1 00:00:06,040 --> 00:00:08,079 Hello and welcome to another episode 2 00:00:08,080 --> 00:00:09,759 of The Operations Room, a podcast 3 00:00:09,760 --> 00:00:10,629 for CEOs. 4 00:00:10,630 --> 00:00:12,579 I am Brandon Bensinger, joined by my 5 00:00:12,580 --> 00:00:13,809 lovely co-host, Bethany Harris. 6 00:00:13,810 --> 00:00:14,799 How are things going? 7 00:00:14,800 --> 00:00:16,689 Bethany Kirk I can't 8 00:00:16,690 --> 00:00:18,399 say they're great. Say it's Monday 9 00:00:18,400 --> 00:00:19,839 morning. I'm tired. 10 00:00:19,840 --> 00:00:22,029 I don't want to go to work. 11 00:00:22,030 --> 00:00:23,079 I don't want to go to Manchester 12 00:00:23,080 --> 00:00:24,249 tomorrow. 13 00:00:24,250 --> 00:00:26,019 I think we hit the ATM mark on 14 00:00:26,020 --> 00:00:26,859 Monday morning. 15 00:00:26,860 --> 00:00:28,359 It is a tough go regardless of 16 00:00:28,360 --> 00:00:29,469 whatever is happening, especially 17 00:00:29,470 --> 00:00:31,989 when it's cold and dreary outside, 18 00:00:31,990 --> 00:00:33,639 it makes you feel like you just want 19 00:00:33,640 --> 00:00:35,799 to leave the covers of your bed. 20 00:00:35,800 --> 00:00:37,659 Yeah. And my room is currently 21 00:00:37,660 --> 00:00:40,899 18.8°C. 22 00:00:40,900 --> 00:00:41,739 Why is that? 23 00:00:41,740 --> 00:00:42,579 Crank up the heat. 24 00:00:42,580 --> 00:00:43,059 What's going on? 25 00:00:43,060 --> 00:00:44,859 WOMAN It's just taking a while 26 00:00:44,860 --> 00:00:45,999 because I'm at the top of the house. 27 00:00:46,000 --> 00:00:47,019 It's a Victorian house. 28 00:00:47,020 --> 00:00:48,519 It has no insulation. 29 00:00:48,520 --> 00:00:49,899 Are you a nest user, by the way? 30 00:00:49,900 --> 00:00:51,759 So I love my nest because I can set 31 00:00:51,760 --> 00:00:54,099 it to go off when I want. 32 00:00:54,100 --> 00:00:55,629 Yes, I am. 33 00:00:55,630 --> 00:00:56,619 Although I was thinking about 34 00:00:56,620 --> 00:00:58,449 getting the doorbell, but I'm 35 00:00:58,450 --> 00:00:59,319 having so much problem with 36 00:00:59,320 --> 00:01:00,999 technology, I'm not sure I can brave 37 00:01:01,000 --> 00:01:02,109 the doorbell. 38 00:01:02,110 --> 00:01:03,639 Do you have a video doorbell? 39 00:01:03,640 --> 00:01:05,378 No, I don't actually have one. 40 00:01:05,379 --> 00:01:06,909 Well, everybody on our street has 41 00:01:06,910 --> 00:01:08,439 them, so any time a package goes 42 00:01:08,440 --> 00:01:10,359 missing or some sort 43 00:01:10,360 --> 00:01:11,949 of event happens, there's a call 44 00:01:11,950 --> 00:01:12,950 around the 45 00:01:14,080 --> 00:01:15,459 house. There seem to be events on 46 00:01:15,460 --> 00:01:16,359 our street. 47 00:01:16,360 --> 00:01:17,619 I mean, it makes it sound bad, like 48 00:01:17,620 --> 00:01:19,719 a mugging or a car breaking 49 00:01:19,720 --> 00:01:23,109 in or an altercation. 50 00:01:23,110 --> 00:01:24,279 It is London. 51 00:01:24,280 --> 00:01:25,809 These things happen and then 52 00:01:25,810 --> 00:01:27,459 everybody asks for the doorbell 53 00:01:27,460 --> 00:01:28,359 footage. 54 00:01:28,360 --> 00:01:30,129 And I feel a bit left out that I 55 00:01:30,130 --> 00:01:32,229 don't have doorbell footage. 56 00:01:32,230 --> 00:01:33,819 It seems to be very popular. 57 00:01:33,820 --> 00:01:36,129 And then as Black Friday recently 58 00:01:36,130 --> 00:01:37,869 and then they had some really cheap 59 00:01:37,870 --> 00:01:40,059 doorbells ring doorbells 60 00:01:40,060 --> 00:01:42,609 I think Amazon owns Ring and 61 00:01:42,610 --> 00:01:44,499 Google owns Nest and so 62 00:01:44,500 --> 00:01:45,459 they're like half price. 63 00:01:45,460 --> 00:01:47,079 But then I didn't know what to do 64 00:01:47,080 --> 00:01:48,249 because there's motion detector 65 00:01:48,250 --> 00:01:49,719 things you have to add and then 66 00:01:49,720 --> 00:01:50,709 there's the doorbell and it's 67 00:01:50,710 --> 00:01:51,939 removable to charge it. 68 00:01:51,940 --> 00:01:53,649 But then I thought, given it's 69 00:01:53,650 --> 00:01:55,119 looking for crime, are people just 70 00:01:55,120 --> 00:01:56,859 going to steal my removable doorbell 71 00:01:56,860 --> 00:01:58,059 for whatever reason? 72 00:01:58,060 --> 00:01:59,469 And then you need to add another 73 00:01:59,470 --> 00:02:00,639 chime inside. 74 00:02:00,640 --> 00:02:02,139 And suddenly it went from being 75 00:02:02,140 --> 00:02:04,089 quite cheap to all of this stuff. 76 00:02:04,090 --> 00:02:05,769 And then they have to get somebody 77 00:02:05,770 --> 00:02:07,629 in to do it because 78 00:02:07,630 --> 00:02:10,359 I don't even know how to attach 79 00:02:10,360 --> 00:02:12,299 a motion detector on to my house. 80 00:02:12,300 --> 00:02:13,669 It's actually when I installed Nest 81 00:02:13,670 --> 00:02:15,159 and there was similar complexities 82 00:02:15,160 --> 00:02:17,199 like the the boiler was in a self 83 00:02:17,200 --> 00:02:18,759 enclosed unit. So I literally had to 84 00:02:18,760 --> 00:02:20,589 like rip apart the boiler and the 85 00:02:20,590 --> 00:02:21,969 unit itself to be able to somehow 86 00:02:21,970 --> 00:02:23,499 string nest in there to activate. 87 00:02:23,500 --> 00:02:25,299 It was ridiculous. The guy took like 88 00:02:25,300 --> 00:02:27,430 five hours to do an install of nest. 89 00:02:28,870 --> 00:02:30,279 Yeah, I'm struggling with technology 90 00:02:30,280 --> 00:02:31,719 in general. I am definitely starting 91 00:02:31,720 --> 00:02:34,359 to feel old or curmudgeonly 92 00:02:34,360 --> 00:02:36,399 or, you know, just like 93 00:02:36,400 --> 00:02:37,389 none of it works. 94 00:02:37,390 --> 00:02:38,229 It's supposed to make our lives 95 00:02:38,230 --> 00:02:39,009 easier. 96 00:02:39,010 --> 00:02:40,959 I bought a new phone and 97 00:02:40,960 --> 00:02:43,059 my new phone changed all 98 00:02:43,060 --> 00:02:44,679 of my settings on my computer and I 99 00:02:44,680 --> 00:02:46,629 can't get the notifications to stop 100 00:02:46,630 --> 00:02:47,859 on my computer, even though the 101 00:02:47,860 --> 00:02:49,239 notifications are not happening on 102 00:02:49,240 --> 00:02:50,199 my phone. 103 00:02:50,200 --> 00:02:51,580 Now, they pain in the ass. 104 00:02:55,340 --> 00:02:57,169 So we have got a lovely topic 105 00:02:57,170 --> 00:02:59,089 for today, which is patents and IP 106 00:02:59,090 --> 00:03:00,379 strategy for Scaleups. 107 00:03:00,380 --> 00:03:01,489 And we have an amazing guest for 108 00:03:01,490 --> 00:03:03,199 this. And John Calvert, he is the 109 00:03:03,200 --> 00:03:05,359 CEO of Clearview IP and 110 00:03:05,360 --> 00:03:07,009 truly an expert in all things IP 111 00:03:07,010 --> 00:03:07,909 related. 112 00:03:07,910 --> 00:03:09,289 So I guess what I wanted to start 113 00:03:09,290 --> 00:03:11,149 with, Bethany, was he had 114 00:03:11,150 --> 00:03:13,219 talks about something I never knew 115 00:03:13,220 --> 00:03:15,019 about or realized, but this thing 116 00:03:15,020 --> 00:03:16,939 called patent box in patent box is 117 00:03:16,940 --> 00:03:18,829 a tax incentive scheme from the UK 118 00:03:18,830 --> 00:03:20,629 government where if you have a 119 00:03:20,630 --> 00:03:22,609 single patent on a product and 120 00:03:22,610 --> 00:03:24,649 that product is profitable, 121 00:03:24,650 --> 00:03:26,689 you can take that profitability and 122 00:03:26,690 --> 00:03:28,399 the tax rate that is put on that is 123 00:03:28,400 --> 00:03:31,129 10%, not 25%. 124 00:03:31,130 --> 00:03:32,659 So if you are truly a scaling 125 00:03:32,660 --> 00:03:34,639 company of size where your product 126 00:03:34,640 --> 00:03:36,499 is killing, it is highly profitable. 127 00:03:36,500 --> 00:03:37,789 The 10% can make a massive 128 00:03:37,790 --> 00:03:38,839 difference, obviously, in terms of 129 00:03:38,840 --> 00:03:39,859 your bottom line. 130 00:03:39,860 --> 00:03:41,449 And I was just wondering what you 131 00:03:41,450 --> 00:03:42,919 made of that. 132 00:03:42,920 --> 00:03:43,939 It was news to me as well. 133 00:03:43,940 --> 00:03:45,299 I guess this is what happens when 134 00:03:45,300 --> 00:03:46,429 you never work for profitable 135 00:03:46,430 --> 00:03:48,079 companies or profit making 136 00:03:48,080 --> 00:03:49,129 companies. We've never had to think 137 00:03:49,130 --> 00:03:49,969 about this. 138 00:03:49,970 --> 00:03:51,139 R&D tax credits. 139 00:03:51,140 --> 00:03:53,089 I understand it very well. 140 00:03:53,090 --> 00:03:55,009 It definitely made getting 141 00:03:55,010 --> 00:03:57,169 patents more compelling because 142 00:03:57,170 --> 00:03:58,369 in my experience has always felt 143 00:03:58,370 --> 00:04:00,319 like a bit of a vanity 144 00:04:00,320 --> 00:04:01,609 project. 145 00:04:01,610 --> 00:04:03,439 Patents And that's supposed to help 146 00:04:03,440 --> 00:04:04,219 with fundraising. 147 00:04:04,220 --> 00:04:05,419 But for the most part, VCs like you 148 00:04:05,420 --> 00:04:06,769 have patents and you go, yes, they 149 00:04:06,770 --> 00:04:07,849 go, okay, fine. 150 00:04:07,850 --> 00:04:09,169 And if you VC says you have any 151 00:04:09,170 --> 00:04:10,249 patents you like. No. And they like, 152 00:04:10,250 --> 00:04:11,209 well, okay, fine. 153 00:04:11,210 --> 00:04:13,219 It never seems to really change 154 00:04:13,220 --> 00:04:14,719 things either way. 155 00:04:14,720 --> 00:04:16,879 But getting tax benefits 156 00:04:16,880 --> 00:04:18,259 from it is great. 157 00:04:18,260 --> 00:04:19,699 So I think this strikes at the heart 158 00:04:19,700 --> 00:04:21,349 of the matter here, which is what is 159 00:04:21,350 --> 00:04:23,449 the value of intellectual property 160 00:04:23,450 --> 00:04:25,009 for B-to-B SaaS companies 161 00:04:25,010 --> 00:04:25,939 generically. 162 00:04:25,940 --> 00:04:27,079 I struggle with this a little bit, 163 00:04:27,080 --> 00:04:28,429 even post our conversation with 164 00:04:28,430 --> 00:04:30,139 John, because when I think back to 165 00:04:30,140 --> 00:04:32,059 my past, I was in a space that 166 00:04:32,060 --> 00:04:33,679 was highly litigious back in the 167 00:04:33,680 --> 00:04:35,569 day, which is voice recognition, 168 00:04:35,570 --> 00:04:37,159 input technology, handwriting 169 00:04:37,160 --> 00:04:38,689 recognition, predictive technology 170 00:04:38,690 --> 00:04:39,499 and so on. 171 00:04:39,500 --> 00:04:41,449 And there were so many patents 172 00:04:41,450 --> 00:04:42,649 that were being filed in the space. 173 00:04:42,650 --> 00:04:43,819 It was off the charts. 174 00:04:43,820 --> 00:04:46,039 And my former company 175 00:04:46,040 --> 00:04:48,079 was sued numerous times 176 00:04:48,080 --> 00:04:49,999 because of the IP side of things. 177 00:04:50,000 --> 00:04:51,529 And I remember at some point the 178 00:04:51,530 --> 00:04:52,339 companies called Nuance 179 00:04:52,340 --> 00:04:53,509 Communications. They were probably 180 00:04:53,510 --> 00:04:54,679 the biggest vendor at the time for 181 00:04:54,680 --> 00:04:56,299 voice recognition technology. 182 00:04:56,300 --> 00:04:57,319 They owned all the intellectual 183 00:04:57,320 --> 00:04:58,939 property associated to that. 184 00:04:58,940 --> 00:05:00,619 So any scale a company that would 185 00:05:00,620 --> 00:05:01,969 come on the scene with new voice 186 00:05:01,970 --> 00:05:03,379 technology or a new kind of input 187 00:05:03,380 --> 00:05:04,999 technology, they would basically 188 00:05:05,000 --> 00:05:07,249 take their IP portfolio and 189 00:05:07,250 --> 00:05:09,409 litigate you to death, which is 190 00:05:09,410 --> 00:05:11,179 they recognized that they were the 191 00:05:11,180 --> 00:05:12,349 business company, they weren't 192 00:05:12,350 --> 00:05:14,119 innovating and they would take their 193 00:05:14,120 --> 00:05:15,499 patents, sue the company to the 194 00:05:15,500 --> 00:05:17,119 ground, the scale of company, and 195 00:05:17,120 --> 00:05:19,009 then based on that and suppressing 196 00:05:19,010 --> 00:05:20,929 their valuation, they would buy them 197 00:05:20,930 --> 00:05:23,059 at that point. And so as an example, 198 00:05:23,060 --> 00:05:24,169 the company that I used to work for 199 00:05:24,170 --> 00:05:25,769 back in Calgary, Canada, we had 200 00:05:25,770 --> 00:05:27,469 revenue at some point here of around 201 00:05:27,470 --> 00:05:29,329 a million, 10 million US and 202 00:05:29,330 --> 00:05:31,429 our litigation bill that year was 203 00:05:31,430 --> 00:05:32,570 8 to 10 million US. 204 00:05:33,740 --> 00:05:35,329 So it was ridiculous. 