Iipcc 2012 ip valuation


Published on

Presentation at International IP Commercialization Conference on Feb. 24, 2012 about maximizing IP value creation at start-ups

Published in: Technology, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Iipcc 2012 ip valuation

  1. 1. IIPCCHK  2012:  “Hong  Kong  as  the  Global  IP   Hub  for  China  on  GD-­‐HK  CEPA  Pla@orm”   Plenary  Session  on  “IP  ValuaFon”   Maximize IP Value Creation for Start-ups
 (based on Silicon Valley Success Stories)
 初创企业创造最佳知识产权价值的典范 (基于硅谷的成功案例) Prepared  by:    Al  Kwok  (郭灿辉)                    President,  CASPA  PRD  Chapter                                        Governor  &  Founding  Member,  Savantas  Policy  InsFtute                    Principal  IP  Advisor,  STARS  FoundaFon                    Founder,  China  InternaFonal  Intellectual  Property  Services  Ltd.                    Former  VP  &  CIPO,  NetLogic  Microsystems  (“NETL”)                    Feb, 24, 2012
  2. 2. Global  IP  Trends  &  Best  PracFces   2
  3. 3. CASPA ConfidentialKnowledge-based Economic TrendEvolution of Intangible Assets – U.S. Companies 3
  4. 4. CASPA Confidential Raising  Values  of  a  Product  (IP  is  the  Core)   Price = Values to Customers •  价格  =  给客户的价值  =>    价格  =  成本+服务+IP授权+品牌   (价格 = 给客户的价值) •  Pre-sale services mean design- win efforts providing solutions to address customers’ problems Brand Recognition •  This is the best sources of (品牌认知) innovation and ideas for the next- generation products (Product & Tech Roadmaps)Increasing Values (提高增值) •  Post-sale services mean reducing Embedded IP Licensing customers’ costs of ownership, (隐含IP授权) extending the useful lifetime of the product, generating recurring sales & product improvement ideas •  Embedded IP licensing means the Pre- & Post-Sale Services customers can use the product IP for (售前及售后的服务) their own product uplifting & differentiations - e.g., “Intel Inside” •  Brand recognition means the Manufacturing Cost customers recognize the product (生产成本) and its maker for superb quality, performance, reliability & services 4
  5. 5. CASPA Confidential The  Value  Hierarchy  (Business  Models)   Presented  at  Intellectual  Property  Symposium  2002  in  Guangzhou  on  December  10,  2002   Brand Innovation Intellectual Property (IP)Values/Profit Margins 50% Applications/Serv. (Mkt. & Standards) System Integration (Archit., …) Outsourcing 40% Trend Engineering (Design, ODM,..) 30% Manufacturing (Process, OEM) Consumer recognition Core competency 5
  6. 6. CASPA Confidential  The  Value  Chain  (=>  DemandSupply  in  Alignment)  Great  end-­‐to-­‐end  push-­‐pull  effect  for  market  scaling  thru  lifecycles   For Consumer Electronics Market (Ecosystem) Consumer Markets (End Users)Service Providers Various Applications/ServicesSystem Manuf. Differentiated Application DesignsSystem Integrators System Application Platform(s) Generic Reference Design (w/ other chips) IC S/W Platform (API, drivers, etc.) IC Design houses IC H/W Platform 6
  7. 7. CASPA Confidential IT Business Value-chain (& Learning Cycle)  Hierarchy of IT Business (from “service to consumers” as the top of the value-chain with highest Gross Margin then down): Service requirements drive H/W platform improvements Service (to consumers) <=> Domestic market (localization) (China market is huge enough) Application (for service) <=> Domestic market (localization) (China centric standards & IPs) Network platform <=> Domestic stds. for local services/appl. International stds. (for global interface) System Integration <=> Domestic market (localization) vs. Int’l. mkt. (for applications) (China centric standards & IPs vs. Int’l. ones) S/W & F/W platform <=> Int’l and domestic stds. (global & local) H/W platform <=> International stds. (global IC supplies) Existing OEM/ODM business model breaks the IT Business Food Chain without positive feedback from Service to drive next product dev. cycle 7
