At first, I would like to express my gratitude towards Mark Partridge and John Ambrogi from Partridge Partners, who organized this seminar to share their knowledge, wisdom and experience in the field of Intellectual Property.
When the Legal department of a company marries the marketing strategy, magic happens. Let us explore how.
Any intellectual property can be categorized and secured in four ways:
- Distinctive Brands –> TradeMarks.
- Original Content –> Copyrights.
- New innovations –> Patents
- Trade Secrets –> NDA
While a majority of the companies perform this practice, only a select few know the true art to weaponize these assets as part of their business strategy. During the seminar, Mark shared several methods to make money out of these intellectual properties from real-world examples.
- Premium Price: The law allows the brands to raise the price of their products accordingly. This is the reason why Coke is more expensive than a regular Cola, drugs from big pharma companies are ridiculously priced over the generic medicines with same ingredients, in-store label brands sold at a lower price than the recognized ones, etc.
- Greater Market Share: A traditional strategy with a patented product is that before the expiration of the patent, the prices are raised to capture maximum value, however, Equal, the low calorie sweetener, did the opposite. They lowered the price and captured a big market share and established a loyalty over the market. Once, the patent expired, they continued their existence with their brand value and a large presence in the market.
- Royalties and Licensing: If you have an amazing product with a high demand, let everyone use it. License your intellectual properties for a fee. If it is actually that good, then you might be in the league of Seattle Software, who later became Microsoft using this strategy.
- Asset Value: The Intellectual property itself has a hidden asset value which might be useful for some. It is surprising to know that a yellow page directory company, R.H. Donnelly paid $345 million to buy the domain name for business.com. Ever filed for bankruptcy and had no idea what to do? No problem. So did Nortel, and later sold all their intellectual property for $4.25 Billion.
- Financial Assets: It is also possible to convert the intellectual properties to financial assets and have people invest in those. This is what the famous musician David Bowie did with his songs. He made bonds out of them and people started investing in them because of the royalties earned on it. Many musicians and writers started this practice henceforth.
- Market Value: The brand value not only enables the company to sell at a premium price, but also increases the valuation of the company itself. A recent acquisition of SABMiller by AB InBev is a perfect example. Out of a $107 Billion deal, only $13 billion were comprised of tangible assets such as equipment, properties, plants, etc. The remaining represents the power of a brand.
Later in the seminar, an important point was touched about Patent trolls, an unethical way to make money out of the intellectual property. A patent troll is a person or a company who foresees the upcoming technologies and buys related patents to it. They never make or discover anything, but rather sue the ones who actually do the work. There have been cases of individuals rising from bankruptcy to millionaires with such malpractice. Sure, it is another way of making money with your intellectual property, but is it really above your dignity ?
SMarketinGuru 