Società Italiana Brevetti – Roma www.sib.it - roma@sib.it How to maximize the Exploitation of Intangibles: Going Beyond the Protection of Intellectual Property Rights to Business Strategies based on Licensing, Franchising and/or Merchandising by Fabrizio de Benedetti Caserta, November 30, 2005

IP rights are Business Assets Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Beyond the protection of IP IP rights are assets having no value per se. Rather they are expenses accounted at cost. IP rights are Business Assets At what time the shift from one category to another takes place ? Use vs. value extraction

Which Assets New Traditional Patents Utility Models Know-How Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it New Traditional Business Patents Topographies of integrated circuits registrations Computer-implemented inventions Software Data Compilation / Databases Business Identifiers (domain names) Geographical indications Slogans Sounds Distinctive packaging / Trade dress Person’s identity Properties from characters (pictures, cartoons, TV, radio) Lifestyle properties Graphic symbols and computer icons Graphic user interfaces Website designs Patents Utility Models Know-How Trade Secrets Plant Varieties Designs Trademarks Copyright Expansion trend

Agreement on Trade-Related Aspects of Intellectual Property Rights Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it TRIPs Agreement on Trade-Related Aspects of Intellectual Property Rights 15 April 1994 … taking into account the need to promote effective and adequate protection of intellectual property rights… …Recognizing that intellectual property rights are private rights…

Which business Direct use Indirect use Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Which business Direct use Indirect use

Direct use No real business without innovation Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Direct use No real business without innovation Either traditional manufacturing companies or new start-up or spin-off companies need an innovative idea in order to plan their business and to focus their strategies around it.

Direct use Protecting the idea Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Direct use Protecting the idea The idea, being the seed from which the business should develop, needs to be protected. It will then turn into an asset.

Direct use Extracting value Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Direct use Extracting value Direct exploitation not limited to traditional use of a patented innovation, a design, a trademark, a copyright, etc. Includes creative recognition of all potentialities (e.g. business expansion areas, geographical expansion, additional protectable items such as simplifying or enhancing technology, new design, new graphics, new colors, new slogans, creative use in advertising, etc.). The phenomenon of no factory companies.

Indirect use Licensing Joint Venture Franchising Merchandising Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Indirect use Licensing Joint Venture Franchising Merchandising Creation of a new business

Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Fund Raising Public loans or capital contributions for start-up innovative business Securitization (bank – private investors - venture capitalists) Equity financing IP valuation

Intangibles Tangibles Value-in-use Fair market value vs. Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Fair market value Value-in-use vs. Tangibles Intangibles

Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Valuation of IP The value of an intangible depends on its context Potentialities, strategies, capabilities influence the IP value Proprietor’s business plan determines the value-in-use

Valuation problems IP may be employed for different uses Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Valuation problems IP may be employed for different uses IP is unique even in the same area of activity the corresponding market being more difficult to define IP may include a number of rights of different nature IP should be considered with respect to its legal status

Valuation methods Cost approach (principle of substitution) Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Valuation methods Cost approach (principle of substitution) Market approach (reference to transactions involving similar assets in similar markets) Royalty income (anticipation of future income relating to use of IP)

From Cognitive property (knowledge) Intangible economy (profit) to Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it From Cognitive property (knowledge) to Intangible economy (profit)

Thank you! Fabrizio de Benedetti Società Italiana Brevetti – Roma www.sib.it - debenedetti@sib.it Thank you!