  8. 8. CASPA Confidential Example: Low-end vs. High-end  China  e-­‐book  as  a  low-­‐end  example     “Shanzhai”  business  model  (山寨型商业模式)     Copy  others’  design  concepts     Add  more  common  (proven)  applicaFons     Aim  for  low-­‐cost  and  low-­‐price  (~US$250)     Li_le  post-­‐sale  on-­‐going  services     Li_le  connecFon  to  on-­‐going  e-­‐commerce  service     Li_le  customer  feedback,  no  learning  and  no  product  innovaFon    Apple’s  iPad  as  a  high-­‐end  example     Designed  as  an  e-­‐commerce  CRM  tool  (Fed  to  iTunes  e-­‐commerce   pla`orm)  -­‐  one-­‐stop  e-­‐commerce  business  ecosystem     More  recurring  business  from  post-­‐sale  of  iPad  (hardware)     Aim  for  high-­‐value  and  affordable  price  (~US$600)     Complete  the  “H/W  pla@orm  to  Service”  end-­‐to-­‐end  cycle  for   next-­‐generaFon  product  innovaFon   8
  9. 9. CASPA Confidential Types & Ranking of InnovationIn the order of lasting value impact to society (from most to least):  New business model (global productivity jump) - great lasting value impact   E.g.: e-Commerce (internet), pure-play foundry business model, carbon trading…  New business process (global productivity jump) - great lasting value impact   E.g.: Window/Office (new work environment), outsourcing, TQM, ERP…  New application/market (for exist. prod. or tech.) - great value impact   E.g.: GPS, RFID, radar guiding… - from military to commercial applications  New technology (for existing product) - great value impact sometimes   E.g.: High-speed CMOS (over NMOS) for power reduction and device scaling  New product/service (for existing market) - medium value impact   E.g.: On-line shopping/trading, SMS (China), digital broadcast…  New combination of package of technologies, products and services   E.g.: Apple’s iPhone and iPod, Blackberry, solar, clean tech…  New design (implementation or appearance) - limited value impact   New system architectures: e.g., the Sandisk “338” patent for flash-memory card   New subsystem/circuitry 9
  10. 10. IP  Value  CreaFon  pracFced     by  Silicon  Valley     Top  InnovaFng  Companies    –  Best  of  the  Best   10
  11. 11. CASPA Confidential Intellectual Capital Intellectual Capital Human Intellectual Capital Assets (Tacit Knowledge  Codified Knowledge) 2 1 IP How to expand one’s Intellectual Property (IP):   By converting Human Capital into Intellectual Assets through the Employment Agreement and systematic and thorough documentation of the process of engineering and improvement   By converting Intellectual Assets into Intellectual Property through legal claims (by patents & confidential notices) and protection (by NDA and proper access controls – on a “need-to-know” basis)Source: VSI Alliance (IPPWP2 1.0) 11
  12. 12. CASPA Confidential Maximizing IP Value Creation – Part 1  Innovation <= Differentiating values to customers   Highest values = Mission-and-time critical (“Must-have”) ones   Customers must use and buy the product when available   Little values <= “me-too” innovation w/o differentiation  Intellectual property (IP)   Protected, reproducible and scalable innovation   Patent is the best form of protected IP   Exclusive rights for 20 years to use for commercial purposes  Values of the patent is based on its “CLAIMS”   The 1st CLAIM is most important in a patent   Scope – the broader and the more independent, the better   The fewer enabling elements and less restrictions, the better   Coverage – covering all means of customer value creations   Mapping value creations vs. enabling elements   Values to customers: performance (functionality & speed), price (yield improvement & cost reductions), quality (robustness, consistency, tolerance & reliability) & delivery (shortened cycle- time and lead-time). 12
