The presentation provides some background information about intellectual property as related to businesses and how the intellectual property can be used as a security interest or collateral for obtaining financing for businesses.

1. Value of Intellectual Property
From a Business Perspective
Protecting your Business’s Most Valuable Asset

2. Starting a New Business
Idea
Plan
Fund
Execute/Prove
Grow/Sustain

3. Idea
Technology
Brand
Concept
Process
Entertainment
Plus Many More…

4. Planning
Looking for New Markets

5. Business Plan
Business
Idea
Makes
Money

6. Business Plan
Business
Idea
Makes
Money?

7. Barriers to Entry

8. Overcoming Barriers to Entry

9. Funding

10. Business/Investor/Creditor Uncertainty
Will I be able to get my
money back?
 Business Idea/Plan
Uncertainty
 Business Sustainability
Uncertainty

11. Uncertainty
Uncertainty
Uncertainty
Business Idea/Plan Uncertainty

12. Uncertainty
Uncertainty
Uncertainty
Business Idea/Plan Uncertainty

13. Uncertainty
Uncertainty
Uncertainty
Business Idea/Plan Uncertainty

14. How to Get Money Back for Funding
Sustain • Revenue
Sell
• Proceeds
from
Sale
Bankrupt
• Proceeds
of Asset
Sales

15. Sustaining a Business

16. Sustaining a Business
Barrier
Money
Business
Idea

17. Sustaining a Business
Barrier
Money
Business
Idea
Uncertainty

18. Different Kinds & Qualities of Barriers

19.  Competitive
Advantages
 Regulatory
 Intellectual
Property
Common Kinds of Competitor Barriers

20. Competitor Barriers

21. How Investors & Creditors Get Money Back
for Funding
Sustain • Revenue
Sell
• Proceeds
from Sale
Bankrupt
• Proceeds
of Asset
Sales

22. Physical Assets for Startups

23. Asset Components of S&P 500 Market Value
0%
20%
40%
60%
80%
100%
Intangible 17% 32% 68% 80% 80%
Tangible 83% 68% 32% 20% 20%
1975 1985 1995 2005 2010
*Source: Ocean Tomo

24. Security Camera
Security Guard
Fence
Forms of Intellectual Property Protection
Alarm System

25. Forms of Intellectual Property Protection
Security Camera
Security Guard
Fence
Alarm System

26. Different Types of Intellectual Property Rights

27. Different Types of Intellectual Property Rights

28. Sustaining- IP Strengths & Weaknesses
 Intellectual Property (IP)
Protection is not Perfect.
 Always Substitutes.
 Different Markets/Industries
Require Different IP Strategies.
 IP Strategies Changes Over
Time.
 IP is Worth Nothing Unless a
Business (maybe not your
business) Makes Money on
What it Covers.

29. Sustaining- IP Strengths & Weaknesses
 Expensive Process to Obtain &
Limited Time for Protection.
 Scope of Protection can be Broad
and Immediate Once Patent is
Granted.
 Never as Broad as You Initially Think.
 Better Suited Where Patented
Improvement is Far Superior to
Existing Substitutes (Objective)
 Pharmaceuticals, semiconductors…

30. Sustaining- IP Strengths & Weaknesses
 Inexpensive to Register & Can
Almost Last Forever.
 Actual Value Slowly Develops
Over Time.
 Impacted by Consumer Experience
with Goods or Services.
 Shows Strength in More Mature
Industries Where Consumer
Choices are More Subjective.
 Restaurants, consumer goods…

31. Sustaining- IP Strengths & Weaknesses
 International Protection
Immediate with Little Expense &
Lasts a Long Time.
 Scope of Protection Somewhat
Limited to Exact (or nearly) exact
copies.
 Can’t Protect Against Non-Copyists.
 Best Suited Where the Exact
Subjective or Functional
Experience Matters.
 Software, entertainment…

32. Sustaining- IP Strengths & Weaknesses
 Legal Costs are Inexpensive,
but Cost of Keeping the
Secret are Not & Can Last
Almost Forever.
 Trade Secrets can be
Valuable.
 Most Companies Have
Some Form of Trade Secrets
 Financial/pricing information,
customer lists…

33. Sustaining- Generating Revenue
 Intellectual Property can
be
 A Source of Revenue
 A Valuable Asset
 Important to Sustain a
Business
 Important to Exit
Strategy