205 00:05:35,330 --> 00:05:36,469 You can imagine from an investor 206 00:05:36,470 --> 00:05:38,359 standpoint, being sued like 207 00:05:38,360 --> 00:05:40,039 that, you start asking yourself the 208 00:05:40,040 --> 00:05:41,869 question like, is this even viable? 209 00:05:41,870 --> 00:05:44,329 And we ended up in 2009, 210 00:05:44,330 --> 00:05:46,219 back when the markets tanked. 211 00:05:46,220 --> 00:05:47,749 The investors wanted to flee 212 00:05:47,750 --> 00:05:49,639 effectively based on the market 213 00:05:49,640 --> 00:05:51,169 and based on the litigation that we 214 00:05:51,170 --> 00:05:53,539 end up selling off that company for 215 00:05:53,540 --> 00:05:55,549 the time, which was a terrible price 216 00:05:55,550 --> 00:05:56,419 for the company, I think, to be 217 00:05:56,420 --> 00:05:58,129 honest, was around 25, 30 million 218 00:05:58,130 --> 00:05:59,929 U.S. at that point to Nuance. 219 00:05:59,930 --> 00:06:01,009 So coming off the back of that 220 00:06:01,010 --> 00:06:02,359 experience and rolling into 221 00:06:02,360 --> 00:06:04,249 SwiftKey, which again was in 222 00:06:04,250 --> 00:06:06,559 the same space, we had a very 223 00:06:06,560 --> 00:06:08,329 concrete program of intellectual 224 00:06:08,330 --> 00:06:10,219 property development where we 225 00:06:10,220 --> 00:06:11,989 worked a lot with John Calvert to 226 00:06:11,990 --> 00:06:14,149 build out the portfolio, articulate 227 00:06:14,150 --> 00:06:16,159 it correctly in terms of for future 228 00:06:16,160 --> 00:06:17,899 investors, what that value was, why 229 00:06:17,900 --> 00:06:18,949 that was and so on. 230 00:06:18,950 --> 00:06:20,839 And it became a key component of our 231 00:06:20,840 --> 00:06:22,519 valuation that we sold on to 232 00:06:22,520 --> 00:06:23,629 Microsoft at that point. 233 00:06:23,630 --> 00:06:25,519 And Microsoft also bought Nuance 234 00:06:25,520 --> 00:06:26,509 Communications. 235 00:06:26,510 --> 00:06:28,579 So Microsoft effectively now 236 00:06:28,580 --> 00:06:30,139 owns every intellectual property 237 00:06:30,140 --> 00:06:31,399 asset you can possibly imagine 238 00:06:31,400 --> 00:06:32,839 around the input space. 239 00:06:32,840 --> 00:06:34,609 So in that world, it was very, very 240 00:06:34,610 --> 00:06:36,229 important. And then post that when I 241 00:06:36,230 --> 00:06:38,089 joined the more generic B2B 242 00:06:38,090 --> 00:06:39,919 SaaS companies, it was almost like 243 00:06:39,920 --> 00:06:41,189 an afterthought, to your point. 244 00:06:41,190 --> 00:06:42,739 And I'm just saying when you think 245 00:06:42,740 --> 00:06:44,089 about this because it feels like 246 00:06:44,090 --> 00:06:44,989 maybe to your point they were 247 00:06:44,990 --> 00:06:47,509 making, maybe it doesn't matter. 248 00:06:47,510 --> 00:06:49,489 I think it really matters on clearly 249 00:06:49,490 --> 00:06:50,599 what space you're in. 250 00:06:50,600 --> 00:06:52,249 At New Voice Media, we were also in 251 00:06:52,250 --> 00:06:54,679 this kind of call center 252 00:06:54,680 --> 00:06:56,539 comms space and we had a 253 00:06:56,540 --> 00:06:58,429 lot of patents and there was 254 00:06:58,430 --> 00:07:00,169 also like some level of patent 255 00:07:00,170 --> 00:07:01,459 swapping or patent one. 256 00:07:01,460 --> 00:07:02,929 I think somebody would come to you 257 00:07:02,930 --> 00:07:05,059 and go, you have broken our patents, 258 00:07:05,060 --> 00:07:06,079 we have a patent on this. 259 00:07:06,080 --> 00:07:07,069 And then we would look at that maybe 260 00:07:07,070 --> 00:07:08,989 like you have broken our 261 00:07:08,990 --> 00:07:10,789 patent, we have a patent on this, 262 00:07:10,790 --> 00:07:12,019 and then you both write threatening 263 00:07:12,020 --> 00:07:13,069 letters to each other and then you 264 00:07:13,070 --> 00:07:14,869 both are like, okay, fine, and you 265 00:07:14,870 --> 00:07:16,129 just carry on. 266 00:07:16,130 --> 00:07:18,739 We had a patent for popups 267 00:07:18,740 --> 00:07:20,539 on the agent screen. 268 00:07:20,540 --> 00:07:22,189 I'm amazed is patentable, but I 269 00:07:22,190 --> 00:07:23,869 guess at one point the ability to 270 00:07:23,870 --> 00:07:26,329 pop up on an agent screen was novel. 271 00:07:26,330 --> 00:07:28,189 And so anybody who had a 272 00:07:28,190 --> 00:07:29,599 pop up on an agent screen, we were 273 00:07:29,600 --> 00:07:31,009 able to be like, Wow. 274 00:07:31,010 --> 00:07:32,419 Like every call center software 275 00:07:32,420 --> 00:07:34,489 application on the planet. 276 00:07:34,490 --> 00:07:35,149 Yeah. 277 00:07:35,150 --> 00:07:36,649 And then they would back off. 278 00:07:36,650 --> 00:07:38,089 So I think there is something to be 279 00:07:38,090 --> 00:07:40,099 said, like we are in a space 280 00:07:40,100 --> 00:07:41,929 where there is a lot 281 00:07:41,930 --> 00:07:43,879 of litigious patent 282 00:07:43,880 --> 00:07:46,249 swapping and like being around your 283 00:07:46,250 --> 00:07:47,599 marketing, your a little bit of 284 00:07:47,600 --> 00:07:49,459 territory and finding it. 285 00:07:49,460 --> 00:07:51,139 But my experience later on is that 286 00:07:51,140 --> 00:07:53,059 it hasn't been as big 287 00:07:53,060 --> 00:07:54,759 a deal, but maybe it just depends. 288 00:07:54,760 --> 00:07:55,839 On. 289 00:07:55,840 --> 00:07:57,849 Are you a company that is stitching 290 00:07:57,850 --> 00:07:59,229 things together, or are you a 291 00:07:59,230 --> 00:08:01,659 company that's inventing 292 00:08:01,660 --> 00:08:03,129 within an ecosystem of other 293 00:08:03,130 --> 00:08:04,089 companies that are inventing? 294 00:08:04,090 --> 00:08:05,019 Because the other one is if you're 295 00:08:05,020 --> 00:08:06,459 completely novel, there's nobody 296 00:08:06,460 --> 00:08:07,629 else in the space. 297 00:08:07,630 --> 00:08:08,589 I think you're right. I think this 298 00:08:08,590 --> 00:08:09,969 is maybe the difference because the 299 00:08:09,970 --> 00:08:11,439 last couple of B2B SaaS companies 300 00:08:11,440 --> 00:08:13,269 have worked for largely speaking, 301 00:08:13,270 --> 00:08:14,829 there were applications that were 302 00:08:14,830 --> 00:08:16,929 part of workflows for end users. 303 00:08:16,930 --> 00:08:18,789 So the true innovation, if 304 00:08:18,790 --> 00:08:20,109 you want to call it that, it really 305 00:08:20,110 --> 00:08:20,919 wasn't there. 306 00:08:20,920 --> 00:08:22,209 And I think when we talked to John 307 00:08:22,210 --> 00:08:23,889 on the call, he talked about a lot 308 00:08:23,890 --> 00:08:25,389 around deep tech companies and 309 00:08:25,390 --> 00:08:27,159 octopus venture investment companies 310 00:08:27,160 --> 00:08:28,719 where they were truly doing some 311 00:08:28,720 --> 00:08:30,039 groundbreaking work and there was 312 00:08:30,040 --> 00:08:31,209 intellectual property that was being 313 00:08:31,210 --> 00:08:32,439 followed around that. 314 00:08:32,440 --> 00:08:33,849 And maybe to your point, maybe 315 00:08:33,850 --> 00:08:34,839 that's a bit of the difference, 316 00:08:34,840 --> 00:08:36,249 which is if you're stitching 317 00:08:36,250 --> 00:08:37,509 together a bunch of stuff to create 318 00:08:37,510 --> 00:08:39,249 an application, you know, there's 319 00:08:39,250 --> 00:08:40,989 not a lot of utility to creating 320 00:08:40,990 --> 00:08:41,859 patents around that. 321 00:08:41,860 --> 00:08:42,939 Or if you're doing end user 322 00:08:42,940 --> 00:08:44,379 applications where you're leveraging 323 00:08:44,380 --> 00:08:46,029 a bunch of APIs from others. 324 00:08:46,030 --> 00:08:47,979 Again, not a lot of value 325 00:08:47,980 --> 00:08:49,269 and utility in doing IP in that 326 00:08:49,270 --> 00:08:50,259 case. So maybe that's the 327 00:08:50,260 --> 00:08:51,519 distinction. 328 00:08:51,520 --> 00:08:52,599 I guess, although it's just one 329 00:08:52,600 --> 00:08:54,369 where I guess we did a lot of it at 330 00:08:54,370 --> 00:08:56,199 news media and then subsequently we 331 00:08:56,200 --> 00:08:57,159 haven't done nearly as much. 332 00:08:57,160 --> 00:08:58,599 And so it's probably just some sort 333 00:08:58,600 --> 00:09:00,699 of recency bias of does it 334 00:09:00,700 --> 00:09:02,829 matter? Although John is saying that 335 00:09:02,830 --> 00:09:04,689 there are increasing numbers of 336 00:09:04,690 --> 00:09:05,979 patents, like everything is being 337 00:09:05,980 --> 00:09:07,209 patented, though. 338 00:09:07,210 --> 00:09:08,319 Maybe it's like we're in a weird 339 00:09:08,320 --> 00:09:09,639 microcosm or we're not seeing the 340 00:09:09,640 --> 00:09:11,059 bigger picture. 341 00:09:11,060 --> 00:09:12,129 Yeah. 342 00:09:12,130 --> 00:09:13,779 He also talked about from his point 343 00:09:13,780 --> 00:09:15,369 of view that if you're going to do 344 00:09:15,370 --> 00:09:17,469 IP, the sensible starting point 345 00:09:17,470 --> 00:09:19,779 is when you're at series A, which is 346 00:09:19,780 --> 00:09:21,729 you do some initial filing around 347 00:09:21,730 --> 00:09:23,589 something that you think is 348 00:09:23,590 --> 00:09:25,449 sensible, basically, and you 349 00:09:25,450 --> 00:09:26,739 create an IP narrative around that 350 00:09:26,740 --> 00:09:27,699 as well as when you go to your 351 00:09:27,700 --> 00:09:29,589 series B investor said you can say, 352 00:09:29,590 --> 00:09:31,899 Look, we have an IP strategy. 353 00:09:31,900 --> 00:09:33,909 We have one initial filing in place. 354 00:09:33,910 --> 00:09:35,049 We think there's more to be done 355 00:09:35,050 --> 00:09:36,069 here in terms of securing that 356 00:09:36,070 --> 00:09:36,879 initial patent. 357 00:09:36,880 --> 00:09:38,619 And by the way, we ask for trade 358 00:09:38,620 --> 00:09:40,479 secrets for Arabian Sea, and we 359 00:09:40,480 --> 00:09:41,709 have some thoughts around evolving 360 00:09:41,710 --> 00:09:42,489 our patent portfolio. 361 00:09:42,490 --> 00:09:43,999 And this is what it looks like, that 362 00:09:44,000 --> 00:09:45,849 Series B investor that 363 00:09:45,850 --> 00:09:47,319 resonating, I guess, with the series 364 00:09:47,320 --> 00:09:49,839 B investor them wanted to actually 365 00:09:49,840 --> 00:09:51,729 put in money and have allocated 366 00:09:51,730 --> 00:09:53,589 resources to actually fund 367 00:09:53,590 --> 00:09:55,149 the next step for the IP narrative 368 00:09:55,150 --> 00:09:56,379 story in that way. 369 00:09:56,380 --> 00:09:58,089 I think it's icing on the cake. 370 00:09:58,090 --> 00:10:00,249 Like you can have loads of patents, 371 00:10:00,250 --> 00:10:01,899 but if you're not hitting your go to 372 00:10:01,900 --> 00:10:03,789 market metrics, it just 373 00:10:03,790 --> 00:10:05,709 doesn't matter because 374 00:10:05,710 --> 00:10:07,299 then your patents and things that 375 00:10:07,300 --> 00:10:08,499 nobody wants to buy. 376 00:10:08,500 --> 00:10:10,119 So I think it's you have good 377 00:10:10,120 --> 00:10:12,369 product market fit, you're growing 378 00:10:12,370 --> 00:10:14,529 well, investors are interested 379 00:10:14,530 --> 00:10:16,449 in you. And then you say, and 380 00:10:16,450 --> 00:10:17,859 by the way, part of our competitive 381 00:10:17,860 --> 00:10:19,809 moat are all these patents 382 00:10:19,810 --> 00:10:21,369 and then they go, okay, cool. 383 00:10:21,370 --> 00:10:22,809 That makes you more appealing, but 384 00:10:22,810 --> 00:10:24,609 not in and of itself. 