  13. 13. CASPA Confidential Maximizing IP Value Creation – Part 2  Customer value driven corporate culture:   Innovation is pursued solely to create DIFFERENTIATING VALUES to the customers (sharpshooting & no shotgun approach)   Contributing directly to their bottom-line in term of critical functionality, cost, performance, low-power, quality and delivery   Strategic partnership and close working relationship with the lead customer is a must   All valuable innovation ideas come from lead (strategic) customers   Cisco for NetLogic Microsystems (recently ranked as the best supplier by Cisco)   Aligning all the company’s activities to be proactively responsive to the customers’ current and future needs   Including technology and product roadmaps as well as employee evaluation/promotion   Continuous innovations by solving the customers next biggest problems (the next product development cycle) 13
  14. 14. CASPA Confidential Continuing Innovation Methodology Lead Customers’ Requirements => 2nd G => 3rd G =>… Close collaboration between the customer and the vendor Differentiating Value Creations => 2nd G => 3rd G =>… Business Model => 2nd G => 3rd G =>… Product Roadmap => 2nd G => 3rd G =>… Technology Roadmap => 2nd G => 3rd G =>… IP Portfolio Development => 2nd G => 3rd G =>…The next innovation ideas come from customers & “Stress Tests” identifying(1)  The weak-links in product design & performance and scalability(2)  System (architecture) integrity and scalability (elasticity) issues(3)  The bottlenecks for scalability (technology and manufacturability roadmap) 14
  15. 15. CASPA ConfidentialAK comment: NM solutions address theprocessing performance requirements formission-and-time critical (interactive, real-time,mobile, multimedia, high QoS) applications incutting-edge broadband networksJuly 20, 2010 CIIPS Presentation 15 15
  16. 16. CASPA Confidential Understand the Core Differentiation  How fundamental is the idea? More the better!   Independent of technology? “Must-have” for intelligent?  What position is it in the value-chain? Higher the better!   On top at the global system architecture level? Or H/W level?  What values can it bring to the customer?   Mission-and-time critical? Improve its profit margins?  How disruptive can it be? Exponential growth potential!   Whole new paradigm shift? Last forever?  Can another technology/idea be its disruptor?   How basic is the invention? On “NDA” level?  Its usefulness over time - invariant? Its lifecycle?   What is the required supporting ecosystem for its usefulness?  What are the alternative/competing solutions?   What is its market share? Differentiations?  How large the TAM can it serve now and future?   Demand driven by Moore’s Law and Metcalfe’s Law? 16
  17. 17. CASPA Confidential Anatomy of a Generic Problem-solving (Intelligent) Process Presented by Al Kwok as a vision in 1999 Steps in an intelligent processThe cycle: Observe/monitor Analyse Decide ExecuteFocus: References/result Ref./result Action ActionConstraint: Data (more the Data (more Resources Resources better) the better) (less the better) (less the better)Preferred Concurrent & Concurrent Interactive & Concurrent ifmode of real -time & real-time if iterative possibleoperation possible (what if?)Time factor Parallel Parallel if Algorithmic by Parallel if possible nature possiblePreferred Pattern Patternmethod: recognition recognition Pattern recognition parallel-search engine is fundamentally superior to algorithmic one The NetLogic Microsystems’ core patent portfolio was fundamentally based on this core concept: how to perform pattern recognition better through parallel-search engines (including Layer 7 since then). 17
