Time to Buy Intellectual Property?
One triggering event is if you get notice that you are infringing IP belonging to another entity or you discover blocking IP and determine to take a license. Otherwise, if you plan to start a business around proprietary technology or products.
37 months ago
There are numerous reasons to answer the age old question of "make or buy". Overall, acquisition of IP depends on your long term corporate growth strategy.
After that, several tactical factors come into play. For example, is the market segment that you plan to enter/are currently in an embryonic market that will require considerable investment and time in terms of customer education regarding the solution to a problem that they are generally not aware of at time of launch.
Do you anticipate that after successfully educating customers, regulatory, reimbursement and other stakeholders, penetrating the market and building a leadership position,, do you foresee the field becoming increasingly competitive from an IP perspective. In this case, it would do well to build a strong patent estate to protect your market investment going forward to build barriers to entry and protect your competitive position.
Would the acquisition of specific IP give you access to a new, high growth market segment?
Could the product (line) evolve to a market platform? If so, IP must play a focal role.
IP can also you a fast start on product development and can be easily followed with in-house product improvements that are patentable..
Over 90% of my former employer's revenues are derived from IP, products, technologies and businesses that were externally acquired, unbeknownst even to those familiar with the medical device space. The company had 2017 revenues of approximately $12.5 billion dollars with many global market leading positions, virtually all through acquisition supplemented by follow-on internal development and application of their high volume manufacturing expertise.
Companies are often reluctant to spend on IP, especially if they are already investing in R&D. But the fact is, companies almost always develop a mindset that has them looking at their markets, their products, and possible opportunities in a certain way. The flip side of this is that there are blind spots. If you're pumping out a steady stream of hit products, more power to you, but even then, the "next big thing" might just be in your blind spot.
RP's comments spawned a few more thoughts. Companies that have not only a heavy R&D investment, but an ingrained NIH (not invented here) culture that precludes them from external IP acquisitions are doomed for the long term. Think about this. Even global companies with revenues well north of $10-20 billion cannot rely only on internal R&D and "hope" to remain a leader in their respective market(s). Regardless of your R&D spend, size and history, you can't afford the risk of ignoring global ideation. If you don't readily embrace it, your competitors certainly will.
I have personally been involved in technological disruption early on in my clinical diagnostics career. With the acquisition and launch of a proprietary technology and assay for myocardial infarction, we obsoleted 5 major competitors virtually overnight. That my friends, illustrates the power of and risk of ignoring external IP. To re-phrase RP's words, there is nothing better than "blind siding" the market leaders.