Monthly Archives: September 2010

Want to Know More about IP Strategy? A Selection of Posts for In-House and Outside Counsel

The IP Asset Maximizer Blog Greatest Hits--At Least in Relation to IP Counseling

This week, I am speaking at the Midwest IP Institute.  I will be participating in a “fire side chat” with my good friend, Edna Vassilovski of Stoel, Rives LLP. Our session is entitled “How Patent Prosecutors and In-House Counsel Can Provide Work Product Better Aligned with Client’s Business Needs.”  Specific topics we will discuss include:

  • How clients’ views of IP and intangible assets are changing and ways both inside and outside counsel can stay relevant to clients today;
  • What you can do to help clients obtain meaningful patents at reduced cost;
  • How to really understand clients’ business goals and how to help make those happen; and
  • How to help clients monetize their patents

I am really looking forward to sharing my passion for IP business strategy with in-house lawyers and outside counsel, especially since I will be doing this with someone like Edna who I think has a great grasp on client service from a business perspective.  In preparation for this talk, and for the benefit of those attending the the session who would like to learn more about my perspective, I thought it made sense to revive some previous blog posts from the past couple of years where I put forth my positions on why I believe that IP legal service–whether provided by in-house or outside counsel–often fails to create value for clients and how the value proposition for clients can be improved.

Regular readers of this blog may recognize many of these posts, which might be considered a “greatest hits” of my opinions of problems with how we provide IP counseling to our clients.  I semi-seriously refer to myself as a “recovering patent attorney,” and for those who wonder why they should consider my opinions as relevant to their practices, you should appreciate that I am not the only person who is calling for change in how legal services are provided.  The good news–at least for me–is that business people are listening, and anyone who wishes to remain relevant in the long term should take heed, at least to know what alternatives their competition might be offering to their clients.

Without further ado–here are a few posts I think are worth highlighting for those seeking insights on how to better serve their business clients in the area of IP.

July 2010:  IP Lawyers:  Enough About Bilski Already–Start Talking about Things that Create Value for Your Clients

April 2010:  What Outside Counsel Don’t Understand about Patent Marking in the Corporate Environment

March 2010:  A Case Study of the Failure of Patent Attorneys to Protect a Major Corporate Innovation

December 2009:  Issues with IP Counseling in Corporate Innovation Processes–Why Innovation Professionals Ignore their IP Lawyers

May 2009:  IP Management as an Organizational Issue

May 2009:  IP Counsel Can Provide Value-Added Services for Clients by Assisting in Open Innovation Efforts

April 2009:  Innovative Methods for Corporate Legal Managers to Reduce IP Counsel Costs

April 2009:  The Dirty Little Secret of Patents is that Most are Worthless to Their Owners.  Here is Why

March 2009:  An Introduction to Patent Monetization Resources for Corporations and Entrepreneurs

March 2009:  How a Patent Strategy Focused Only on Obtaining the Lowest Cost Patents May Reveal a Company’s Future Inability to Remain Viable

February 2009:  Chief IP Counsel:  Stop Trying to Change How Your Lawyers Bill You and Focus on the Model They Use to Provide Your Legal Services

January 2009:  Without Disruptive Innovation, Many IP Law Firms are Destined to Meet the Fate of Buggy Whip Manufacturers

January 2009:  What is an IP Strategist?  A Lawyer Who is not Afraid to Say “No”

January 2009:  Confessions of a Recovering Patent Attorney and Why I Have Joined the Ranks of IP Strategists

July 2008:  If You Have to Ask Your Patent Attorney what Your Patent Strategy is, You Don’t Have One

July 2008:  Only You Can Prevent Patent Expertise Creep:  Recognizing the Proper Role of Your Patent Attorneys

R & D Tax Credits Mean Little to Businesses That Do Not Competently Manage Their Intangible Assets

Companies that fail to properly identify, capture and protect their intangible assets leave much R & D tax credits on the table.