34. Generating Revenue with Intellectual Property

35. Generating Revenue with Intellectual Property

36. Generating Revenue with Intellectual Property

37. Example
Yum! Brands, Inc.
Yum! Owned Franchisee
Operated

38. Generating Revenue with Intellectual Property

39. Generating Revenue with Intellectual Property

40. ARM Holdings plc
Example- Semiconductors

41. Example- Intellectual Property Financing
• Accounts Receivable
• Inventory
• Assets

42. Example- Intellectual Property Financing
• Accounts Receivable
• Inventory
• Assets

43. Example- Intellectual Property Financing
• Accounts Receivable
• Inventory
• Assets

44. Example- Intellectual Property Financing
• Accounts Receivable
• Inventory
• Assets

45. General Best Practices- Intellectual Property
Owner/Officer
Employee
3rd Party Supplier

46. Intellectual Property- Due Diligence Checklist
 All of the intellectual property
identified- anything missing?
 Does the business still own
the intellectual property?
 Has any of the intellectual
property been abandoned?
 Any legal defects in the
intellectual property?
 Any potential lawsuits related
to the intellectual property?

47. Specific Industry Recommendations
LifesciencesSoftware Industrial/Mfg.

48. Software & Computer Technology
• Establish Ownership Through
Employee & Consultant
Agreements
• Do not Just Rely on Work for
Hire Doctrine
• Don’t Create Copyright
Infringement Time Bomb
• Understand Limits of
Licenses for Underlying Tools

49. Software & Computer Technology
• Register Domain Names &
Social Media Accounts
• Make Sure You Have Them
• Conduct Trademark Search
• Reduce lawsuit risk
• Register Marks
• Get Rid of Cyber squatters
• Consider Future/Large International
Markets

50. Software & Computer Technology
• Consider Industrial Design
Protection for the Look of the
Interface
• Inexpensive Way to Protect the
Decorative Aspects of Your Interface
• Consider Filing a Utility Patent
for New Technical Functional
Features
• In most countries, patent
protection is only available for
technology that improves computer
function

51. Software Example
Agreements
Ensure IP
Ownership
Develop
Software
(Copyrights)
Brand
Clearance &
Reservation
(Trademarks)
Leverage
Brand into
Future
Products

52. Toys
Agreements
Ensure IP
Ownership
Develop
Software
(Copyrights)
Brand
Clearance &
Reservation
(Trademarks)
Leverage
Brand into
Future
Products
Software Example- Extreme
Television
Movie
Other Apps
Theme Park

53. Lifesciences
• Establish Ownership
Through Employee &
Consultant Agreements
• File Patent Applications
• Why
• Market- Protect Market Share
• Revenue- Licensing Revenue
• Defense- Make Competitors Think
Twice Before Suing
• Exit Strategy- Enhance Value for Sale

54. Lifesciences
• Identify Key Secrets
• Confidentiality Agreements
• Establish Procedures
• Document Retention Policy
• Own Computers
• Why?
• Key Information about
Business Could Walk out the
Door
• Some Countries Provide Data
Exclusivity as to Trials Data

55. Lifesciences
• Conduct Search of Potential
Marks Before Adopting
• Prevent Investing Large Amounts
of Marketing Money in Mark that
Can’t Use
• Special Issues for Regulatory
Approval
• Register Internationally
• Lifesciences products have large
markets/applicability

56. Industrial/Manufacturing
• Patents, Trademarks, & Trade
Secrets are all important
Relative importance depends on industry
• Consumer facing- trademarks
• Commercial Supplier- patents
• Use a Layered IP approach

57. Develop
Technology
Keep Key
Processes a
Trade Secret
Patent
Consumer
Facing
Technology
Register
Trademarks in
Key Marks
Leverage
Trademark into
Other Products
Industrial Manufacturing Example

58. Intellectual Property Used in All Business
Stages
Idea
Plan
Fund
Execute/Prove
Grow/Sustain

59. Contact Information
Chuck Schmal
(cschmal@uspatent.com)
Woodard, Emhardt, Moriarty, McNett & Henry LLP
111 Monument Circle, Suite 3700
Indianapolis, IN 46204
(317) 634-3456
www.uspatent.com

60. Value of Intellectual Property
From a Business Perspective
Protecting your Business’s Most Valuable Asset