385 00:10:24,610 --> 00:10:26,199 And also, if you go we have all of 386 00:10:26,200 --> 00:10:27,729 this growth and we're going well and 387 00:10:27,730 --> 00:10:29,379 we don't have a single patents and 388 00:10:29,380 --> 00:10:30,429 we've never thought about it. 389 00:10:30,430 --> 00:10:32,229 But could you help us then they'll 390 00:10:32,230 --> 00:10:33,669 also go, Yeah, okay, we can help you 391 00:10:33,670 --> 00:10:34,479 there. 392 00:10:34,480 --> 00:10:36,039 I guess I'm just a bit cynical on 393 00:10:36,040 --> 00:10:38,209 how much the patents itself helps as 394 00:10:38,210 --> 00:10:39,069 a fundraiser. 395 00:10:39,070 --> 00:10:40,809 And I guess it also depends on your 396 00:10:40,810 --> 00:10:42,909 buyer set or your strategic 397 00:10:42,910 --> 00:10:44,739 trade sale opportunities set 398 00:10:44,740 --> 00:10:46,209 in that way. Because, you know, in 399 00:10:46,210 --> 00:10:48,399 our case, Microsoft clearly 400 00:10:48,400 --> 00:10:50,109 had a huge interest in the kind of 401 00:10:50,110 --> 00:10:52,029 IP that we were developing, as did 402 00:10:52,030 --> 00:10:53,319 Google and some other companies as 403 00:10:53,320 --> 00:10:54,639 well. And so from a trade sell 404 00:10:54,640 --> 00:10:56,469 standpoint, that was in our mind's 405 00:10:56,470 --> 00:10:58,089 eye a little bit. So I'd imagine 406 00:10:58,090 --> 00:10:58,929 that has an impact. 407 00:10:58,930 --> 00:11:00,759 So if you're strategic buyers that 408 00:11:00,760 --> 00:11:02,379 looks like X and they actually have 409 00:11:02,380 --> 00:11:03,939 legit interests in IP for whatever 410 00:11:03,940 --> 00:11:05,919 reason, then there's probably some 411 00:11:05,920 --> 00:11:07,329 utility in value in actually doing 412 00:11:07,330 --> 00:11:08,499 it. And the other thing you 413 00:11:08,500 --> 00:11:10,539 mentioned, which was of interest was 414 00:11:10,540 --> 00:11:12,429 the initial filing that you do. 415 00:11:12,430 --> 00:11:14,619 He pointed out that modifying 416 00:11:14,620 --> 00:11:16,749 that filing step by step 417 00:11:16,750 --> 00:11:18,189 in the examination office. 418 00:11:18,190 --> 00:11:20,079 And, you know, and also when you go 419 00:11:20,080 --> 00:11:21,909 international, very important 420 00:11:21,910 --> 00:11:23,949 to do and to ensure that you're 421 00:11:23,950 --> 00:11:25,689 optimizing your filing to make it 422 00:11:25,690 --> 00:11:26,919 valuable and to ensure they have a 423 00:11:26,920 --> 00:11:28,389 good outcome for that filing, 424 00:11:28,390 --> 00:11:30,129 because your initial filing may be 425 00:11:30,130 --> 00:11:31,359 off base for all sorts of different 426 00:11:31,360 --> 00:11:33,159 reasons and also the value of that 427 00:11:33,160 --> 00:11:35,079 initial filing in your eyes and 428 00:11:35,080 --> 00:11:36,579 in the market size may change over 429 00:11:36,580 --> 00:11:38,439 time. So you saying don't leave it 430 00:11:38,440 --> 00:11:40,299 with your patent lawyers, think 431 00:11:40,300 --> 00:11:41,199 it through to make sure you're 432 00:11:41,200 --> 00:11:42,939 modifying it step by step to ensure 433 00:11:42,940 --> 00:11:44,079 that it's the best possible option 434 00:11:44,080 --> 00:11:45,429 that you could possibly have. 435 00:11:45,430 --> 00:11:47,169 Yeah. And also the reason why you 436 00:11:47,170 --> 00:11:48,579 modify along the way is because it 437 00:11:48,580 --> 00:11:50,349 takes so long that you're thinking 438 00:11:50,350 --> 00:11:51,849 will have changed across the board 439 00:11:51,850 --> 00:11:53,919 rather than that it's a three 440 00:11:53,920 --> 00:11:55,479 month process and you need to modify 441 00:11:55,480 --> 00:11:57,459 along. You know, it's a 18 month 442 00:11:57,460 --> 00:11:58,419 to two year process. 443 00:11:58,420 --> 00:12:00,339 And so as a small company, you'll 444 00:12:00,340 --> 00:12:01,509 learn a lot. 445 00:12:01,510 --> 00:12:02,829 And the reason why that's beneficial 446 00:12:02,830 --> 00:12:04,899 is then if it's closer to reality, 447 00:12:04,900 --> 00:12:06,429 if your patent reflects closer to 448 00:12:06,430 --> 00:12:08,139 reality, then when it comes around 449 00:12:08,140 --> 00:12:09,369 to patent box, you're able to 450 00:12:09,370 --> 00:12:11,559 explain why your patent is valuable 451 00:12:11,560 --> 00:12:13,959 and you should get the 10% 452 00:12:13,960 --> 00:12:15,279 corporation tax. 453 00:12:15,280 --> 00:12:17,049 And then the last point that I made 454 00:12:17,050 --> 00:12:19,569 was the IP asset lending. 455 00:12:19,570 --> 00:12:20,559 And I think the way that it 456 00:12:20,560 --> 00:12:22,119 described is, was that if you're 457 00:12:22,120 --> 00:12:24,489 looking for a debt facility, 458 00:12:24,490 --> 00:12:27,069 this can be an added bonus 459 00:12:27,070 --> 00:12:28,749 to get the debt that you want and 460 00:12:28,750 --> 00:12:30,609 get the rates that you want based on 461 00:12:30,610 --> 00:12:32,049 the fact that you have whatever RR 462 00:12:32,050 --> 00:12:33,129 they have in the business with 463 00:12:33,130 --> 00:12:34,389 whatever gross levels. 464 00:12:34,390 --> 00:12:35,559 But if you have a bit of a story and 465 00:12:35,560 --> 00:12:37,299 a bit of a filing scenario value 466 00:12:37,300 --> 00:12:39,249 around intellectual property, that 467 00:12:39,250 --> 00:12:40,209 you can actually throw that into 468 00:12:40,210 --> 00:12:42,009 that mix to get those better rates 469 00:12:42,010 --> 00:12:42,969 and to perhaps get that debt 470 00:12:42,970 --> 00:12:44,619 facility and kind of put it over the 471 00:12:44,620 --> 00:12:47,229 top, so to speak, for the company. 472 00:12:47,230 --> 00:12:48,549 Yeah, just basically is another 473 00:12:48,550 --> 00:12:49,899 piece of collateral. 474 00:12:49,900 --> 00:12:52,149 It has value in and of itself 475 00:12:52,150 --> 00:12:53,349 for all the reasons we just spoke 476 00:12:53,350 --> 00:12:54,759 about companies that. 477 00:12:54,760 --> 00:12:56,079 To just collect patents and sue 478 00:12:56,080 --> 00:12:57,099 people. 479 00:12:57,100 --> 00:12:58,749 So why don't we park it here and get 480 00:12:58,750 --> 00:13:00,429 on to our conversation with John 481 00:13:00,430 --> 00:13:01,430 Calvert. 482 00:13:05,170 --> 00:13:06,789 Maybe a bit of orientation to start 483 00:13:06,790 --> 00:13:08,319 with because they're all nowadays 484 00:13:08,320 --> 00:13:09,789 quite a few different types of actor 485 00:13:09,790 --> 00:13:10,749 in the IP space. 486 00:13:10,750 --> 00:13:12,909 So I guess originally 487 00:13:12,910 --> 00:13:14,859 IP was left to, I'll 488 00:13:14,860 --> 00:13:16,869 say the lawyers, but the really 489 00:13:16,870 --> 00:13:18,669 two flavors you get of maybe 490 00:13:18,670 --> 00:13:19,869 actually three flavors, you get 491 00:13:19,870 --> 00:13:21,339 solicitors, as we would call them in 492 00:13:21,340 --> 00:13:23,229 the UK, which are really 493 00:13:23,230 --> 00:13:24,519 lawyers helping with license 494 00:13:24,520 --> 00:13:25,989 agreements and contracts and 495 00:13:25,990 --> 00:13:27,819 transferring IP rights and 496 00:13:27,820 --> 00:13:29,139 that sort of thing. 497 00:13:29,140 --> 00:13:30,879 You'd have patent attorneys which in 498 00:13:30,880 --> 00:13:33,099 the US are called patent agents 499 00:13:33,100 --> 00:13:34,479 and they actually help you get 500 00:13:34,480 --> 00:13:35,769 patent protection for your 501 00:13:35,770 --> 00:13:37,269 inventions. 502 00:13:37,270 --> 00:13:39,099 And then we have trademark 503 00:13:39,100 --> 00:13:40,539 attorneys that actually help get 504 00:13:40,540 --> 00:13:42,369 trademarks to protect your brand. 505 00:13:42,370 --> 00:13:44,529 So it's probably those three. 506 00:13:44,530 --> 00:13:46,389 And then the fourth, a new 507 00:13:46,390 --> 00:13:47,949 entrant. But it's not so new now. 508 00:13:47,950 --> 00:13:49,809 It's probably 15 years ago, we we 509 00:13:49,810 --> 00:13:51,279 started a company called Clearview 510 00:13:51,280 --> 00:13:53,439 IP to provide commercial 511 00:13:53,440 --> 00:13:55,299 and technical and business advice 512 00:13:55,300 --> 00:13:56,349 around IP. 513 00:13:56,350 --> 00:13:58,449 So very much not to legal advice, 514 00:13:58,450 --> 00:14:00,189 but to sit alongside those skill 515 00:14:00,190 --> 00:14:02,019 sets and and help people figure 516 00:14:02,020 --> 00:14:03,459 out what the value was and what to 517 00:14:03,460 --> 00:14:04,599 do about it. 518 00:14:04,600 --> 00:14:07,059 Does that mean that if you 519 00:14:07,060 --> 00:14:09,279 want to file a patent, 520 00:14:09,280 --> 00:14:12,369 you still need an attorney? 521 00:14:12,370 --> 00:14:14,619 Yes, you do. I mean, in the end, 522 00:14:14,620 --> 00:14:16,989 to file really good patents that 523 00:14:16,990 --> 00:14:18,909 describe the invention well enough 524 00:14:18,910 --> 00:14:20,649 in the right legal language. 525 00:14:20,650 --> 00:14:22,029 You do need that skill sets and 526 00:14:22,030 --> 00:14:23,589 expertise. 527 00:14:23,590 --> 00:14:25,389 But there are hybrid models now 528 00:14:25,390 --> 00:14:27,279 where companies like mine 529 00:14:27,280 --> 00:14:29,109 actually will use technical people 530 00:14:29,110 --> 00:14:30,999 to help understand what 531 00:14:31,000 --> 00:14:32,559 the invention is and to work with 532 00:14:32,560 --> 00:14:34,269 engineers or software developers to 533 00:14:34,270 --> 00:14:36,189 actually work out really what's 534 00:14:36,190 --> 00:14:37,569 special about it. 535 00:14:37,570 --> 00:14:39,039 And that includes it needs to be 536 00:14:39,040 --> 00:14:41,079 novel and inventive, 537 00:14:41,080 --> 00:14:43,329 so it has to have various elements, 538 00:14:43,330 --> 00:14:45,219 but we can write that up 539 00:14:45,220 --> 00:14:46,419 and then give that to a patent 540 00:14:46,420 --> 00:14:47,649 attorney to actually draft the 541 00:14:47,650 --> 00:14:49,599 patent claims and the document 542 00:14:49,600 --> 00:14:50,919 that gets filed with the patent 543 00:14:50,920 --> 00:14:52,839 office. So we've worked at hybrid 544 00:14:52,840 --> 00:14:54,669 models for about 12 years now, but 545 00:14:54,670 --> 00:14:56,529 some patents that only firms prefer 546 00:14:56,530 --> 00:14:59,229 to do the whole job, but actually 547 00:14:59,230 --> 00:15:00,769 often their skill set is really in 548 00:15:00,770 --> 00:15:02,619 the complexity and it is 549 00:15:02,620 --> 00:15:04,209 difficult to become a patent agent 550 00:15:04,210 --> 00:15:05,529 or an attorney. 551 00:15:05,530 --> 00:15:06,579 And that's because it's quite 552 00:15:06,580 --> 00:15:08,109 difficult to write good claims that 553 00:15:08,110 --> 00:15:09,969 will survive examination and 554 00:15:09,970 --> 00:15:11,709 become great patents. 555 00:15:11,710 --> 00:15:13,389 When should a scale up consider 556 00:15:13,390 --> 00:15:14,829 patents, if at all? 557 00:15:14,830 --> 00:15:16,599 I think a little bit as it's a sort 558 00:15:16,600 --> 00:15:18,129 of cultural and belief system, 559 00:15:18,130 --> 00:15:20,199 because there are also 560 00:15:20,200 --> 00:15:22,029 some industries and I'm thinking 561 00:15:22,030 --> 00:15:24,129 of the software industry here where 562 00:15:24,130 --> 00:15:26,109 there was over probably last 15 563 00:15:26,110 --> 00:15:27,969 years a real push into open source 564 00:15:27,970 --> 00:15:29,979 and then sharing code that's been 565 00:15:29,980 --> 00:15:32,079 written with the wider community. 566 00:15:32,080 --> 00:15:33,759 And that's almost the antithesis of 567 00:15:33,760 --> 00:15:35,679 the idea of filing a pattern to 568 00:15:35,680 --> 00:15:37,239 get a monopoly right, to be able to 569 00:15:37,240 --> 00:15:39,069 exclude others from using your 570 00:15:39,070 --> 00:15:41,049 invention. So there's that 571 00:15:41,050 --> 00:15:42,759 cultural piece. And what we saw 572 00:15:42,760 --> 00:15:44,619 probably 15 years ago, Silicon 573 00:15:44,620 --> 00:15:46,539 Valley was a big tech 574 00:15:46,540 --> 00:15:48,489 company. Start really thinking 575 00:15:48,490 --> 00:15:49,809 patents for that important. 