  18. 18. CASPA Confidential A Fundamental & Useful Innovation!  The basic DNA of intelligence is the ternary (“1” or “0” or “X”) CAM cell with the implementation of “don’t care” state in circuit by means of the Mask bit Match bit Mask bit = 0 Mask bit = 1 Input bit 0 1 = Ref. bit Input bit 1 1 = Ref. bit   2 memory cells, a comparator circuit to determine “Match” (i.e., basic intelligence) & a Mask bit to give a dimension of freedom (i.e., option)   Degree of intelligence <=> degree of possible options  The ternary CAM (content addressable memory) becomes the basic building block for parallel-processing engines/filters.  KBP (knowledge-based processor) is essentially a massy array of ternary CAM with some classification and prioritization circuits.  SRAM that was avoided by IC manufacturers like plague has reborn into its second life as high-value ternary CAM -- What an innovation! Discovering treasure in a junk yard! 18
  19. 19. CASPA Confidential IP Value Assessment Criteria  Factors driving valuation (based on share % of TAM)   The Strength of the patent (legal aspect)   Scope, territories, claims, enforceability…   The Significance of the patent (technical aspect)   How fundamental? Timelessness of its values   Differentiating functionalities: Values to customers   Competing solutions: need comprehensive benchmarking   The Usefulness of the patent (market aspect)   Applications with respect to industry standards and ecosystems   Sunrise (emerging trends) vs. Sunset (displaced practices)   Present state of market readiness (units shipped and growth rate)   Differentiations against competition (market share)   Customer/market acceptance: TAM and market share   Average Selling Price of the product and IP value in the product   The Lifecycle of the patent (longevity aspect)   The expiration date of the patent   Emerging disruptive technologies against the patent 19
  20. 20. CASPA Confidential AK comment: Based on a portfolio of ONLY ~100 patents AK comment: With only 163 granted US patents as of June 8, 2008 (All multi-billion $ companies) AK comment: Considering the facts that NM is much less than 1/10 of the size (in revenue) of the other 9 top-ranking companies and much younger (~10 years old), it is a crowning achievement! Likewise, “ipIQ” rated NM’s portfolio the best for a medium size (~$100M) high-tech company worldwide in its “Patent Scorecard 2006” report with the 2nd highest CII (current impact index). CIIPS Presentation 20July 20, 2010 20
  21. 21. CASPA Confidential (Set Roadmaps and Standards for Global Collaboration)Unprecedented Global Collaborative Innovation in human history:along the Supply-Chain and Value-Chain with roadmaps & standards 21
  22. 22. CASPA Confidential Conclusion  Knowledge  Economy  is  based  on  intangible  asset  creaFons     The  market  values  of  high-­‐tech  corporaFons  reflect  this  trends     Intellectual  ProperFes  (IP)  with  patent  protecFon  are  the  crown  jewels     IP  covers  all  three  aspects:    Business,  technical  and  legal    China  must  focus  its  patent  creaFons  on  applicaFons/services     IP  in  the  Supply-­‐Chain  are  dominated  by  foreign  companies  with  earlier  starts     China  as  a  late  comer  to  the  IPR  game  can  find  open  field  in  applicaFons/services     Adequate  IP  por`olio  in  the  Demand-­‐Chain  (applicaFons/services)  can  help  cross-­‐ licensing  negoFaFons  with  IP  por`olio  owners  on  the  supply-­‐side     Leveraging  China’s  emerging  market  demands  in  a  massive  scale    Value  creaFon  must  be  for  differenFaFng  values  to  customers     Generate  mission-­‐and-­‐Fme  criFcal  soluFons  that  customers  MUST  buy     Patent  must  be  drajed  to  reflect  “enabling  elements”  vs.  “differenFaFng  values”     Patent  is  a  legal  document:    a  term-­‐limited  CONTRACT  for  MONOPOLIZATION     It  must  be  drajed  by  highly  qualified  patent  a_orneys  who  understand  the  technology    Chinese  enterprises  need  to  learn  from  Silicon  Valley  experiences   How  NetLogic  Microsystems  can  rank  so  high  among  giants  with  ~100  patents     Why  Intel  offered  to  trained  its  engineers  to  be  patent  a_orneys   22
  23. 23. CASPA Confidential Thank You!多谢光临指导! al.kwok@ciips.org 131-1383-7806 23