Battle of the Billions: Wall Street is Coming for Your IP
by: Tom Hochstatter, President
I hope you read Bloomberg’s Sarah Ponczek this week. Her piece entitled: “Epic S&P 500 Rally is Powered by Assets You Can’t See or Touch” sets off an ongoing discussion here at Techson around the management and exploitation of intellectual property [note: exploitation in its most positive sense], or lack thereof.
Sarah’s piece, which cites the now oft cited tectonic shift of tangible assets underpinning public companies market valuations to now intangible assets garnering 85% of said value, focuses on the recent tech stock run ups despite the pandemic; her analysis: “a surge in tech shares that has added $2 trillion to their combined market cap even as a recession raged.” This analysis is right and accurate from a Wall Street and (more) macro financial point of view.
I am not an accountant; I am, though, a former financial analyst (from the 1980’s, no less) when I worked for Boeing counting $1.25 billion worth of very tangible airplane parts within their Commercial Aircraft division. I was miles away from the invention process there, but with my first exposure to computers, Lotus 1-2-3 and Microsoft in my Seattle backyard I transitioned in 1989 to the house that Gate’s built - and forever entered the business of intangible assets.
But, what’s missing from this discussion is what we do at Techson everyday. We assist intellectual property owners, large and small: a) efficiently generate more IP faster, b) exploit the value of the IP they have already created, or c) defend against claims of infringing someone else’s IP. What we don’t regularly see is a level of rigor and discernment that should be expected of more than $2.0 Trillion in increased market cap.
IP is not being managed or scrutinized as closely as other assets. Sure companies are accumulating patent assets, for one, at an all time high, but where is the deep quarter-over-quarter life cycle management of those assets? The tools and management workflow platforms have simple not kept up.
Think for a moment if you are Boeing, Ford or Caterpillar…and you have so many factories and physical buildings you actually don’t know where they all are, what state of repair they are in, or what each is contributing to the firm or the broader marketplace? That board meeting lasts about 90 seconds before someone is fired on the spot. The time for that level of scrutiny for your patents and other IP is coming, fast.
Add to that the new capital entering the IP sector, what seems like weekly from traditional IP litigation folks raising $1.5 Billion fund and F500 Insurance companies creating insurance products and deploying real capital into the sector as non-dilutive, collateralized debt instruments.
This size of capital deployments and the expected returns (and offset risks) will demand and are demanding a much higher degree of regular, rigorous quarterly management and Techson will be there to support those decision-makers. We have the expertise and now the toolsets with Limestone’s AI-patent research capabilities to partner with the world’s largest patent holders.