576 00:15:49,810 --> 00:15:51,489 And you can see this going back 20 577 00:15:51,490 --> 00:15:53,289 years. But then look at the 578 00:15:53,290 --> 00:15:55,419 portfolios that Google and Microsoft 579 00:15:55,420 --> 00:15:56,949 and Facebook have now. 580 00:15:56,950 --> 00:15:58,869 So in the end, patents 581 00:15:58,870 --> 00:16:00,489 matter. But the question is when do 582 00:16:00,490 --> 00:16:01,659 they matter? 583 00:16:01,660 --> 00:16:03,519 And they usually matter a 584 00:16:03,520 --> 00:16:05,079 big offense in the life of a 585 00:16:05,080 --> 00:16:06,789 company. So that could be a funding 586 00:16:06,790 --> 00:16:08,739 round. So even as early as 587 00:16:08,740 --> 00:16:11,409 we say, probably not at seed, 588 00:16:11,410 --> 00:16:13,389 but at Citrix, a company wants 589 00:16:13,390 --> 00:16:15,039 to be able to show or demonstrate. 590 00:16:15,040 --> 00:16:17,649 I've got something that's unique 591 00:16:17,650 --> 00:16:18,999 when it can have an algorithm, but 592 00:16:19,000 --> 00:16:19,929 it doesn't want to share the 593 00:16:19,930 --> 00:16:21,399 algorithm with an investor, right? 594 00:16:21,400 --> 00:16:23,169 It just want to disclose that what 595 00:16:23,170 --> 00:16:24,759 we would call a trade secret. 596 00:16:24,760 --> 00:16:26,049 It doesn't want to disclose that 597 00:16:26,050 --> 00:16:27,219 because that investor might be 598 00:16:27,220 --> 00:16:29,049 looking at other companies that do 599 00:16:29,050 --> 00:16:30,009 similar things, right? 600 00:16:30,010 --> 00:16:31,689 So you really want to keep something 601 00:16:31,690 --> 00:16:32,469 like that secretly. 602 00:16:32,470 --> 00:16:33,979 You also might want to protect to 603 00:16:33,980 --> 00:16:36,099 element top. It's so filing 604 00:16:36,100 --> 00:16:38,079 an initial patent actually 605 00:16:38,080 --> 00:16:40,089 says to investors, we've got 606 00:16:40,090 --> 00:16:42,099 something that's protectable 607 00:16:42,100 --> 00:16:43,959 and differentiated so that it 608 00:16:43,960 --> 00:16:46,509 communicates with the greater value. 609 00:16:46,510 --> 00:16:48,279 If you get later down to series B 610 00:16:48,280 --> 00:16:50,259 and C, then various kind 611 00:16:50,260 --> 00:16:52,069 of investors that are putting 50 to 612 00:16:52,070 --> 00:16:53,919 75 million, maybe 100 billion into a 613 00:16:53,920 --> 00:16:55,809 company and then looking 614 00:16:55,810 --> 00:16:57,939 to see, well, is this IP actually 615 00:16:57,940 --> 00:16:59,529 protected properly? 616 00:16:59,530 --> 00:17:01,149 And nowadays people expect to see 617 00:17:01,150 --> 00:17:03,039 patents as part of that, you 618 00:17:03,040 --> 00:17:04,659 know, basket of rights that people 619 00:17:04,660 --> 00:17:06,669 have secured. So the final 620 00:17:06,670 --> 00:17:07,899 sort of stage of that journey is 621 00:17:07,900 --> 00:17:10,179 when you do a trade sale to accept, 622 00:17:10,180 --> 00:17:12,098 if it's a sophisticated buyer, will 623 00:17:12,099 --> 00:17:14,199 be crawling through the IP position 624 00:17:14,200 --> 00:17:15,848 in terms of due diligence. 625 00:17:15,849 --> 00:17:16,929 And if you don't have it well 626 00:17:16,930 --> 00:17:18,219 protected and you don't have a good 627 00:17:18,220 --> 00:17:20,139 story around it, but chip down 628 00:17:20,140 --> 00:17:21,818 the valley or they might not even go 629 00:17:21,819 --> 00:17:23,049 through with the transaction if the 630 00:17:23,050 --> 00:17:24,549 IP rights are all over the place 631 00:17:24,550 --> 00:17:26,379 site. And finally, if 632 00:17:26,380 --> 00:17:28,419 you go for an IPO, 633 00:17:28,420 --> 00:17:30,249 then again you're open 634 00:17:30,250 --> 00:17:32,349 to companies wanting to license 635 00:17:32,350 --> 00:17:33,369 their patents to you. 636 00:17:33,370 --> 00:17:35,109 And if you've got nothing that gives 637 00:17:35,110 --> 00:17:37,089 you a defensive position, then 638 00:17:37,090 --> 00:17:38,289 you're going to end up paying royalties 639 00:17:38,290 --> 00:17:39,639 of diminished value of the company. 640 00:17:39,640 --> 00:17:41,739 So for me, the thinking 641 00:17:41,740 --> 00:17:43,239 about patents needs to start at the 642 00:17:43,240 --> 00:17:45,249 beginning so that companies 643 00:17:45,250 --> 00:17:47,229 learn about patents, why they 644 00:17:47,230 --> 00:17:48,699 might be useful, where they might be 645 00:17:48,700 --> 00:17:50,649 useful, and then they probably 646 00:17:50,650 --> 00:17:53,499 start to get better in actually 78, 647 00:17:53,500 --> 00:17:55,149 but maybe just one patent to then 648 00:17:55,150 --> 00:17:57,130 steadily build a portfolio for time. 649 00:17:58,280 --> 00:18:00,319 And I think maybe if we take a step 650 00:18:00,320 --> 00:18:02,779 back, it would be good to understand 651 00:18:02,780 --> 00:18:05,269 what is patentable. 652 00:18:05,270 --> 00:18:06,349 Because I always found this a bit 653 00:18:06,350 --> 00:18:08,509 surprising in that sometimes 654 00:18:08,510 --> 00:18:10,189 the big things aren't, but little 655 00:18:10,190 --> 00:18:12,199 tiny things are as 656 00:18:12,200 --> 00:18:14,059 if we could explain what novel 657 00:18:14,060 --> 00:18:15,869 which means new and inventive 658 00:18:15,870 --> 00:18:16,729 because, like, what's the difference 659 00:18:16,730 --> 00:18:17,839 between new and inventive? 660 00:18:17,840 --> 00:18:18,889 That would be really helpful. 661 00:18:18,890 --> 00:18:20,599 And maybe some examples. 662 00:18:20,600 --> 00:18:22,519 If you actually look at the 663 00:18:22,520 --> 00:18:24,769 historical rates of patents filing 664 00:18:24,770 --> 00:18:26,689 and you see the graph, you can 665 00:18:26,690 --> 00:18:28,579 see that in recent years and I think 666 00:18:28,580 --> 00:18:30,439 recent last ten years, it's 667 00:18:30,440 --> 00:18:31,879 almost exponential. 668 00:18:31,880 --> 00:18:33,709 So that's because many 669 00:18:33,710 --> 00:18:35,329 more businesses, but many more 670 00:18:35,330 --> 00:18:37,639 industries that may be interested 671 00:18:37,640 --> 00:18:39,349 in patents have started to get into 672 00:18:39,350 --> 00:18:41,599 patents to protect their inventions. 673 00:18:41,600 --> 00:18:43,279 So the rate of filing has increased 674 00:18:43,280 --> 00:18:44,209 dramatically. 675 00:18:44,210 --> 00:18:46,039 So the chance of inventing 676 00:18:46,040 --> 00:18:47,329 something that's fundamentally 677 00:18:47,330 --> 00:18:49,209 breakthrough like for me, you 678 00:18:49,210 --> 00:18:50,869 will, right? 679 00:18:50,870 --> 00:18:52,399 The wheel was invented a while ago, 680 00:18:52,400 --> 00:18:54,829 but maybe carbon fiber wheels 681 00:18:54,830 --> 00:18:56,499 with a certain spiked island. 682 00:18:56,500 --> 00:18:58,039 So that makes it lighter, stronger, 683 00:18:58,040 --> 00:19:00,379 faster, but more aerodynamic. 684 00:19:00,380 --> 00:19:01,699 You could probably file something 685 00:19:01,700 --> 00:19:02,959 around there. Well, now it's getting 686 00:19:02,960 --> 00:19:05,359 a bit narrower and a bit specific 687 00:19:05,360 --> 00:19:07,519 about what that invention is, 688 00:19:07,520 --> 00:19:08,869 but you've got a chance that it's 689 00:19:08,870 --> 00:19:10,279 going to be inventive. 690 00:19:10,280 --> 00:19:12,229 The inventive step is really 691 00:19:12,230 --> 00:19:13,189 has you got something that's 692 00:19:13,190 --> 00:19:15,229 technically clever or small that 693 00:19:15,230 --> 00:19:16,909 really, you know, is a technological 694 00:19:16,910 --> 00:19:18,949 breakthrough of some sort. 695 00:19:18,950 --> 00:19:20,869 And then obviously the novelty is 696 00:19:20,870 --> 00:19:22,759 if it's already been disclosed in 697 00:19:22,760 --> 00:19:24,619 the public domain or 698 00:19:24,620 --> 00:19:26,209 if someone's filed a patent claiming 699 00:19:26,210 --> 00:19:27,499 the same thing in the past when, of 700 00:19:27,500 --> 00:19:28,909 course, you can't get a new patent 701 00:19:28,910 --> 00:19:30,649 on that, someone's already got it. 702 00:19:30,650 --> 00:19:32,659 But patents are getting 703 00:19:32,660 --> 00:19:33,829 narrower and narrower. 704 00:19:33,830 --> 00:19:35,839 But if you look at maybe in recent 705 00:19:35,840 --> 00:19:38,749 years, quantum computing, 706 00:19:38,750 --> 00:19:40,189 the weren't tiny quantum computing 707 00:19:40,190 --> 00:19:41,989 patents ten years ago, but now 708 00:19:41,990 --> 00:19:43,519 there's thousands of them. 709 00:19:43,520 --> 00:19:45,229 So there are many breakthrough 710 00:19:45,230 --> 00:19:47,149 technologies that end up 711 00:19:47,150 --> 00:19:49,219 getting that say, but 712 00:19:49,220 --> 00:19:51,229 not that many that frequently. 713 00:19:51,230 --> 00:19:52,249 I think it's fair to say. 714 00:19:53,860 --> 00:19:55,779 And then also you can 715 00:19:55,780 --> 00:19:57,879 patent AI diers 716 00:19:57,880 --> 00:20:00,309 that are not yet proven. 717 00:20:00,310 --> 00:20:02,319 From what I understand. 718 00:20:02,320 --> 00:20:04,179 What you have to do is you've got 719 00:20:04,180 --> 00:20:05,109 an invention. 720 00:20:05,110 --> 00:20:06,549 So you have to describe that 721 00:20:06,550 --> 00:20:08,349 invention in a way that can be put 722 00:20:08,350 --> 00:20:09,369 in a patent document. 723 00:20:09,370 --> 00:20:11,259 And one of the things you do is 724 00:20:11,260 --> 00:20:13,389 you broadly in the specification 725 00:20:13,390 --> 00:20:14,769 of the patent, you describe what the 726 00:20:14,770 --> 00:20:16,629 invention is, why 727 00:20:16,630 --> 00:20:18,279 it's different from the prior art, 728 00:20:18,280 --> 00:20:20,289 what's special about it, How does 729 00:20:20,290 --> 00:20:22,359 it work and how does it work? 730 00:20:22,360 --> 00:20:23,679 It's called an embodiment, but it's 731 00:20:23,680 --> 00:20:25,629 like an example of how 732 00:20:25,630 --> 00:20:28,149 this invention could be implemented. 733 00:20:28,150 --> 00:20:29,649 Typically, companies will put 734 00:20:29,650 --> 00:20:31,239 several different embodiments or 735 00:20:31,240 --> 00:20:32,709 different ways of implementing into 736 00:20:32,710 --> 00:20:34,569 the patent and at the final bit 737 00:20:34,570 --> 00:20:36,069 of the patent to some patent claims, 738 00:20:36,070 --> 00:20:36,969 which are actually the legal 739 00:20:36,970 --> 00:20:38,799 language that defined the invention 740 00:20:38,800 --> 00:20:40,629 itself, that by putting 741 00:20:40,630 --> 00:20:42,249 those different embodiments said 742 00:20:42,250 --> 00:20:43,509 what you do have to really 743 00:20:43,510 --> 00:20:45,399 demonstrate is that you 744 00:20:45,400 --> 00:20:47,229 may not actually implement it yet, 745 00:20:47,230 --> 00:20:48,759 but you're demonstrating that it can 746 00:20:48,760 --> 00:20:50,919 be reduced to practice, it could be 747 00:20:50,920 --> 00:20:52,269 put in place. So you can't really 748 00:20:52,270 --> 00:20:53,589 just patents. And it's a terrible 749 00:20:53,590 --> 00:20:55,419 idea because the 750 00:20:55,420 --> 00:20:57,159 idea of a patent is you are actually 751 00:20:57,160 --> 00:20:59,589 disclosing enough information 752 00:20:59,590 --> 00:21:01,179 to allow someone in the field this 753 00:21:01,180 --> 00:21:03,129 knowledgeable of that failed 754 00:21:03,130 --> 00:21:04,659 to actually be able to implement 755 00:21:04,660 --> 00:21:06,489 that invention. So you are expected 756 00:21:06,490 --> 00:21:07,899 to describe it to a degree of 757 00:21:07,900 --> 00:21:09,189 detail. 