Published on July 18th, 2013

Long Standards, Twinkie IP, Macro Trends, and Patent Trolls

In Part II, IP Extreme’s Savage reveals why IP standards take so long while discussing brand values, macro trends, and changes wrought by patent trolls.

image_1Blyler: Last time we talked, we covered the ongoing development of a soft IP standard. Should we expect an update in the near future?

Savage: The standard is in draft form and being reviewed among the technical contributors at Accellera. It’s just a matter of getting consensus within the EDA community and with the equipment manufacturers, who will need a mechanism to read the soft IP. What helps a lot is that this standard is based on the existing one for hard IP tagging. There are just a few extra things that needed to be added (to the soft IP standard).

Blyler: Please tell us more about those “extra things.”

Savage: One of the extra things proposed in the soft IP standard is the inclusion of export control information in the tag. That’s important in IP. For example, if the semiconductor IP has an Export Control Classification Number (ECCN), that information could be placed in the tag. It could then be discovered later on an actual device – perhaps in a (geographic) location where it shouldn’t be.

Blyler: Some have complained that the soft IP standard is taking too long to ratify. Any comments?

Savage: Things just move slowly in the semiconductor IP world – especially when you have interoperability with the EDA community. The challenge is that you need a handshake between the IP developers, the EDA companies who create the tools (that will need to make the [soft IP] machine-readable), and finally the semiconductor companies (who will actually be using the tools). You have to get all of those constituencies lined up. Like any standard, it takes a number of years before everyone agrees on the details and then gets the standard into widespread industry use.

Blyler: Has that process been made easier with all of the consolidations taking place in the EDA community? Do things move faster now because there are fewer players?


Savage: Surprisingly, the consolidation probably works against that. The problem is assessing a dollar value gain (to the soft IP). How much more can I charge if I support this standard? If you can’t answer that question, there is not a lot of motivation for EDA companies to invest in these things – especially in comparison to developing features for which people will pay extra money.

Blyler: Any other trends that you see?

Savage: We work with many companies to help create external channels for their internal IP. Lots of semiconductor companies talk with us about how to efficiently manage both their internal and external IP.

There is a nice video that Kevin Kline from Freescale did for us at our recent user event. One of his key points was that the value of the internal IP is worth more than the market cap of the company itself. It is analogous to Hostess Twinkies in that the value of the brand is worth way more than the Hostess factories. It’s similar with IP at large semiconductor companies.

I’ve had analysts call me to ask about the value of a specific company IP portfolio in relation to the competition. It seems that an increasing number of semiconductor companies are taking a more strategic view of their IP – beyond just the raw material and resources point of view. Within the next five years, I think that companies will think completely differently about their IP. This is a big macro trend – a new way of looking at IP.

Blyler: How do companies determine the real marketplace value of their IP? Is there an accepted benchmark or other means of open comparison?

Savage: The situation is very fluid. Look at the activities of Google and Motorola, where companies were being bought just for their IP. But their IP became a lot more valuable once Apple and Google started fighting it out in the marketplace (i.e., iOS vs. Android). A company’s IP may not have much value until something happens in the market. Then it becomes extraordinarily valuable. The big problem facing most companies is that they don’t know what IP they have. They might have this big opportunity because the market shifts and they are suddenly sitting on a treasure trove that they didn’t know they had.

Blyler: What about patent and IP trolls? I’ve seen companies that announced partnerships with certain patent houses and then, a month later, sued a competitor for patent infringement. I’m wondering what effect that has on innovation. Do you think patent trolls slow down innovation in favor of quick financial returns?

Savage: Most people have a pretty negative view of patent trolls – like the modern version of the highwayman. The troll analogy is quite good, as they seem to wait for someone interesting to appear. Then they pop out and ask for “your money or your life.” Inevitably, the industry will be heading for some kind of legislation to put some brakes on that activity – especially since there are a lot of people trying to get rich quick by specifically setting up practices to do patent trolling. It’s an extremely negative thing. But that is another reason why companies need to be on top of what IP they have. In these situations, you might have cross-licensing and such.

Blyler: Thank you.

savage_warrenWarren Savage is a marathon runner and President-CEO of IP-Extreme.

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