Why buying patents makes sense during recession

When reading this month’s issue of IAM magazine (nr. 34), we came across a remark allegedly made by a senior IP executive at a major high-tech company, (“The patent transaction market at a crossroads“) asking himself “how can you justify buying patents when you are laying people off” .  A rather amazing statement from the mouth of someone who should know better. Two issues are being put in the equation here that really have little to do with each other. In recession times, when demand is low, companies are laying off employees because a company’s income as a result of sales drops, as demand decreases.  Companies hoard cash, as cash, especially in this particular “depression-like recession” is king. What also is king, is “vision”. Lack of vision on innovative power in any company, on where its technology will go, where they can improve, make better and cheaper stuff, where energy resources will be in 5 years time, will result in even lower income in the future, as such company will lose its edge towards competitors who have spent time and money on how to innovate their production or services. Obviously, buying patents as such will not be enough to weather a recession. However building up an IP position in areas where the company sees future in certain innovations, either by driving the innovative production or service themselves or developing in open innovation surroundings, IP will plays its role to secure competitive edge over others that are looking for the same innovative approach. Apply for the patent is an option but this fits better in a longer, say 4-5 year plan, strategy. For short term goals to reach certain innovation objectives, IP acquisition of patents, is a smart way, either to get freedom to operate in an area where innovation is sought, or securing a competitive position.

The thing that worries most is that if even IP “senior executives” have opinions like the one mentioned, how do we expect any senior management of a company, the CEO’s and CFOs to ever understand and appreciate the power of IP?