758 00:21:09,190 --> 00:21:11,049 But by disclosing it, 759 00:21:11,050 --> 00:21:12,939 you're saying or you can use it, you 760 00:21:12,940 --> 00:21:15,039 need to probably pay me a royalty 761 00:21:15,040 --> 00:21:16,299 for that. For trade, you're getting 762 00:21:16,300 --> 00:21:17,859 a monopoly position by actually 763 00:21:17,860 --> 00:21:19,869 educating the world as to what that 764 00:21:19,870 --> 00:21:21,369 invention is so they can build on 765 00:21:21,370 --> 00:21:22,370 it. 766 00:21:22,580 --> 00:21:23,629 You know, we talked about software 767 00:21:23,630 --> 00:21:25,189 engineers and kind of complex 768 00:21:25,190 --> 00:21:27,019 algorithmic novel, innovative 769 00:21:27,020 --> 00:21:28,789 things that are possible that you 770 00:21:28,790 --> 00:21:30,409 might want to patent the user 771 00:21:30,410 --> 00:21:31,519 interface design. 772 00:21:31,520 --> 00:21:33,829 What's your your take on that? 773 00:21:33,830 --> 00:21:35,179 The first thing about a user 774 00:21:35,180 --> 00:21:37,189 interface is it has got a 775 00:21:37,190 --> 00:21:38,719 design, let's call it, in terms of 776 00:21:38,720 --> 00:21:40,069 the way it looks. 777 00:21:40,070 --> 00:21:41,989 And some of those aspects can 778 00:21:41,990 --> 00:21:43,669 actually be protected by copyright. 779 00:21:43,670 --> 00:21:45,529 So website design or 780 00:21:45,530 --> 00:21:46,759 otherwise you've implemented 781 00:21:46,760 --> 00:21:48,469 something. If someone told me 782 00:21:48,470 --> 00:21:50,579 something looks the same and it's 783 00:21:50,580 --> 00:21:52,519 obvious the same, then 784 00:21:52,520 --> 00:21:53,359 you can rely on me. 785 00:21:53,360 --> 00:21:54,679 The copyright law. 786 00:21:54,680 --> 00:21:56,599 You can somewhat rely on design 787 00:21:56,600 --> 00:21:58,909 rights, but you can't patent 788 00:21:58,910 --> 00:22:00,559 a design in that way. 789 00:22:00,560 --> 00:22:02,239 If there's a technical effect of the 790 00:22:02,240 --> 00:22:04,219 user interface where there's 791 00:22:04,220 --> 00:22:05,959 some sort of embedded workflow that 792 00:22:05,960 --> 00:22:07,759 does something special, that makes 793 00:22:07,760 --> 00:22:09,769 the user interface work better, 794 00:22:09,770 --> 00:22:11,689 I'm thinking of something like an 795 00:22:11,690 --> 00:22:13,309 AI flash player or something that's 796 00:22:13,310 --> 00:22:15,349 got some capability to produce video 797 00:22:15,350 --> 00:22:17,209 in a different way, smoother 798 00:22:17,210 --> 00:22:18,079 and more seamlessly. 799 00:22:18,080 --> 00:22:19,879 Well, that underlying technology 800 00:22:19,880 --> 00:22:21,139 would be patentable, but not the 801 00:22:21,140 --> 00:22:23,659 actual user interface itself. 802 00:22:23,660 --> 00:22:26,089 One of the skills here is 803 00:22:26,090 --> 00:22:27,709 obviously sometimes where the legal 804 00:22:27,710 --> 00:22:30,079 advice is tricky because 805 00:22:30,080 --> 00:22:32,599 you actually are looking at assets, 806 00:22:32,600 --> 00:22:33,949 software, platform or the user 807 00:22:33,950 --> 00:22:35,809 interface and you say, Well, how 808 00:22:35,810 --> 00:22:36,979 do I protect that? 809 00:22:36,980 --> 00:22:39,289 Or how do I prove differentiation? 810 00:22:39,290 --> 00:22:40,909 And you might want several different 811 00:22:40,910 --> 00:22:42,529 types of IP rights to be used 812 00:22:42,530 --> 00:22:44,659 together to achieve the outcome. 813 00:22:44,660 --> 00:22:46,609 So indeed, you might keep the 814 00:22:46,610 --> 00:22:48,409 algorithm secret, sort of trade 815 00:22:48,410 --> 00:22:49,369 secret. 816 00:22:49,370 --> 00:22:50,929 You might patent protect some 817 00:22:50,930 --> 00:22:52,369 aspects. 818 00:22:52,370 --> 00:22:54,349 You also my own training 819 00:22:54,350 --> 00:22:56,959 data that's used for that algorithm. 820 00:22:56,960 --> 00:22:59,059 So now status of intangible or IP 821 00:22:59,060 --> 00:23:01,249 asset that you put some controls 822 00:23:01,250 --> 00:23:02,689 around try or you might have the 823 00:23:02,690 --> 00:23:04,579 rights to license in certain way to 824 00:23:04,580 --> 00:23:05,599 the user. 825 00:23:05,600 --> 00:23:07,129 In the end, you need companies to 826 00:23:07,130 --> 00:23:08,479 learn enough about all of these 827 00:23:08,480 --> 00:23:09,949 things. 828 00:23:09,950 --> 00:23:11,029 The problem is if they go to a 829 00:23:11,030 --> 00:23:12,559 patent attorney, they might get 830 00:23:12,560 --> 00:23:14,329 encouraged to use the patents 831 00:23:14,330 --> 00:23:16,339 approach more things than 832 00:23:16,340 --> 00:23:17,659 they should. 833 00:23:17,660 --> 00:23:19,519 So it's a balance of using 834 00:23:19,520 --> 00:23:21,079 the right advisors, the right times. 835 00:23:21,080 --> 00:23:22,249 But everyone has to raise that 836 00:23:22,250 --> 00:23:23,179 knowledge. 837 00:23:23,180 --> 00:23:25,219 In a series, a space where 838 00:23:25,220 --> 00:23:27,199 generic B-to-B SaaS company doing 839 00:23:27,200 --> 00:23:28,729 interesting things, maybe novel, 840 00:23:28,730 --> 00:23:29,569 maybe not. 841 00:23:29,570 --> 00:23:31,429 But the CEO is flagged by 842 00:23:31,430 --> 00:23:32,779 this for like, okay, this might be 843 00:23:32,780 --> 00:23:34,249 something for us to look at. 844 00:23:34,250 --> 00:23:35,959 Where would they start and what 845 00:23:35,960 --> 00:23:36,949 would they actually do in that 846 00:23:36,950 --> 00:23:39,409 series? A space of investigating 847 00:23:39,410 --> 00:23:40,739 what they have, what they don't have 848 00:23:40,740 --> 00:23:41,899 or what they may have, and whether 849 00:23:41,900 --> 00:23:43,129 or not they should do something. 850 00:23:43,130 --> 00:23:44,899 What steps should they walk through? 851 00:23:44,900 --> 00:23:46,789 So if they want, let's say, less 852 00:23:46,790 --> 00:23:48,559 expensive forks, they might start 853 00:23:48,560 --> 00:23:50,179 with a company like that, where we 854 00:23:50,180 --> 00:23:52,069 also very inexpensively 855 00:23:52,070 --> 00:23:54,169 with early stage businesses 856 00:23:54,170 --> 00:23:56,119 are actually you can do a two hour 857 00:23:56,120 --> 00:23:58,609 workshop with a client to actually 858 00:23:58,610 --> 00:23:59,959 just understand enough about what 859 00:23:59,960 --> 00:24:02,089 they're doing and to give them some 860 00:24:02,090 --> 00:24:03,289 pointers for what they should be 861 00:24:03,290 --> 00:24:05,119 doing or why they should 862 00:24:05,120 --> 00:24:07,099 learn more so that the next meeting 863 00:24:07,100 --> 00:24:08,629 is more productive. 864 00:24:08,630 --> 00:24:10,099 But what we tend to find in that 865 00:24:10,100 --> 00:24:12,229 series space is what they really 866 00:24:12,230 --> 00:24:14,989 need is we call an IP narrative 867 00:24:14,990 --> 00:24:15,979 and it is a deliverable. 868 00:24:15,980 --> 00:24:17,519 We help produce for the client, but 869 00:24:17,520 --> 00:24:19,409 it actually says what it 870 00:24:19,410 --> 00:24:20,539 says. It has respect special. 871 00:24:20,540 --> 00:24:22,069 What is my IP strategy? 872 00:24:22,070 --> 00:24:24,169 Even though it might be embryonic, 873 00:24:24,170 --> 00:24:25,819 but that's like a five page document 874 00:24:25,820 --> 00:24:27,199 they can use with an investor to 875 00:24:27,200 --> 00:24:29,029 say, We know what it is. 876 00:24:29,030 --> 00:24:30,649 We've got a plan and we know what 877 00:24:30,650 --> 00:24:31,589 we're going to do about it. 878 00:24:31,590 --> 00:24:33,079 By the way, we've deliberately not 879 00:24:33,080 --> 00:24:35,119 spent $50,000 880 00:24:35,120 --> 00:24:36,949 building up loads of IP 881 00:24:36,950 --> 00:24:39,079 rights, but we are going to post 882 00:24:39,080 --> 00:24:41,809 Series A do the following things. 883 00:24:41,810 --> 00:24:43,729 And that's usually enough to be able 884 00:24:43,730 --> 00:24:45,229 to be comfortable that they thought 885 00:24:45,230 --> 00:24:47,569 it through and they've got a plan. 886 00:24:47,570 --> 00:24:48,799 And then obviously they then start 887 00:24:48,800 --> 00:24:50,269 to execute on that plan as they go 888 00:24:50,270 --> 00:24:52,069 forward. So we think a little bit of 889 00:24:52,070 --> 00:24:53,989 an IP strategy or an 890 00:24:53,990 --> 00:24:55,879 IP narrative is something that is 891 00:24:55,880 --> 00:24:57,739 a good start and that gets the 892 00:24:57,740 --> 00:24:59,239 stakeholders in the business to just 893 00:24:59,240 --> 00:25:00,439 understand enough about the 894 00:25:00,440 --> 00:25:01,440 strategy. 895 00:25:02,300 --> 00:25:03,679 What you can also do. 896 00:25:03,680 --> 00:25:05,389 But we don't always advise it's 897 00:25:05,390 --> 00:25:07,549 necessary and you can actually 898 00:25:07,550 --> 00:25:09,289 look at all your competitors or all 899 00:25:09,290 --> 00:25:10,699 the kind of companies in the field 900 00:25:10,700 --> 00:25:11,869 and see what they actually do. 901 00:25:11,870 --> 00:25:13,459 So you can see how they file 902 00:25:13,460 --> 00:25:14,959 patents, what if they filed or they 903 00:25:14,960 --> 00:25:15,979 protected? 904 00:25:15,980 --> 00:25:16,939 Because that's all in the public 905 00:25:16,940 --> 00:25:18,679 domain. You can research that. 906 00:25:18,680 --> 00:25:20,299 It's called a pattern landscape. 907 00:25:20,300 --> 00:25:22,129 And that full may be what your 908 00:25:22,130 --> 00:25:23,179 strategy ought to be. 909 00:25:23,180 --> 00:25:25,069 So you're doing a similar thing 910 00:25:25,070 --> 00:25:26,839 to industry cohorts, so you don't 911 00:25:26,840 --> 00:25:28,699 look different in that you 912 00:25:28,700 --> 00:25:29,749 look like you're behaving in a 913 00:25:29,750 --> 00:25:30,889 similar way. 914 00:25:30,890 --> 00:25:32,689 But often that can be expensive to 915 00:25:32,690 --> 00:25:33,919 do that landscape work. 916 00:25:33,920 --> 00:25:35,509 And we tend to note most of these 917 00:25:35,510 --> 00:25:37,369 spaces well enough to just 918 00:25:37,370 --> 00:25:38,479 help a client with what the right 919 00:25:38,480 --> 00:25:39,439 answer is. 920 00:25:39,440 --> 00:25:41,299 So the narrative story for 921 00:25:41,300 --> 00:25:43,189 the investors for the next round, 922 00:25:43,190 --> 00:25:44,719 and once you get to that next round, 923 00:25:44,720 --> 00:25:46,549 you're almost setting the table for 924 00:25:46,550 --> 00:25:47,659 the investor is going to invest 925 00:25:47,660 --> 00:25:48,619 their money. They want to know how 926 00:25:48,620 --> 00:25:50,659 it's allocated with the IP 927 00:25:50,660 --> 00:25:51,739 narrative there. 928 00:25:51,740 --> 00:25:53,089 That could be part of where you're 929 00:25:53,090 --> 00:25:54,469 allocating money in, is your point, 930 00:25:54,470 --> 00:25:55,849 I suppose. And then when you get to 931 00:25:55,850 --> 00:25:57,799 those Series B and that next step 932 00:25:57,800 --> 00:25:59,089 and they wanted to evolve that and 933 00:25:59,090 --> 00:26:00,829 actually invest in it in some form, 934 00:26:00,830 --> 00:26:01,879 what would that look like on a 935 00:26:01,880 --> 00:26:03,529 practical basis? 936 00:26:03,530 --> 00:26:05,449 What that usually will mean 937 00:26:05,450 --> 00:26:07,519 is over that period of time 938 00:26:07,520 --> 00:26:09,139 that have done some things, some 939 00:26:09,140 --> 00:26:11,359 projects, those projects 940 00:26:11,360 --> 00:26:13,639 will have resulted in most likely 941 00:26:13,640 --> 00:26:15,379 some patent applications being 942 00:26:15,380 --> 00:26:17,929 filed, maybe a handful, 943 00:26:17,930 --> 00:26:19,429 maybe as many as ten, but probably 944 00:26:19,430 --> 00:26:20,389 not 100. 945 00:26:20,390 --> 00:26:21,969 It would also mean that. 946 00:26:21,970 --> 00:26:23,289 Identified. 