The original Edison in the Boardroom has become a classic text in the intellectual property field, and introduced many people to the basic concepts of intellectual capital, intellectual assets, and their management.
The cover notes of the first edition – published in 2001 – described it as ‘an in-depth look at the revolutionary concept of intellectual asset management (IAM) [which] is changing the way companies all over the world are doing business.’
It is therefore somewhat surprising that, over a decade later, IAM remains a relatively rarefied discipline, explicitly practised by only a small number of specialist service providers. Indeed, the only private-practice firm of professional advisors which appears in the first ten Google search results for the exact phrase “intellectual asset management” is Watermark [the author’s employer, in the interests of full disclosure]. This perhaps reflects a fragmentation in terminology, as much as conservatism on the part of many traditional providers of IP legal services.
Yet the management practices of many of the world’s largest and most sophisticated owners, developers, commercialisers and monetisers of intellectual capital have advanced significantly since 2001. Some of the best (or worst, depending on your point of view) examples of this are patent aggregators, such as Intellectual Ventures, RPX Corporation and Acacia Research, amongst others, which have developed a number of novel business models around the acquisition and monetisation of patents for both defensive and offensive purposes. At the same time, Microsoft is rapidly gaining on IBM in its ability to generate licensing revenues from partners and competitors alike, while Apple is currently giving a number of its own competitors (most notably Samsung) an object lesson in IP strategy.
We have frequently recommended the original Edison in the Boardroom to clients and colleagues, both as an introduction for those new to IAM, and as a useful insight into the best practices of top companies for those with some IP management experience. However, we were becoming concerned that the examples and practices described in the book were somewhat dated in an increasingly fast-moving field.
The authors of the revised edition apparently agreed, describing it as not so much an updated second edition as an almost complete rewrite of the original book. According to the introductory chapter, the changes in the business and IP environments over the past decade, and their impact on IP management, have been too great for anything less to have sufficed. While the format of the book is unchanged, 85% of the content is new, and reflects the advances that have been made in best-practice IAM since publication of the first edition.
As for whether this new edition remains compulsory reading for IAM novices and professionals alike, the short answer is a resounding ‘yes’!
THE ORIGINS OF EDISONThe original Edison in the Boardroom had its origins with a group known as the Intellectual Capital Management (ICM) Gathering – companies which were actively trying to manage their intangible assets, brought together by the authors from 1995. Initially representatives from just seven companies assembled to share their IC insights. The ICM Gathering has since grown to a group of over 30 companies, providing a much larger base upon which the authors have been able to draw for Edison Revisited.
Members of the ICM Gathering have always shared information openly, reasoning that the more companies there were that put these lessons into practice, then the more companies there would be to learn from. Furthermore, the lessons that are shared are of a relatively general character. Proprietary internal practices and procedures are not revealed. Or, as one member is quoted as saying, it is the ‘what’ that is shared, not the ‘how’.
Members of the ICM Gathering have produced five books, including the two editions of Edison, and more than four dozen published articles.
STYLE AND SUBSTANCEOne of the best features of Edison Revisited, like its predecessor, is the way it is written which is, for the most part, in pretty plain language. If anything, it occasionally slips into overly colloquial prose! The ‘Edison’ metaphor is strained at times (as we are taken on a ‘journey’ to the Boardroom, with ‘the Man from Menlo Park), and we do not really need to be told to ‘turn the page’ (especially if reading in one of the available e-book formats) to find out what happens next. But the authors are clearly far more concerned with communicating what they rightly see as an important message than they are with crafting finely-honed sentences.
Stultifying consultant- or management-speak is rare is Edison Revisited, and when it does appear it is usually in the quoted wisdom of one or other of the representatives of the Gathering companies. We confess that some part of our brain glazed over as it grappled with the following explication from Jim O’Shaughnessy of Percipience LLC:
Opportunity Foresight is a process that allows one to gain critical insights or foresights about future opportunities. The magic of opportunity foresight is that it is used to create a context about possible paths the future may take. The object of the first step in the process is to create three equally desirable, yet mutually exclusive, contexts for the future.
Yet despite is relatively simple language, Edison Revisited is packed with truly substantive revelations. If you are relatively new to the field of IAM, and have not read the original Edison, there are dozens of insights that may forever change the way you think about IP in general, and patents in particular.
To give an example of a how a few simple (in hindsight) ideas can lead to more profound insights, consider the following contributions:
- that ‘invention’ is only the conception of an idea, merely the beginning of a process of ‘innovation’, which refers to the entire life-cycle of taking the idea to market in order to realise bankable value;
- that while many people think of IP (such as a patent) as an ‘investment’ or an ‘asset’, it is in fact more like an option on an investment, which may lose or gain value depending upon the ‘market’ for the IP; and
- IP has ‘value in context’, and there is no such thing as a ‘fair market value’ for IP, because the value of an IP ‘asset’ depends upon how the owner intends (or is able) to use it, as well as the other assets the owner brings to the table.
