Your IP is Worthless

June 14, 2018

Until You Wrap it in a Sustainable Business Model

At the Australian Farm Institute ‘Digital Farmers 2018’ conference, I created some controversy with a comment. I said that attitudes about IP management and commercialisation in Australian agricultural research are broken. I was not suggesting that IP protection is a waste of time and money. Far from it, but the issue needs deeper consideration.

Intellectual property is critical. Research institutes and private enterprises should focus on generating intellectual property and take sensible approaches to patent, copyright and trademark protections. But what is sensible will vary with the subject area and the resources of the entity generating the IP. There’s no one-size-fits-all approach.

What’s the Issue?

Protecting IP makes sense. Extracting value from it presents challenges. We need to value IP in the context of sustainable business models. This requires an attitude change.

The fact that a body of protected IP cost $10M to develop doesn’t mean it’s worth $10M of commercial value

The fact that a body of protected IP cost $10M to develop doesn’t mean it’s worth $10M of commercial value. There is no relationship between the investment in, and the value derived from, IP. Without a sustainable business model to support the entire lifecycle of customer engagement, the IP is probably worth nothing, no matter how much was invested to create it.

Who Unlocks Value?

Traditional approaches to commercialisation are not delivering good enough results. We need new and different approaches to create sustainable business models that maximise IP value. Low-friction legal and cash-conserving financial engagement must be features of the strategy. Decision-making must be at internet speed. Expecting a startup to wait months or years for a decision is a death sentence. We need to give proper consideration to different approaches of engagement with startups. Equity-based models for participating in value creation will open up new opportunities to generate returns from IP portfolios and know-how.

Why Change?

We can’t afford to be complacent. Venture capital-funded startups are driving more and more commercially successful innovation. The funding available to startups globally puts them directly in competition with research institutes. Many startups are conducting long-running and sophisticated research internally. If we fail to engage with startups on terms that are realistic and practical, we risk being made entirely redundant. We have so much that is valuable to startups in addition to IP. Know-how and execution assistance are of great value. Our research institutes have vast resources to draw on to provide valuable services to augment their IP offering.

Doing it Differently

Locking up innovation with intractable commercialisation processes and unrealistic financial burdens threatens its viability. We need to let go of our fears and open up to new possibilities of engagement, Take some risk and reap the rewards. In startups, execution is key and if we package up IP with the know-how to maximise it and a low-friction engagement model then the results can be very powerful.

Knowledge not Produce

We have set ourselves a growth target of $100B for Australian farm-gate outputs. If we think about Australian agriculture as a knowledge economy rather than a produce economy, then our growth target can be many multiples of that. With the huge assets we have in our research sector and high-functioning engagement model with our growing AgTech startup sector, we can confidently expect to meet and exceed those ambitious targets.