Efrat Kasznik: Competitive Advantage of IP

On April 20th, Efrat Kasznik, Founder & President of Foresight Valuation Group, LLC, was our guest speaker in class. Her presentation was on the role of intellectual property in the scope of strategic business assets. In this blog, I will be discussing the importance of intellectual property by industry, as discussed in her presentation.

The chart above shows the relative importance of having IP according to a Berkeley patent study done in 2010 on the following industries: biotechnology, medical devices, and software. I was particularly interested in looking deeper at these statistics because as a Bioengineer, I am right at the center of these three industries. I have experience in medical devices and will be working post-graduation at a biotech company. 

Overall the chart shows that having a patent is least important in providing a competitive advantage to the software industry. This falls inline with the research that we've done all semester long in understanding how vague and problematic software patents are. According to the OECD, number of patents that were granted in biotech increase 15% between 1990 and 2000 in the USPTO.

One of the reasons why patents are so important in the field of biotech and medical devices is that R&D is a huge part of the business model in these industries. Therefore, the protection of research outcomes becomes a huge concern. Another key factor in patent importance in these fields is the large costs associated with the development of their industry products. Venture capitalists consider the cost of research alone in these industries to be considered a high risk cost. Additionally, I think a driving point is that for some companies within biotech/medical devices, a patent is the final product.