This week, President Obama will announce a $100 billion proposal to stimulate the economy, where much of the focus is to be placed in the area of R & D tax credits. In addition to making the R & D tax credit permanent, Obama will seek increasing one of the credits available from 14 to 17 percent.

This announcement brought to mind a blog post that I wrote almost 2 years ago addressing how I believe that many companies fail to capture all they are entitled with respect to existing R & D tax credits due to the fact that most companies do a poor job identifying, capturing and protecting their intangible assets.  So, irrespective of one’s opinion of whether this new stimulus plan will help the economy, it is my strong belief that many–if not most–corporations, both large and small alike, will fail to fully capitalize on the tax credits available to them because their organizations do not possess the accounting methodologies necessary to identify, capture and protect their organization’s intangible assets.  Without such infrastructures, which are known generally as “intellectual asset management” systems, it is virtually impossible to accurately assess an organization’s entitlement to tax credits associated with R & D spending.

The blog post mentioned above, from November 5, 2008, follows:

I recently heard a group of tax experts spoke about issues related to intellectual property (“IP”), and since then I have been thinking about how my clients could benefit from better incorporating IP into their corporate tax planning and accounting processes. The topic is very complex and, as such, I will leave the details to the experts. (Feel free to contact me for recommendations in this regard.) I believe it is nonetheless valid to make the following statement: if your tax experts do not include IP issues in their tax planning and accounting processes, your company is likely leaving considerable money on the table.

As these experts discussed IP-related tax issues, it became apparent to me how important IP asset management should be to corporate tax planning and accounting efforts. However, my experience demonstrates that few corporate managers are aware that such savings are possible. Even if they know about this opportunity, it would likely be exceedingly difficult for them to capitalize on this savings because few organizations possess the IP infrastructure that allows efficient capture and assessment of costs associated with obtaining and managing IP assets. And, without such IP accounting information, the tax savings cannot be appropriately captured.

A word of qualification–I am in no way a tax expert. Nevertheless, I do understand that in order to capitalize on tax deductions and tax credits related to IP, accounting processes must be able to determine the costs of obtaining and managing such assets. It would then make sense that IP attorneys such as myself would be contacted on a regular basis to assist tax experts in the information capture process. In my years of high level intellectual property practice, I was never expressly brought into the tax planning or accounting processes. I must therefore conclude that most, if not all, of my clients failed to adequately capitalize on the tax savings opportunities discussed by the tax experts. Indeed, the tax experts who I heard speak confirmed that many companies are effectively ignorant about how proper IP asset management and tax planning can reduce overall corporate tax liability.

How can a corporation capture this tax savings value? The first step is certainly to obtain education about the categories of tax savings that can be captured through improved IP management programs. Management would be well-served in this regard by finding the necessary IP and tax expertise to identify opportunities for value capture through tax savings. Due to the highly arcane nature of the interplay between tax and IP, I would advise one to seek specific expertise outside of their organization. This will require payment to consultants, which could be a limiting factor for many corporations. However, without the initial investigation by the appropriate consultants, the result will be that no IP-related tax savings will be captured.

If this investigation proves that demonstrable IP-related tax savings are possible, the next step would be to institute an intellectual asset management (“IAM”) system that allows the corporation to capture the costs associated with obtaining and managing IP-related assets. Many corporations have successfully developed and executed on IAM systems by internally developing robust business-focused IP management processes. Such “home grown” solutions to IP management can be very effective, however, long term management commitment and infrastructure development are typically needed for success.

For organizations seeking to obtain IP-related tax savings more quickly and (possibly) with less infrastructure development, an IAM software solution may be beneficial. Examples of such software systems are Decipher, Anaqua and Lecorpio. These software solutions can be expensive to implement and maintain, but for many corporations the reduction in tax liability may clearly demonstrate immediate ROI associated with such a product.

To reiterate, my knowledge of tax is minimal. However, I feel strongly that much opportunity exists for corporations to capture tax savings through better IP management processes.