1. SELECTED IDEAS FROM FROM IDEAS TO ASSETS (CHAPTER 5 AND 15) BY JONAS HELLER Managing IP Financial Assets and Analyzing Financial Growth

2. Introduction Factors that determine the success of a company’s portfolio:  Timing  Demand for the inventions covered  The quality of the proprietary rights and how they are managed

3. Introduction Companies don’t know how to manage their intangible assets.  There are abundant unused intellectual property rights Wrong view: Managers view IP rights as financial assets, only to be used during litigation Correct view: IP’s behave almost identically to call options  Call Options are easy to price  With Black-Scholes formula, options contracts are priced easily  Sellers and buyers to easily make trades based off of demand Solution: IP’s can be priced just as easily as call options

4. Principles from financial assets Despite GAAP treating them as ZERO value on balance sheet…  they are worth monetary value and can produce money like any other tangible asset. There are changes happening to the way people treat IP assets: 1. More attention is given to IP’s what was previously only afforded to tangible assets 1970’s – 50% intangibles, 1990’s – 80% intangibles 2. Acquiring and disposing of IP assets (buying selling) is easier and safer now BEFORE: Transactions were slow and took 3 years, eroding 15% of potential value  Tools were not available to eliminate financial risk, share info AFTER: The internet has changed this  IP transactions to a larger market  IP buyer and seller protection is available

5. Principles from financial assets Basic principles  1. Maximize the return on the company’s assets by deploying them in those ways in which they are most valuable.  2. Sell off or otherwise dispose of assets that are generating an annual return below the company’s cost of capital. Most companies follow these rules for all assets except for IP assets  They let unused IP assets sit and pay $200,000 for over 20 years for worldwide rights per asset

6. Recommendations for IP as Assets IP assets have been severely underutilized in the past due to  No objective source of value The problems this caused  Inventors with a glut of technologies  Manufacturers with a shortage of products With treating IP assets as the financial instruments they can be  Companies have a cash flow from otherwise nonperforming assets

7. Predicting income growth through IP Can patient activity (usually refer to the number of patents that a company filed and accepted) helps to predict income growth and future stability?

8. Finding the Growth Areas The relationship between patenting activity and growth of revenue varies depending on the nature of the technology and the products It is important for companies to keep pace with competitors by maintaining a similar rate of research and patenting activity in a growing industry

9. Research Five areas of technology were researched: Business methods Telecommunications Semiconductor manufacture Molecular biology or biotech Drugs

10. General Conclusions A rise in patenting activity does not guarantee a growth of future income, but a continuous decline or flat motion in patenting activity would signals a company's revenue maybe at risk. IP assets have been severely underutilized in the past but by treating IP assets as the financial instruments they can be, companies have a cash flow from otherwise nonperforming assets