Exploit the value of your agency’s IP assets
Intellectual property assets do not just belong to the CSIROs of this world
Companies like Apple, Intel, Microsoft, Johnson and Johnson, Pfizer, Roche spend billions of dollars on research and development creating innovative new products and services which they hope we will buy. Recognising the value of the innovation and originality that these companies have added to their balance sheets – and the intellectual property they have created in the process – is easy.
This intellectual property (IP) is of course also recognised in law via patents, trademarks, copyrights, design rights etc.
Yet even in the commercial world many companies do not always gather information about their IP that would lend itself to external disclosure to the investment community or to the public at large. Nor do they always have the measures and metrics that might provide some clue to management as to the value of the IP they possess.
Many public sector agencies likewise may overlook the raft of intellectual property they have generated. Intellectual property products are typically understood to include assets such as computer software, research and development, entertainment, literary or artistic originals and the like. The importance of the time that employees spend in creating or facilitating the creation of new and original content and in developing solutions (technological or otherwise) should not be underestimated. It may be in the development of a new website portal, the collation of information in a database or the development of a training course. But imagine trying to disseminate information to thousands of stakeholders without a well-organised web portal or trying to operate a large facility - without compromising the safety of personnel and equipment – in the absence of operating protocols and manuals. Or trying to reconstruct archive records if databases are not maintained or are corrupted.
Most agencies are likely to be astounded by the value – financial, operational and otherwise – of their IP once identified and quantified. And we all know the old adage that what gets measured gets actioned. There is something about the process of identifying value that leads to a re-thinking of how that value might be further shared or leveraged to provide revenue streams, reduce costs, improve services to the community, protect critical assets or simply to allocate, or re-allocate, scarce resources rationally.
|The tip of the iceberg: How much value is there in government IP?
According to the Australian National Accounts1 recorded expenditure on IP products increased from $42 million in 1960 to $7.3 billion in 2011 but these numbers do not capture anything like the real value of total public sector IP.
You don’t know what you got … if you don’t know what you’ve got
One reason that management of IP is often somewhat cursory is that it is not necessarily straightforward or obvious. Identifying, managing and accounting for IP is complex. It requires not only an in-depth knowledge of IP law, but also an understanding of an agency’s role, its stakeholders and the way in which it uses IP.
- There are a number of legal thresholds that must be met before an asset can be classified as a piece of IP. If an asset meets the IP definition, it then becomes important to understand its value to the organisation. As predominantly non-commercial organisations, public sector agencies may need to invoke both quantitative and qualitative analysis.
- As it may not be captured within the normal reporting framework IP is often managed in a piecemeal fashion. The process of discovering the IP within an agency may involve a significant amount of time and resources. It will often include the review of documentation and management discussion to understand the nature of the IP. It may also necessitate the involvement of subject experts.
- Valuation of IP can also seem a somewhat esoteric concept, especially when dealing with items of IP that do not generate an identifiable revenue stream. But value should not be seen simply in terms of assigning a dollar amount to an asset; but by reference to the importance of IP assets to the organisation and the broader community.
|It is impossible to fully exploit and lever off the intellectual property that has been developed within the organisation without knowledge of the assets that have been developed. A central repository for this purpose is invaluable. It is amazing what knowledge exists within a department once the identification process has been undertaken.|
|An awareness of the consequences of an asset being compromised and impaired is important. If one register is being used by various departments it needs to be clear who has responsibility for maintaining it. Without this there could be significant potential for personnel to be exposed to risk, as well as members of the public, contractors and suppliers.|
IP Principles compliance for Australian Government agencies
Since October 2010, when the revised Statement of Intellectual Property Principles for Australian Government Agencies (IP Principles) became effective for all agencies covered by the Financial Management and Accountability Act 1997, agencies have been required to have in place:
- An IP management policy
- Systems and processes to identify and keep a record of IP
- Strategies and guidelines to ensure protection of IP
- Procedures to reduce the risk of infringing other agencies/enterprises’ IP rights
- procedures to comply with the IP Principles regarding sharing, commercialisation, disposal, and public access to IP (including the sharing of public sector information under ‘Creative Commons’ licences).
Some questions your agency should consider:
- How effective is our IP management policy and what are its goals?
- How robust are our systems to ensure that we identity and record our IP?
- How effective are our strategies to ensure our IP is protected?
- What procedures do we have in place to ensure we don’t infringe the IP of others?
- Should we be sharing our IP?
|Is your critical IP – and source of risk –your website? Are you aware that the downside if it is not reliable, contains out of date or incorrect information – or in fact is unavailable – may be enormous?|
Some final comments
There are countless examples of assets that are vitally important from an agency’s operational perspective, but which can be lost sight of in the absence an effective intellectual property management policy and robust and effective systems for their identification and measurement.
While revenue generating opportunities should not be overlooked, it is likely that the proper identification of IP and the creation of a properly constructed asset register can assist agencies in reducing costs, protecting and maintaining assets and improving service. It may also lead to greater sharing of IP as agencies identify joint development opportunities, thereby eliminating duplication of effort and expense. This can be especially beneficial with technology assets which are evolving so rapidly.
A review and valuation of the IP in an agency is therefore important because it not only highlights the ways in which IP contributes to the success of the agency, but allows stakeholders to understand the strategic, financial and operational importance of the IP and the way in which individual efforts have contributed to its development. With a clear understanding of an agency’s IP, the agency can allocate resources appropriately, prioritise expenditure, utilise existing IP as fully as possible from both a commercial and public benefit perspective, avoid cost duplication and implement risk mitigation plans to ensure that IP is adequately protected.
1. Australian Bureau of Statistics: cat. no 5204.0 Australian System of National Accounts 2010-2011: Table 51. Gross Fixed Capital Formation, by Type of Asset.