s patent ecosystem.

IPwe is partnering with IBM to accelerate its mission to address the inefficiencies in the patent marketplace. IBM Cloud and IBM Blockchain teams are working closely with IPwe on a multi-year project to assist IPwe in its mission to deliver world class solutions to its enterprise, SME, university, law firms, research institutions and government customers, with a heavy emphasis on meeting the needs of financial, technology and risk management executives.

In addition to giving patent owners tools that provide greater visibility, effective management, and ease of conducting transactions with patents, the IPwe Platform reduces costs for innovators, and creates commercial opportunities for those that wish to partner or engage in financial transactions.

The IPwe Platform, is a comprehensive solution that helps patent owners better understand and manage their patent assets. The IPwe Platform enables patent owners to:

  • Better understand your own patent portfolios — AI driven analytical tools identify commercially or financially interesting patents and evaluate relevance, importance, transactional value and other metrics that are easily understood.
  • Understand your position and the IP-based competitive landscape with tools to compare the relative strengths of your portfolio with your actual and potential competitors’ IP positions.
  • Evaluate and manage IP risk in ways that were simply not possible before, by proactively identifying sources of risk and utilizing mitigation strategies targeted to managing that risk on a far more cost effective basis.
  • Make it much simpler and less expensive to conduct all kinds of patent transactions, including acquisitions, licensing, sales, insurance, patent pooling and financings.

With patent assets, security and privacy being paramount, the IPwe platform leverages smart contracts underpinned by blockchain running on IBM Cloud.

IPwe’s mission is to drastically improve the management of this asset class and reduce the friction in patent transactions once appropriate and informed management decisions have been made. AI lowers discovery costs and blockchain lowers transaction costs. IPwe’s platform, based on The Linux Foundation Hyperledger, leverages these exponential technologies to make it easier for business executives to effectively understand, interact with, and manage these assets. The IPwe Platform is a place to begin to improve your IP performance.

IBM and IPwe have already joined together to create the Global Patent Registry (GPR), the world’s first blockchain registry collecting current, active, and historical patent records in a single freely accessible registry. By providing full transparency in patent identification and ownership, IPwe solves the fundamental problems of inaccurate data, outdated ownership records and lack of transparency in the IP ecosystem.

We are now working together to add leading-edge AI and blockchain features to the IPwe Platform, including smart pooling and enhanced reporting capabilities designed for business executives and IP professionals, like valuation, innovation, competitive analytics and FTO reports. Targeted for Q2 2021 is the advanced tokenization of patent and patent attributes that has the potential to fundamentally change how innovators and the capital markets interact and transact over the IPwe Platform.

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From time to time, we invite industry thought leaders, academic experts and partners, to share their opinions and insights on current trends in blockchain to the Blockchain Pulse blog. While the opinions in these blog posts are their own, and do not necessarily reflect the views of IBM, this blog strives to welcome all points of view to the conversation.

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