Saturday, November 12, 2011

Ownership is (still) everything

With open source software being widely popular and Larry Lessig becoming a household name, is the concept of intellectual property ownership dead?

Absolutely not.

Inventors are still applying for patents as aggressively as ever.  Ownership comes up in almost every commercial sales contract, in every M&A transaction and in every IPO.  Today we even have companies claiming ownership in LinkedIn contacts.

This is all because ownership remains a great differentiator.  Generally, ownership entitles you not just to engage in some kind of lucrative activity.  It also allows you to prevent others from doing it.  Companies sue others for patent infringement or negotiate for ownership of software in commercial contracts because millions, potentially billions, of dollars are at stake.

How should companies react to this reality?

Embrace it.  Recognize this value and work to maximize it.  Invent, develop and patent using the best engineering talent you can find.  Once you have intellectual property, protect, nurture and grow it.  Negotiate hard when the topic of intellectual property comes up, because revenue and enterprise value are up for grabs.  

By acknowledging that ownership of intellectual property remains a foundational issue in company valuations, companies set the philosophical groundwork for business practices that will help them win.   


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