Licensing Foundation Survey Shows
Growing Importance of IP Licensing Across Industries
Also, Increasing Concern Over Adverse Environment for IP and Licensing

"Our survey results support what is an increasingly recognized trend towards an emerging innovation economy," said Richard Razgaitis, Ph.D., President of the Licensing Foundation, which surveyed US and Canadian industries. "The growing importance of intellectual property and licensing is further evidence that companies, such as those that comprise the S&P 500, are valuing and putting to work in various dealmaking ways their significant intangible assets."

The Foundation's Annual Survey of Licensing uniquely gathers data from members of the Licensing Executives Society, USA & Canada, Inc., (LES), who work in a variety of industry sectors, including Health, Industrial, University/Government, and Digital Information, Communications and Electronics (DICE). In addition to these industry categories, the survey also breaks the data down into categories for small (under 500 employees) and large businesses (over 500 employees).

"The goal of our survey is to provide an annual synoptic perspective on key statistics, events, and trends in the business of licensing that can assist licensing professionals in understanding and advancing the business environment in which they operate and to which they contribute," said Dr. Razgaitis. "It can also be used by the public, academic researchers, and government policy analysts to grasp the issues and impacts of licensing business practices."

According to survey results, licensing is becoming increasingly important in realizing value from technology, with 65% of respondents saying it has increased versus only 5% saying it has decreasing. Further, a majority of those surveyed (including 75% of Industrial, DICE and Healthcare companies) reported that over the past three years their organizations have become more open to licensing as a way of gaining access to IP.

At the same time, the level of concern over forces and opinions that are generally adverse towards IP and licensing has increased from an already high level. Respondents were asked:

"Some argue that IP-protected products should be made available at prices below those for which there are actually licensed or sold. Others argue that there should be no IP protection at all. Still others believe that some form of compulsory licensing should be available under certain conditions. To what extent do you see these forces as being cause for concern with respect to your business?"

Nevertheless, IP property, particularly in the form of patents and know how, is seen by respondents as extremely important for providing competitive advantage in the marketplace. This was true for all three commercial industry sectors, as well as for both large and small companies.

Ironically, while IP is highly valued for creating a competitive advantage, most of an organization's IP remains available for licensing, according to respondents in all industry sectors. The 'off-limits' IP is said to comprise only 40% of total IP estates.

Although litigation around IP obviously occurs, it is not the primary reason why companies develop IP. In fact, over 60% of the respondents indicated that in the previous year, their organizations had not entered into any licenses to settle litigation and that less than 20% of their licensing activities involved enforcing IP rights.

Rather, respondents said that their key objectives for developing IP are to generate licensing income, as well as to promote strategic partnering and joint ventures. These motivations were viewed as much more important than factors such as "making life difficult for competitors." Partnering is of particular importance to the Health and DICE sectors and for small businesses.

Despite their growing importance, IP deals are still much tougher to seal than deals involving tangible assets, such as real estate or other high-value tangible assets, according to 84% of respondents. One of the primary reasons for this is the complexity of due diligence on the IP assets and the required attention of top management.

A comprehensive look at the Annual Survey of Licensing appears in this month's issue of Les Nouvelles, the Journal of the Licensing Executives Society, USA & Canada, Inc., and the Licensing Executives Society International (LESI). The information will also be available along with survey information from previous years at www.licensingfoundation.org in January 2007.

The Licensing Foundation was established in 2000 by the Licensing Executives Society, USA & Canada, Inc., (LES) to promote public awareness and provide educational resources on the value and importance of licensing intellectual property in its many forms. The Foundation is working to communicate the importance of recognizing the intellectual property rights of owners and the important role that licensing plays in bringing creativity and innovation to commercial realization.

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