947 00:26:23,290 --> 00:26:24,789 We call this IP discovery, but 948 00:26:24,790 --> 00:26:26,769 they've identified other 949 00:26:26,770 --> 00:26:28,869 assets, intangible assets 950 00:26:28,870 --> 00:26:30,169 that are of value to that. 951 00:26:30,170 --> 00:26:32,019 So that might be we've got 952 00:26:32,020 --> 00:26:33,849 this proprietary data set 953 00:26:33,850 --> 00:26:36,039 that we use to do X, Y and Z. 954 00:26:36,040 --> 00:26:37,929 We've got this partnership 955 00:26:37,930 --> 00:26:40,059 with a university 956 00:26:40,060 --> 00:26:42,069 that contributes research 957 00:26:42,070 --> 00:26:43,809 into our venture. 958 00:26:43,810 --> 00:26:45,429 So there's different things that 959 00:26:45,430 --> 00:26:47,559 build special IP value 960 00:26:47,560 --> 00:26:48,819 and they might also go, we've 961 00:26:48,820 --> 00:26:50,049 actually already established a 962 00:26:50,050 --> 00:26:51,909 brand, so we filed a 963 00:26:51,910 --> 00:26:53,829 trademark and we've got 964 00:26:53,830 --> 00:26:55,899 the domain names that match that 965 00:26:55,900 --> 00:26:57,759 brand of trademarks. 966 00:26:57,760 --> 00:26:59,619 So we've got a bunch of IP 967 00:26:59,620 --> 00:27:01,149 assets now. 968 00:27:01,150 --> 00:27:02,439 And actually when you get to Series 969 00:27:02,440 --> 00:27:05,019 B, they can tell a broader story of 970 00:27:05,020 --> 00:27:06,969 we've got five different types of IP 971 00:27:06,970 --> 00:27:08,439 rights that we're using to protect 972 00:27:08,440 --> 00:27:10,359 the platform and the brand 973 00:27:10,360 --> 00:27:12,189 and the license 974 00:27:12,190 --> 00:27:13,129 agreements we have. 975 00:27:13,130 --> 00:27:14,529 And that that is a really strong 976 00:27:14,530 --> 00:27:15,759 story because I can actually 977 00:27:15,760 --> 00:27:16,959 demonstrate that. 978 00:27:16,960 --> 00:27:18,789 Now if you go further down 979 00:27:18,790 --> 00:27:20,529 and I'm thinking back and I think I 980 00:27:20,530 --> 00:27:21,699 can say this because in the public 981 00:27:21,700 --> 00:27:23,439 domain, but we work for SwiftKey a 982 00:27:23,440 --> 00:27:25,329 number of years ago and 983 00:27:25,330 --> 00:27:26,649 in that case, and we've done this 984 00:27:26,650 --> 00:27:28,179 with many other clients since, you 985 00:27:28,180 --> 00:27:30,549 can actually build a dashboard 986 00:27:30,550 --> 00:27:32,379 which visualizes those IP 987 00:27:32,380 --> 00:27:34,179 rates, which it can use to 988 00:27:34,180 --> 00:27:35,889 communicate that everything's really 989 00:27:35,890 --> 00:27:37,479 well managed. The positions 990 00:27:37,480 --> 00:27:39,489 improving over time. 991 00:27:39,490 --> 00:27:41,319 When someone comes to invest or 992 00:27:41,320 --> 00:27:43,269 buy the business, they can 993 00:27:43,270 --> 00:27:44,919 get the wow effect of how well 994 00:27:44,920 --> 00:27:46,459 managed this thing is. 995 00:27:46,460 --> 00:27:48,069 I've just visualizing that data, 996 00:27:48,070 --> 00:27:49,959 communicate it with real impact and 997 00:27:49,960 --> 00:27:51,579 it drives value in the exit and 998 00:27:51,580 --> 00:27:53,019 ultimately so. 999 00:27:53,020 --> 00:27:55,149 So we think the communication piece 1000 00:27:55,150 --> 00:27:56,259 comes later. 1001 00:27:56,260 --> 00:27:58,119 But that as well when you exit 1002 00:27:58,120 --> 00:28:00,069 scenario or maybe a much bigger 1003 00:28:00,070 --> 00:28:02,169 funding round that's when 1004 00:28:02,170 --> 00:28:04,299 visualization of data and also 1005 00:28:04,300 --> 00:28:06,159 educating C-suites about to tell the 1006 00:28:06,160 --> 00:28:07,659 story is probably quite important to 1007 00:28:07,660 --> 00:28:08,679 drive value. 1008 00:28:08,680 --> 00:28:10,359 So I guess if I just take a step 1009 00:28:10,360 --> 00:28:12,279 back, I'm probably being unfair 1010 00:28:12,280 --> 00:28:14,169 to some SAS tools out there. 1011 00:28:14,170 --> 00:28:15,819 There seems to be kind of like two 1012 00:28:15,820 --> 00:28:17,259 groups. 1013 00:28:17,260 --> 00:28:19,449 Tech companies that are doing 1014 00:28:19,450 --> 00:28:21,369 actually interesting things with 1015 00:28:21,370 --> 00:28:23,889 tech and tech 1016 00:28:23,890 --> 00:28:25,539 companies that are making people's 1017 00:28:25,540 --> 00:28:26,529 lives easier. 1018 00:28:26,530 --> 00:28:28,599 And it might be inventive and novel 1019 00:28:28,600 --> 00:28:30,489 or it might just be 1020 00:28:30,490 --> 00:28:31,659 putting a bunch of opensource 1021 00:28:31,660 --> 00:28:33,849 together in a way that 1022 00:28:33,850 --> 00:28:35,049 is easy. 1023 00:28:35,050 --> 00:28:36,879 We should both companies be looking 1024 00:28:36,880 --> 00:28:38,289 at it because actually like how you 1025 00:28:38,290 --> 00:28:40,059 string that open source in some ways 1026 00:28:40,060 --> 00:28:42,189 can be interesting, or is it really 1027 00:28:42,190 --> 00:28:44,679 only companies that are doing 1028 00:28:44,680 --> 00:28:46,719 inventive technology 1029 00:28:46,720 --> 00:28:48,729 truly, and therefore 1030 00:28:48,730 --> 00:28:50,559 their value is around their 1031 00:28:50,560 --> 00:28:54,069 ideas rather than their product 1032 00:28:54,070 --> 00:28:56,169 that should be focused on 1033 00:28:56,170 --> 00:28:57,699 IP and patents. 1034 00:28:57,700 --> 00:28:59,379 Let's take the company that is glued 1035 00:28:59,380 --> 00:29:00,849 together lots of open source 1036 00:29:00,850 --> 00:29:02,679 components to 1037 00:29:02,680 --> 00:29:04,749 get a product out quickly 1038 00:29:04,750 --> 00:29:06,609 and that solves a problem. 1039 00:29:06,610 --> 00:29:08,529 So they've probably got first 1040 00:29:08,530 --> 00:29:09,819 mover advantage because they've 1041 00:29:09,820 --> 00:29:10,899 figured out how to piece these 1042 00:29:10,900 --> 00:29:12,279 things together. 1043 00:29:12,280 --> 00:29:14,589 They may be very successful 1044 00:29:14,590 --> 00:29:16,389 without feeling that they've got 1045 00:29:16,390 --> 00:29:19,239 anything that inventive or clever. 1046 00:29:19,240 --> 00:29:20,679 It might be quite hard to find 1047 00:29:20,680 --> 00:29:21,759 something that is actually 1048 00:29:21,760 --> 00:29:23,319 patentable anyway because getting a 1049 00:29:23,320 --> 00:29:24,609 software patent isn't easy. 1050 00:29:24,610 --> 00:29:26,229 You need good advice and it needs to 1051 00:29:26,230 --> 00:29:27,909 have some really good technical 1052 00:29:27,910 --> 00:29:29,530 effect or technical invention. 1053 00:29:30,550 --> 00:29:32,649 But eventually 1054 00:29:32,650 --> 00:29:34,179 the barrier to entry is quite low, 1055 00:29:34,180 --> 00:29:35,319 right? Because other people could do 1056 00:29:35,320 --> 00:29:37,449 the same thing and probably catch 1057 00:29:37,450 --> 00:29:38,889 up quickly just by having more 1058 00:29:38,890 --> 00:29:40,239 resources. 1059 00:29:40,240 --> 00:29:41,199 The other thing with your open 1060 00:29:41,200 --> 00:29:43,149 source situation is 1061 00:29:43,150 --> 00:29:44,349 if everything you've built is 1062 00:29:44,350 --> 00:29:45,999 reliant on, say, open source, 1063 00:29:46,000 --> 00:29:47,439 depending on the open source 1064 00:29:47,440 --> 00:29:48,369 license, which you have to 1065 00:29:48,370 --> 00:29:50,409 contribute your new 1066 00:29:50,410 --> 00:29:51,939 IP and new inventions back to that 1067 00:29:51,940 --> 00:29:52,940 community. 1068 00:29:53,640 --> 00:29:55,859 Some buyers have companies that are 1069 00:29:55,860 --> 00:29:57,389 big tech buyers. 1070 00:29:57,390 --> 00:29:59,369 They don't like to buy solutions 1071 00:29:59,370 --> 00:30:00,779 that are proprietary, so they won't 1072 00:30:00,780 --> 00:30:02,699 buy the company because it's riddled 1073 00:30:02,700 --> 00:30:04,169 with open source. 1074 00:30:04,170 --> 00:30:06,119 So we have to open source audits 1075 00:30:06,120 --> 00:30:08,129 sometimes to help clean up companies 1076 00:30:08,130 --> 00:30:10,499 because the value of the enterprise 1077 00:30:10,500 --> 00:30:12,659 is diminished because anyone 1078 00:30:12,660 --> 00:30:13,949 could do that, they could learn 1079 00:30:13,950 --> 00:30:15,999 together and actually commercialize 1080 00:30:16,000 --> 00:30:18,329 some of the IP as they'd like. 1081 00:30:18,330 --> 00:30:20,369 Now, not for the other side 1082 00:30:20,370 --> 00:30:22,259 where you've got someone 1083 00:30:22,260 --> 00:30:24,149 that's genuinely innovating well 1084 00:30:24,150 --> 00:30:25,799 technically in the software side and 1085 00:30:25,800 --> 00:30:26,969 therefore they could get some 1086 00:30:26,970 --> 00:30:28,079 patents. 1087 00:30:28,080 --> 00:30:29,309 And thinking of quite a number of 1088 00:30:29,310 --> 00:30:30,659 Octopus ventures clients we've 1089 00:30:30,660 --> 00:30:32,459 worked with over the years, which 1090 00:30:32,460 --> 00:30:34,019 they wouldn't mind of saying it. 1091 00:30:34,020 --> 00:30:35,429 You know, there's some really good 1092 00:30:35,430 --> 00:30:37,199 software businesses that also have 1093 00:30:37,200 --> 00:30:39,029 been invented, inventive and 1094 00:30:39,030 --> 00:30:41,639 protected, those with patents 1095 00:30:41,640 --> 00:30:42,929 and you've got those two flavors. 1096 00:30:42,930 --> 00:30:44,969 Now what matters later, 1097 00:30:44,970 --> 00:30:46,739 this is winding back forward to 1098 00:30:46,740 --> 00:30:48,719 maybe another five years is 1099 00:30:48,720 --> 00:30:50,369 when the business is successful and 1100 00:30:50,370 --> 00:30:51,899 it's actually making a profit. 1101 00:30:51,900 --> 00:30:52,679 Right? 1102 00:30:52,680 --> 00:30:54,539 And it's making a lot of profit. 1103 00:30:54,540 --> 00:30:55,739 And we've got lots of software 1104 00:30:55,740 --> 00:30:58,169 businesses making a lot of profit. 1105 00:30:58,170 --> 00:31:00,059 There are government incentives 1106 00:31:00,060 --> 00:31:03,029 like the patent box regime in the UK 1107 00:31:03,030 --> 00:31:04,979 where if you've got patents 1108 00:31:04,980 --> 00:31:06,389 covering the technology that's 1109 00:31:06,390 --> 00:31:07,889 making the profit, i.e. 1110 00:31:07,890 --> 00:31:09,719 the software platform, 1111 00:31:09,720 --> 00:31:11,189 you can get your effective tax 1112 00:31:11,190 --> 00:31:13,589 corporation tax rate down from 25% 1113 00:31:13,590 --> 00:31:14,909 to ten. 1114 00:31:14,910 --> 00:31:16,249 If you're making millions and 1115 00:31:16,250 --> 00:31:18,299 billions of profit, all of a sudden 1116 00:31:18,300 --> 00:31:20,039 your ability to retain cash, but 1117 00:31:20,040 --> 00:31:21,959 also the genuine profit of that 1118 00:31:21,960 --> 00:31:24,359 business is massively improved. 1119 00:31:24,360 --> 00:31:26,429 So we are seeing lots of software 1120 00:31:26,430 --> 00:31:29,099 companies that didn't file patents 1121 00:31:29,100 --> 00:31:31,079 coming to us and saying, have 1122 00:31:31,080 --> 00:31:32,249 we got anything that we didn't 1123 00:31:32,250 --> 00:31:34,499 disclose that could be patented 1124 00:31:34,500 --> 00:31:36,329 just so we can go to patent box? 1125 00:31:36,330 --> 00:31:37,469 Right? Because now they're very 1126 00:31:37,470 --> 00:31:38,879 profitable. 1127 00:31:38,880 --> 00:31:40,979 That's another strategic reason 1128 00:31:40,980 --> 00:31:43,049 to have patents, which becomes 1129 00:31:43,050 --> 00:31:45,179 actually a real operational 1130 00:31:45,180 --> 00:31:46,799 cash flow. Business can be improved 1131 00:31:46,800 --> 00:31:47,669 with it. 1132 00:31:47,670 --> 00:31:49,949 Do you have to prove 1133 00:31:49,950 --> 00:31:51,359 that you're specifically making 1134 00:31:51,360 --> 00:31:53,399 money from those patents? 1135 00:31:53,400 --> 00:31:54,869 It's a few different tests. 1136 00:31:54,870 --> 00:31:57,059 One is that you have to be doing R&D 1137 00:31:57,060 --> 00:31:58,859 related to the technology, and there 1138 00:31:58,860 --> 00:32:00,659 are some nuances I won't go into 1139 00:32:00,660 --> 00:32:01,499 around that. 1140 00:32:01,500 --> 00:32:02,669 You know, you have to mandate 1141 00:32:02,670 --> 00:32:03,959 somebody. 