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September 01,
2000 San Jose, Calif. EDA companies and tech firms need to strategically build, acquire and protect their intellectual property to turn patent and copyright portfolios into revenue. That was the message delivered here at the EDA Consortium’s Emerging Companies Committee meeting by Irwin Gross, partner and IP litigator at the law firm of Wilson Sonsini Goodrich & Rosati (Palo Alto, Calif.), and by Julie Davis, executive vice president of Aon Risk Services, a corporate risk management firm. Gross said that as recently as 1982, measured by the market cap of the 500 largest companies in the United States, "intangible assets” represented only 38 percent of the total value of companies. “Today the percentage has increased enormously," said Gross. "Almost 70 percent of the total value measured by the market cap of America’s 500 largest companies' profits today is through intellectual property.” Gross said that over the last 10 years, the number of patents requested and issued has skyrocketed. "In 1990 Microsoft had one patent-today they have 800," said Gross. "At the same time Dell, Oracle, Sun and Intel have experienced fivefold increases in their portfolios.” Gross said patent and licensing revenue grew to $110 billion in 1999, a 700 percent increase over the last eight years. At the same time, he said, patent infringement litigation has increased 100 percent since 1991 and trade secret litigation has also increased. Massachusetts Institute of Technology professor of economics and management "Lester Throw said that 'in many ways, intellectual property is becoming the only sustainable competitive advantage’“ said Gross. "It is something the EDA industry is aware of and is now something that the rest of the economy is catching on to.” Leverage points for IP Gross suggested that companies could leverage their IP to create a distinct market advantage in several ways. Companies should not only protect unique parts of their current technologies, he said, but "patent in paths where their technology is headed.” In doing so, Gross said, companies can create a competitive advantage. Gross also suggested that companies create patents with "an eye on infringement," making sure someone can't infringe a patent and that your company can tell if its patent is being infringed upon. Gross said companies also shouldn't simply focus on protecting their technologies but should also protect their business strategies through copyrights and patents. He pointed out that many companies-Rambus and Numerical Technology, for example-have built entire businesses out of licensing patented technologies. In addition, companies need to be aware of which geographic locations are best suited for IP litigation. Gross said that the Silicon Valley is by far the most advanced for technology intellectual property litigation because the judges and juries are fairly technology savvy. ‘Burger King’ jury "If you try a case somewhere else, you run the risk of having a jury composed mainly of the second shift at Burger King," said Gross. Julie Davis, the second speaker at the meeting, said to help companies protect their IP and absorb the costs of defending an IP litigation, a new breed of insurance carriers and consultants is now emerging. Davis said that in the past only a few insurance companies have offered policies protecting IP, but often the policies were restrictive in their terms and conditions, had an insufficient capacity that covers less than $70 million and the underwriting itself was extremely expensive. She said that unlike typical IP insurers, risk management firms, such Aon Risk Services, insure patent portfolios of medium to large companies and often write policies protecting entire portfolios or segments of a portfolio. “With risk-management services we are learning how to take risk and turn it into value creation, and we are also learning how to turn risk into opportunities," said Davis. www.eetimes.com Copyright 2000 Cmp Media Inc
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