The above insights also help to explain why patent auctions, which caused such a stir when Ocean Tomo started conducting them in 2007, almost completely died out within three years. As the Edison authors explain elsewhere in the book, Intellectual Ventures was the driving force behind the initial auctions, and when it ceased buying up patents for its portfolio, profitability evaporated. Auctions make sense when there are many competing market participants placing a similar value on the assets up for sale. However, the market cannot be relied upon to set a fair price in the absence of a broadly agreed value.
Finally, no discussion of the substantive contributions of Edison in the Boardroom would be complete without mention of the Value Hierarchy. The central five chapters of the book are devoted to a discussion of each one of the five levels of this deceptively simple device, explaining what companies operating at that level are trying to achieve through management of their intellectual assets, along with the best practices of Gathering companies at the same level. As explained in Edison Revisited:
Think of the Value Hierarchy as a pyramid with five levels. Each level represents a different expectation the company has about the contribution that its IP function should be making to the corporate goals. Each higher level on the pyramid represents the increasing demands placed upon the IP function by the executive team and the board of directors. Like building blocks, each higher level relies on the foundation of the lower levels. Mastery of the practices, characteristics, and activities of the prior levels builds the foundation for greater increases in shareholder value at the next level. The more one builds on intellectual property on Level One, the better one is able to enhance the value of all intellectual assets—and more broadly, intellectual capital—at the higher levels.
All companies can benefit from considering where they are – and where they want to be – on the Value Hierarchy. Chapter 8 of Edison Revisited addresses the question of ‘what to do when you’re not on the pyramid’, and includes advice for small companies (including start-ups) which may lack the resources to move up the hierarchy. This chapter also provides examples in which it may be perfectly fine to be ‘IP-indifferent’, and not placed on any level of the pyramid.
LESSONS LEARNEDAnother valuable contribution of Edison Revisited is the many practical experiences shared by representatives of a number of the Gathering companies, including Philips, Nielsen, Procter & Gamble, DuPont, Visa, Samsung, Juniper Networks, and Proteus Biomedical. At the higher levels of the Value Hierarchy some of these lessons can be a little abstract (such as the ‘opportunity foresight’ example quoted above). However, at lower levels there are some fascinating, and instructive, stories told.
For example, a case study from router manufacturer Juniper Networks in Chapter 6 outlines how the company addressed a patent infringement action brought by Toshiba. Of course, Juniper and Toshiba (best known for products such as consumer electronics, laptop computers, semiconductors, and medical imaging devices) are not competitors in the router market, and Juniper had no patents covering any Toshiba products. But Toshiba had some older patents in its portfolio which it alleged were infringed by Juniper. Upon evaluating Toshiba’s claims, Juniper established that the older technology covered by the patents was not used in its router products, and was determined that it would not pay for licenses it did not need.
Lacking suitable patents of its own, Juniper’s solution was to acquire a patent – relating to memory controllers – in an area of high exposure for Toshiba. Not only did Juniper succeed in fighting off Toshiba using this strategy, but it has also managed to acquire a useful reputation as a hard target for anyone seeking to assert dubious patent claims. The lesson from Toshiba’s experience (according to Juniper) is that it is not wise to monetise intellectual assets without a clear strategy, taking into account all possible responses!
The book contains a number of other interesting and instructive case studies, along with an entire chapter devoted to ‘the Proctor & Gamble journey’, from closed to open innovation.
IN CONCLUSIONEdison in the Boardroom Revisited is an interesting and accessible book which is – like its predecessor – essential reading for anybody with an interest in intellectual property and intellectual asset management.
Even experienced readers, or those who have read the first edition, will find something useful in Edison Revisited. If it is not the new and updated experiences and case studies from the ICM Gathering member companies, then it may be the content of the three substantial appendices, covering significant developments in IP law over the past decade, the rise of patent aggregators (e.g. NPEs or ‘trolls’), and current issues in the assessment of IP damages.
Edison Revisited is a book that can be read from cover to cover in a few hours (or over a few lunch breaks), but it is also a handy reference to dip into for useful tools for explaining and managing IP, and practical lessons from the IP ‘war stories’ contributed by Gathering companies.
Given the huge changes in the field between the first and second editions, we can hardly wait to see how the practices of intellectual asset management will look from the perspective of a third edition, surely due in 2021!