1142 00:32:03,960 --> 00:32:05,579 The requirement is really that the 1143 00:32:05,580 --> 00:32:07,499 patents or patents, you 1144 00:32:07,500 --> 00:32:08,579 only need one. 1145 00:32:08,580 --> 00:32:10,349 In the case of the UK, you need one 1146 00:32:10,350 --> 00:32:12,689 to be granted access. 1147 00:32:12,690 --> 00:32:14,459 That covers an aspect of the 1148 00:32:14,460 --> 00:32:15,849 technology that's in use and 1149 00:32:15,850 --> 00:32:17,549 creating the revenues. 1150 00:32:17,550 --> 00:32:19,529 So if you have a 1151 00:32:19,530 --> 00:32:20,909 payment platform and all the 1152 00:32:20,910 --> 00:32:22,559 revenues flowing through it. 1153 00:32:22,560 --> 00:32:24,089 What should we do to promote? 1154 00:32:24,090 --> 00:32:27,209 A while ago, every transaction 1155 00:32:27,210 --> 00:32:29,339 was using a particular feature 1156 00:32:29,340 --> 00:32:31,469 and because they could get a patent 1157 00:32:31,470 --> 00:32:33,509 on that feature, then every 1158 00:32:33,510 --> 00:32:34,979 bit of revenue of that business 1159 00:32:34,980 --> 00:32:36,959 could be fall into the patent box 1160 00:32:36,960 --> 00:32:38,249 calculation. 1161 00:32:38,250 --> 00:32:39,809 So therefore all the profit 1162 00:32:39,810 --> 00:32:41,849 generated could be considered. 1163 00:32:41,850 --> 00:32:43,349 There's lots of different ways of 1164 00:32:43,350 --> 00:32:44,909 counting. While you have to 1165 00:32:44,910 --> 00:32:46,619 manipulate things to get the claim 1166 00:32:46,620 --> 00:32:48,479 together to decide how much you get. 1167 00:32:48,480 --> 00:32:50,369 But that is generally the 1168 00:32:50,370 --> 00:32:52,049 case. You don't need the whole car 1169 00:32:52,050 --> 00:32:53,819 to be packed into it if you have 1170 00:32:53,820 --> 00:32:55,379 bits of the engine but averages in 1171 00:32:55,380 --> 00:32:57,299 every car you sell and 1172 00:32:57,300 --> 00:32:58,739 it all comes in. 1173 00:32:58,740 --> 00:33:00,269 The other thing that you mentioned 1174 00:33:00,270 --> 00:33:02,099 when we chatted beforehand 1175 00:33:02,100 --> 00:33:04,139 was asset based 1176 00:33:04,140 --> 00:33:06,329 lending as an alternative 1177 00:33:06,330 --> 00:33:07,379 to equity finance. 1178 00:33:07,380 --> 00:33:08,849 So for Lent, we talk about the money 1179 00:33:08,850 --> 00:33:09,959 stuff. Right now. 1180 00:33:09,960 --> 00:33:11,789 Probably about 15 years ago 1181 00:33:11,790 --> 00:33:13,679 we started to see 1182 00:33:13,680 --> 00:33:15,779 some banks lending money 1183 00:33:15,780 --> 00:33:17,819 secured against the IP. 1184 00:33:17,820 --> 00:33:19,259 And actually we saw that was Silicon 1185 00:33:19,260 --> 00:33:20,279 Valley Bank, right? 1186 00:33:20,280 --> 00:33:22,079 So Silicon Valley Bank was probably 1187 00:33:22,080 --> 00:33:23,939 the leader in this and a number of 1188 00:33:23,940 --> 00:33:25,889 US banks and and 1189 00:33:25,890 --> 00:33:27,869 all that meant is a company needed 1190 00:33:27,870 --> 00:33:30,089 a debt facility to 1191 00:33:30,090 --> 00:33:31,979 fund it but they would 1192 00:33:31,980 --> 00:33:34,409 be investing in tech businesses 1193 00:33:34,410 --> 00:33:36,269 that was probably actually scale up 1194 00:33:36,270 --> 00:33:37,889 stage not startup stage. 1195 00:33:37,890 --> 00:33:39,629 So they've had a few rounds of 1196 00:33:39,630 --> 00:33:41,609 equity investments, therefore 1197 00:33:41,610 --> 00:33:44,399 a number of theses diligence some 1198 00:33:44,400 --> 00:33:45,419 several times. 1199 00:33:45,420 --> 00:33:47,789 So it was a good proposition, 1200 00:33:47,790 --> 00:33:49,829 but they needed more capital to get 1201 00:33:49,830 --> 00:33:51,389 to that point of profitability to 1202 00:33:51,390 --> 00:33:53,609 just go through that phase. 1203 00:33:53,610 --> 00:33:55,739 So they then need to secure 1204 00:33:55,740 --> 00:33:58,319 ten, 20, 30, $40 million. 1205 00:33:58,320 --> 00:33:59,609 Well, what was the business like 1206 00:33:59,610 --> 00:34:01,079 that got that you can secure it 1207 00:34:01,080 --> 00:34:03,389 against? What is the IP? 1208 00:34:03,390 --> 00:34:04,769 So in the case that the business 1209 00:34:04,770 --> 00:34:06,599 fails, then the lender 1210 00:34:06,600 --> 00:34:07,600 gets the IP. 1211 00:34:08,560 --> 00:34:10,569 And maybe they can monetize 1212 00:34:10,570 --> 00:34:12,069 it somehow. 1213 00:34:12,070 --> 00:34:13,869 Right. So that's the concept of 1214 00:34:13,870 --> 00:34:15,309 asset based lending and what we've 1215 00:34:15,310 --> 00:34:16,569 actually seen. 1216 00:34:16,570 --> 00:34:18,399 We've seen Barclays, Clydesdale 1217 00:34:18,400 --> 00:34:20,738 Bank, HSBC, 1218 00:34:20,739 --> 00:34:23,138 NatWest, that actually we've seen 1219 00:34:23,139 --> 00:34:24,908 a number of banks starting to do 1220 00:34:24,909 --> 00:34:27,499 more of that in recent years. 1221 00:34:27,500 --> 00:34:29,019 And so what they're doing is they're 1222 00:34:29,020 --> 00:34:30,369 looking to because we've worked in 1223 00:34:30,370 --> 00:34:31,899 this space, they always have a 1224 00:34:31,900 --> 00:34:33,309 credit committee that will make a 1225 00:34:33,310 --> 00:34:34,629 decision to lend the money, and 1226 00:34:34,630 --> 00:34:35,948 they're lending the money based on 1227 00:34:35,949 --> 00:34:37,839 that likely PNL of 1228 00:34:37,840 --> 00:34:39,399 the business and how it will get to 1229 00:34:39,400 --> 00:34:40,629 profitability. 1230 00:34:40,630 --> 00:34:42,158 But the AP is sort of pushing the 1231 00:34:42,159 --> 00:34:44,799 risk gap between that 1232 00:34:44,800 --> 00:34:46,809 so that they'll look to us 1233 00:34:46,810 --> 00:34:48,669 to understand what the 1234 00:34:48,670 --> 00:34:50,559 IP is, what might its value 1235 00:34:50,560 --> 00:34:52,359 be, how might you get the value in 1236 00:34:52,360 --> 00:34:54,849 extremis if it collapses? 1237 00:34:54,850 --> 00:34:56,079 And then they'll use that as an 1238 00:34:56,080 --> 00:34:58,029 additional bit of collateral to just 1239 00:34:58,030 --> 00:34:59,169 tip them over the edge, to be 1240 00:34:59,170 --> 00:35:01,029 confident to make the loan. 1241 00:35:01,030 --> 00:35:03,189 Or get better rates on the loan. 1242 00:35:03,190 --> 00:35:04,449 Yeah. And they've been very 1243 00:35:04,450 --> 00:35:06,399 successful. So the 1244 00:35:06,400 --> 00:35:07,959 sort of failure rate until recent 1245 00:35:07,960 --> 00:35:10,129 times has actually been, as 1246 00:35:10,130 --> 00:35:12,009 Richards put it, helps 1247 00:35:12,010 --> 00:35:13,929 for the company because they tend to 1248 00:35:13,930 --> 00:35:15,669 get any further equity dilution. 1249 00:35:15,670 --> 00:35:17,589 And in times where money's hard to 1250 00:35:17,590 --> 00:35:19,419 raise, which at the moment is or has 1251 00:35:19,420 --> 00:35:21,519 been for 3 or 4 years, 1252 00:35:21,520 --> 00:35:23,349 then some of those funding solutions 1253 00:35:23,350 --> 00:35:25,239 are actually on the 1254 00:35:25,240 --> 00:35:27,369 cusp and they've got a choice 1255 00:35:27,370 --> 00:35:29,229 of either downsizing and reducing 1256 00:35:29,230 --> 00:35:31,149 headcount, which delays 1257 00:35:31,150 --> 00:35:32,829 the gratification of the growth and 1258 00:35:32,830 --> 00:35:34,839 success, or actually maybe 1259 00:35:34,840 --> 00:35:36,369 this extra funding can just get them 1260 00:35:36,370 --> 00:35:38,229 through that 2 or 3 year period 1261 00:35:38,230 --> 00:35:39,879 that if they got it with motivation 1262 00:35:39,880 --> 00:35:41,979 but a roving credit facility 1263 00:35:41,980 --> 00:35:42,980 they pay for. 1264 00:35:43,600 --> 00:35:45,519 So when you think about the ultimate 1265 00:35:45,520 --> 00:35:46,929 end point where you have a strategic 1266 00:35:46,930 --> 00:35:48,159 buyer, let's assume that they're 1267 00:35:48,160 --> 00:35:50,289 interested in intellectual property. 1268 00:35:50,290 --> 00:35:51,729 What is that strategic buyer going 1269 00:35:51,730 --> 00:35:53,709 to be looking for in your portfolio? 1270 00:35:53,710 --> 00:35:54,639 Or what's the criteria 1271 00:35:54,640 --> 00:35:56,109 considerations to ensure that they 1272 00:35:56,110 --> 00:35:58,029 feel satisfied you've got something 1273 00:35:58,030 --> 00:35:58,899 that actually matters? 1274 00:35:58,900 --> 00:35:59,889 You've actually cataloged it 1275 00:35:59,890 --> 00:36:01,719 correctly and they can ingest that 1276 00:36:01,720 --> 00:36:02,859 into their larger corporate 1277 00:36:02,860 --> 00:36:04,389 portfolio. 1278 00:36:04,390 --> 00:36:05,989 A little bit depends on the buyer, 1279 00:36:05,990 --> 00:36:07,749 and we've seen different buyers with 1280 00:36:07,750 --> 00:36:10,119 different levels of sophistication. 1281 00:36:10,120 --> 00:36:12,399 So the bare minimum 1282 00:36:12,400 --> 00:36:14,259 is when there's some form of 1283 00:36:14,260 --> 00:36:16,329 share purchase agreements, 1284 00:36:16,330 --> 00:36:18,249 it's got some IP clauses and that 1285 00:36:18,250 --> 00:36:20,799 say and all the IP comes across 1286 00:36:20,800 --> 00:36:23,019 and sometimes there's a schedule 1287 00:36:23,020 --> 00:36:25,239 in the purchase agreement that lists 1288 00:36:25,240 --> 00:36:27,759 the IP. So typically 1289 00:36:27,760 --> 00:36:29,739 that would be a list of registered 1290 00:36:29,740 --> 00:36:31,359 rights, which might be the domain 1291 00:36:31,360 --> 00:36:32,769 names, the trademarks and the 1292 00:36:32,770 --> 00:36:34,359 patents, because they're easy to 1293 00:36:34,360 --> 00:36:36,219 find but easy to find 1294 00:36:36,220 --> 00:36:37,629 in the public domain. 1295 00:36:37,630 --> 00:36:39,519 And they will do what we would 1296 00:36:39,520 --> 00:36:42,429 call the legal basics of checking 1297 00:36:42,430 --> 00:36:44,259 that the company owns 1298 00:36:44,260 --> 00:36:46,479 legal title to those assets 1299 00:36:46,480 --> 00:36:48,429 and can demonstrate that 1300 00:36:48,430 --> 00:36:50,139 and that it probably hasn't granted 1301 00:36:50,140 --> 00:36:52,059 rights to the other parties so 1302 00:36:52,060 --> 00:36:53,739 that they've got the ability to 1303 00:36:53,740 --> 00:36:55,569 control and use those rights going 1304 00:36:55,570 --> 00:36:56,379 forward. 1305 00:36:56,380 --> 00:36:58,719 So we call that the legal basics. 1306 00:36:58,720 --> 00:37:00,489 And actually, many companies tend to 1307 00:37:00,490 --> 00:37:02,529 use outside counsel to do IP 1308 00:37:02,530 --> 00:37:03,879 diligence, and that's the kind of 1309 00:37:03,880 --> 00:37:04,880 thing they do. 1310 00:37:05,630 --> 00:37:08,179 The extra thing that sophisticated 1311 00:37:08,180 --> 00:37:09,829 buyers do is they actually want to 1312 00:37:09,830 --> 00:37:11,779 know is the IP any good? 1313 00:37:11,780 --> 00:37:14,119 Does it actually protect the 1314 00:37:14,120 --> 00:37:15,979 valuable bits of the business that 1315 00:37:15,980 --> 00:37:17,449 we think is going to and make all 1316 00:37:17,450 --> 00:37:19,069 that much of a profit for us? 1317 00:37:19,070 --> 00:37:20,929 Or that technology would 1318 00:37:20,930 --> 00:37:22,879 have to integrate with our office 1319 00:37:22,880 --> 00:37:24,439 platform or whatever it is. 1320 00:37:24,440 --> 00:37:26,299 They want to know that they can do 1321 00:37:26,300 --> 00:37:27,919 that and that it will. 1322 00:37:27,920 --> 00:37:29,569 You know, it really is special. 1323 00:37:29,570 --> 00:37:30,829 Well, that comes down to what's the 1324 00:37:30,830 --> 00:37:32,839 quality of the IP and do the patents 1325 00:37:32,840 --> 00:37:34,939 cover the technology properly? 1326 00:37:34,940 --> 00:37:36,529 Are they well written? 1327 00:37:36,530 --> 00:37:38,029 Are there any gaps or risks that 1328 00:37:38,030 --> 00:37:39,289 need to be filled? So there's sort 1329 00:37:39,290 --> 00:37:41,149 of that or I'll say the boring legal 1330 00:37:41,150 --> 00:37:42,799 bit because I missed the value and 1331 00:37:42,800 --> 00:37:44,809 quality balance, which 1332 00:37:44,810 --> 00:37:45,949 we think is really important. 1333 00:37:45,950 --> 00:37:47,989 But it's also important that 1334 00:37:47,990 --> 00:37:49,069 if you're selling a business to be 1335 00:37:49,070 --> 00:37:50,749 able to tell that story because then 1336 00:37:50,750 --> 00:37:52,959 it's convincing and people 1337 00:37:52,960 --> 00:37:54,859 like to know that they've got 1338 00:37:54,860 --> 00:37:55,669 a strong position. 1339 00:37:55,670 --> 00:37:56,869 I think if you've got one, you might 1340 00:37:56,870 --> 00:37:58,429 as well tell people about it. 1341 00:37:58,430 --> 00:37:59,629 And on the other side, if we're 1342 00:37:59,630 --> 00:38:01,669 acting for a buyer, it's 1343 00:38:01,670 --> 00:38:03,799 very easy to find holes in your IP 1344 00:38:03,800 --> 00:38:05,299 and you often find companies have 1345 00:38:05,300 --> 00:38:07,159 got lots of patents, but 1346 00:38:07,160 --> 00:38:08,599 there are 2 or 3 that cover the 1347 00:38:08,600 --> 00:38:10,129 valuable bit that people would want 1348 00:38:10,130 --> 00:38:12,529 to buy. So there's always a mismatch 1349 00:38:12,530 --> 00:38:15,319 and that's not always spotted. 1350 00:38:15,320 --> 00:38:17,839 And then from a buyer standpoint 1351 00:38:17,840 --> 00:38:19,099 and from a seller standpoint as 1352 00:38:19,100 --> 00:38:20,989 well, how do they come to a place 1353 00:38:20,990 --> 00:38:22,879 where the valuation put on that 1354 00:38:22,880 --> 00:38:24,229 IP actually makes sense because I 1355 00:38:24,230 --> 00:38:25,519 suspect that's quite a struggle in 1356 00:38:25,520 --> 00:38:27,389 the sense that it's quite intangible. 1357 00:38:27,390 --> 00:38:29,269 Yeah. So I think the way we've we've 1358 00:38:29,270 --> 00:38:30,799 seen a different flavor, say the 1359 00:38:30,800 --> 00:38:33,349 simplest flavor is 1360 00:38:33,350 --> 00:38:35,179 there's no value ascribed to the IP 1361 00:38:35,180 --> 00:38:36,619 at all because they're buying the 1362 00:38:36,620 --> 00:38:38,749 business based on its 1363 00:38:38,750 --> 00:38:40,639 future cash flows and the economics 1364 00:38:40,640 --> 00:38:41,599 of the business. 1365 00:38:41,600 --> 00:38:42,739 That's sort of the accounting view 1366 00:38:42,740 --> 00:38:43,969 as well. But often that's how 1367 00:38:43,970 --> 00:38:45,619 businesses support. 1368 00:38:45,620 --> 00:38:47,929 They might then pay a multiplier 1369 00:38:47,930 --> 00:38:49,789 or premium or pay 1370 00:38:49,790 --> 00:38:51,079 more for that business because they 1371 00:38:51,080 --> 00:38:52,609 think it can accelerate or do 1372 00:38:52,610 --> 00:38:55,129 something special or different, 1373 00:38:55,130 --> 00:38:57,019 and then they might pay even 1374 00:38:57,020 --> 00:38:58,969 more if they can see that the IP 1375 00:38:58,970 --> 00:39:01,069 story supports that differentiation 1376 00:39:01,070 --> 00:39:02,389 in the long term. 1377 00:39:02,390 --> 00:39:03,889 So I would say it's a bit of a 1378 00:39:03,890 --> 00:39:05,719 kicker to value, but you wouldn't 1379 00:39:05,720 --> 00:39:07,819 necessarily discretely value the IP 1380 00:39:07,820 --> 00:39:09,049 separately. 1381 00:39:09,050 --> 00:39:11,059 Some companies, though do actually 1382 00:39:11,060 --> 00:39:12,919 say, Yeah, but what's the IP 1383 00:39:12,920 --> 00:39:13,969 worth? 1384 00:39:13,970 --> 00:39:15,349 And that's really they're looking 1385 00:39:15,350 --> 00:39:16,399 for some sort of financial 1386 00:39:16,400 --> 00:39:17,249 quantification. 1387 00:39:17,250 --> 00:39:19,399 We do build valuation models. 1388 00:39:19,400 --> 00:39:20,929 If you are a tech business that's 1389 00:39:20,930 --> 00:39:22,519 used to having to cross license 1390 00:39:22,520 --> 00:39:23,839 patents because you're getting sued 1391 00:39:23,840 --> 00:39:25,669 left, right and center, when 1392 00:39:25,670 --> 00:39:26,989 you're buying a business, you will 1393 00:39:26,990 --> 00:39:29,479 actually look at what 1394 00:39:29,480 --> 00:39:31,609 licensing potential might those 1395 00:39:31,610 --> 00:39:33,169 patents have. So I can buy the 1396 00:39:33,170 --> 00:39:35,029 business and enjoy the revenues of 1397 00:39:35,030 --> 00:39:36,369 the business. So it's integration of 1398 00:39:36,370 --> 00:39:37,639 the technology. 1399 00:39:37,640 --> 00:39:39,229 But maybe I can also additionally 1400 00:39:39,230 --> 00:39:40,729 leverage the patents to help me 1401 00:39:40,730 --> 00:39:42,709 reduce my cross licensing fees. 1402 00:39:43,780 --> 00:39:45,669 Google bought Motorola mobility 1403 00:39:45,670 --> 00:39:48,049 back in 2011, so it was a 10.2 1404 00:39:48,050 --> 00:39:49,050 billion. 1405 00:39:49,960 --> 00:39:51,279 Either for the patents or it's 1406 00:39:51,280 --> 00:39:52,689 hardly a business. 1407 00:39:52,690 --> 00:39:53,679 Well, that's right. 1408 00:39:53,680 --> 00:39:54,909 But they didn't have any patterns at 1409 00:39:54,910 --> 00:39:56,169 the time. 1410 00:39:56,170 --> 00:39:58,359 Various patterns have helped them 1411 00:39:58,360 --> 00:40:00,429 to not pay huge 1412 00:40:00,430 --> 00:40:01,899 royalties to many, many other 1413 00:40:01,900 --> 00:40:03,429 businesses across the world because 1414 00:40:03,430 --> 00:40:04,989 they've got cross-licensing 1415 00:40:04,990 --> 00:40:06,349 firepower of those assets. 1416 00:40:06,350 --> 00:40:08,379 So that's where the patents 1417 00:40:08,380 --> 00:40:10,329 take on a bit more of the front 1418 00:40:10,330 --> 00:40:11,889 and center of the value. 1419 00:40:11,890 --> 00:40:13,989 So my question is, when you talked 1420 00:40:13,990 --> 00:40:15,459 about companies will have loads of 1421 00:40:15,460 --> 00:40:16,899 patents, but only maybe 1 or 2 of 1422 00:40:16,900 --> 00:40:18,909 them are valuable, That is 100% 1423 00:40:18,910 --> 00:40:20,079 my experience. 1424 00:40:20,080 --> 00:40:21,219 And I feel like companies don't 1425 00:40:21,220 --> 00:40:22,689 actually know because we're being 1426 00:40:22,690 --> 00:40:23,889 inventive. We're trying to figure 1427 00:40:23,890 --> 00:40:26,079 things out which ones 1428 00:40:26,080 --> 00:40:28,119 are going to be valuable. 1429 00:40:28,120 --> 00:40:29,739 So then I guess is is the argument 1430 00:40:29,740 --> 00:40:31,839 to default for just doing all 1431 00:40:31,840 --> 00:40:33,789 of them just in case or 1432 00:40:33,790 --> 00:40:36,069 actually try and figure out 1433 00:40:36,070 --> 00:40:38,139 do the hard work of 1434 00:40:38,140 --> 00:40:40,029 this one matters? 1435 00:40:40,030 --> 00:40:41,739 This one doesn't. 1436 00:40:41,740 --> 00:40:43,059 I think there are some basic 1437 00:40:43,060 --> 00:40:45,039 processes you can put in place to 1438 00:40:45,040 --> 00:40:46,809 treat every invention in a certain 1439 00:40:46,810 --> 00:40:49,299 way, which means you're absolutely 1440 00:40:49,300 --> 00:40:50,739 guaranteed to have much better 1441 00:40:50,740 --> 00:40:51,609 quality patents. 1442 00:40:51,610 --> 00:40:53,109 So many more of them will end up 1443 00:40:53,110 --> 00:40:54,249 being good. 1444 00:40:54,250 --> 00:40:55,539 The other thing you can do is ask 1445 00:40:55,540 --> 00:40:57,099 those patents, go through the patent 1446 00:40:57,100 --> 00:40:58,959 office examination process, 1447 00:40:58,960 --> 00:41:00,309 which takes years, right? 1448 00:41:00,310 --> 00:41:02,049 You can adapt the scope of the 1449 00:41:02,050 --> 00:41:03,999 patents over time 1450 00:41:04,000 --> 00:41:05,499 to cover where your invention 1451 00:41:05,500 --> 00:41:06,399 landed. 1452 00:41:06,400 --> 00:41:08,079 Many companies don't do that. 1453 00:41:08,080 --> 00:41:09,939 And if you do that well, you end 1454 00:41:09,940 --> 00:41:11,709 up with many more higher cost 1455 00:41:11,710 --> 00:41:13,749 patterns that are protecting 1456 00:41:13,750 --> 00:41:14,619 your business. 1457 00:41:14,620 --> 00:41:15,879 And that's the problem as people 1458 00:41:15,880 --> 00:41:17,229 sometimes leave it to outside 1459 00:41:17,230 --> 00:41:18,639 counsel to sort of manage all that 1460 00:41:18,640 --> 00:41:20,019 prosecution. 1461 00:41:20,020 --> 00:41:21,309 But they lose sight of what the 1462 00:41:21,310 --> 00:41:23,319 inventions actually become in 1463 00:41:23,320 --> 00:41:24,729 terms of the patents. 1464 00:41:24,730 --> 00:41:26,079 So that needs to be coupled more 1465 00:41:26,080 --> 00:41:26,889 closely. 1466 00:41:26,890 --> 00:41:27,939 What I would also say, because 1467 00:41:27,940 --> 00:41:29,259 you're what your audience is, let's 1468 00:41:29,260 --> 00:41:30,399 close, right. They're really 1469 00:41:30,400 --> 00:41:31,779 practical people and they're trying 1470 00:41:31,780 --> 00:41:33,069 to run businesses and make stuff 1471 00:41:33,070 --> 00:41:34,569 happen. We've talked about some 1472 00:41:34,570 --> 00:41:36,279 quite complicated concepts, but 1473 00:41:36,280 --> 00:41:38,289 actually they're all grounded in 1474 00:41:38,290 --> 00:41:39,879 what's the right economical 1475 00:41:39,880 --> 00:41:41,529 commercial thing to do. 1476 00:41:41,530 --> 00:41:42,729 And there are some very simple 1477 00:41:42,730 --> 00:41:44,529 guidelines that if you put certain 1478 00:41:44,530 --> 00:41:46,719 processes in place, well, 1479 00:41:46,720 --> 00:41:48,879 and maybe the right skill set or 1480 00:41:48,880 --> 00:41:51,399 either advisors or in-house people, 1481 00:41:51,400 --> 00:41:53,199 then it's not that difficult to do 1482 00:41:53,200 --> 00:41:54,399 this well anymore because there's a 1483 00:41:54,400 --> 00:41:56,019 lot of skills around, there's a lot 1484 00:41:56,020 --> 00:41:57,999 of knowledge, whereas ten years ago 1485 00:41:58,000 --> 00:41:59,079 no one did not to do this 1486 00:41:59,080 --> 00:42:00,080 particularly well. 1487 00:42:01,090 --> 00:42:02,889 So if you do want to get started, 1488 00:42:03,940 --> 00:42:05,559 what do our listeners do? 1489 00:42:05,560 --> 00:42:06,969 What's the first step? 1490 00:42:06,970 --> 00:42:08,139 There are quite a lot of public 1491 00:42:08,140 --> 00:42:10,359 domain resources for people to read 1492 00:42:10,360 --> 00:42:12,309 white paper documents, read 1493 00:42:12,310 --> 00:42:13,749 the full education courses that are 1494 00:42:13,750 --> 00:42:14,739 free. 1495 00:42:14,740 --> 00:42:16,299 With about ten hours of investment, 1496 00:42:16,300 --> 00:42:17,319 you can actually become pretty 1497 00:42:17,320 --> 00:42:19,149 valuable and then you can get 1498 00:42:19,150 --> 00:42:20,979 free conversations with advisors 1499 00:42:20,980 --> 00:42:22,959 to actually just orientate 1500 00:42:22,960 --> 00:42:24,249 and work out what you might want to 1501 00:42:24,250 --> 00:42:25,569 do before you actually spend money 1502 00:42:25,570 --> 00:42:26,949 on this stuff. 1503 00:42:26,950 --> 00:42:28,269 Out of everything that we've covered 1504 00:42:28,270 --> 00:42:30,189 today or not, if 1505 00:42:30,190 --> 00:42:31,539 our listeners can only take one 1506 00:42:31,540 --> 00:42:33,099 thing away from the conversation, 1507 00:42:33,100 --> 00:42:34,239 what is it? 1508 00:42:34,240 --> 00:42:35,499 If it's one thing, it would be 1509 00:42:35,500 --> 00:42:36,339 education. 1510 00:42:36,340 --> 00:42:38,269 So learn about IP that 1511 00:42:38,270 --> 00:42:40,119 this actually drives value 1512 00:42:40,120 --> 00:42:41,649 and it certainly diminishes value if 1513 00:42:41,650 --> 00:42:43,479 you get it wrong. So I would 1514 00:42:43,480 --> 00:42:44,480 get educated. 1515 00:42:45,370 --> 00:42:46,599 Perfect. All right. Thank you, John 1516 00:42:46,600 --> 00:42:47,679 Calvin, for joining us on the 1517 00:42:47,680 --> 00:42:48,879 operations room. If you like what 1518 00:42:48,880 --> 00:42:50,079 you hear, please leave us a comment 1519 00:42:50,080 --> 00:42:51,369 or subscribe and we will see you 1520 00:42:51,370 --> 00:42:52,370 next week.