Raising IP Awareness

Innovation plays a material role in the U.S. economy. In fact, the direct and indirect impacts of innovation account for more than 40% of U.S. economic growth and employment. However, without intellectual property (IP), innovation may not reach its economic potential. IP protects innovation and drives a significant portion of the market value of companies. It comes in the form of patents, copyrights, trademarks, and trade secrets.

The value placed on IP, especially patents, continues to rise. In fact, the patent landscape may reach worldwide licensing revenue of $500 billion by 2015 according to Ernst & Young. And as headlines show, companies continue to apply for and acquire patents to build portfolios for defense measures and to increase market value. Despite the continued interest in patents, the United States faces major competition with foreign countries. In 2013, Japan and Taiwan ranked first, third, and fourth for top geographic grants. This is a significant indicator that the United States may be at risk in the innovation landscape.

A part of the issue may stem from the fact that much of the public does not understand what IP is, what it does, and how important it is. This is not great news for up and coming entrepreneurs and innovators. It’s really no wonder since it is generally not taught in schools. IP strategist Ben Goodger reports that few business schools and universities teach courses focused on the importance of IP as a crucial economic and financial asset. Therefore, many people simply stumble through the nuances of IP. This is not ideal as the lack of IP can make the difference between success and failure.

Therefore, the question arises as to when IP should be introduced. Today, plenty of adults do not understand IP. Perhaps IP should be taught at the grade school level. At least one organization focused on young children finds value in IP education. In collaboration with the Intellectual Property Owners (IPO) Education Foundation and the USPTO, the Girl Scout Council of the Nation’s Capital now offers an intellectual property patch. In an effort to encourage girls to focus on STEM (science, technology, engineering, and math) careers, the organization offers an IP patch to familiarize scouts with the patent process and innovation.

By introducing IP value at a young age, we can better prepare our children about the business world. These children continue to face a technologically advanced society, which makes copyright infringement and trade secret theft much easier. However, some of these offenses stem from lack of knowledge. Many people simply do not realize they are infringing on copyrighted work. Educating the public about IP can only result in good things, increasing our chances of introducing new inventions, reducing copyright infringement, stifling trade secret theft, and getting the most value from all forms of IP.

Consumer Perception Feeds Brand Power

One of the best things about popular brands is that consumers can count on them. At least that is what most people perceive. For instance, it is a safe bet that Coca-Cola’s formula will remain intact for years to come. Therefore, when consumers reach for a Coke, they know how it will taste. As a result, consumers give Coca-Cola their trust. They trust particular brands because those brands have worked for them, they become enticed by brand advertisements, and/or they want what is popular. However, brands can instantly break consumer trust if they do not hold up to consumer expectations. For example, if Coca-Cola changes its Coke formula, those who have always loved the soda will be disappointed and will likely choose another brand.

Perception plays a huge role in a brand’s success. Therefore, companies often seek ways to update brands to attract different crowds, address new concerns, and keep up with the latest trends. However, when companies try to change a brand’s image, they may face strong resistance. For instance, when Gap tried to change its logo in 2010, its fans immediately protested. When Tropicana changed its orange juice package design, sales dropped. These instances prove that a fine line exists for companies that try to change brands to keep up with the latest trends, yet uphold the image that earned them success. Fast food restaurants are a prime example as they continually compete with ever-increasing obesity statistics. They must somehow keep the foods that made them popular to begin with, yet satisfy those who seek better and healthier alternatives without ruining their reputation.

Many times, companies make subtle changes to their brands. For instance, Unilever claims it changed its ice cream ingredients in an effort to better appeal to its consumers. However, its ice cream once touted as natural is no longer so. Breyers was well known for its natural products, consisting of four or five natural ingredients including milk, cream, sugar, and vanilla beans for its vanilla-flavored ice cream. Today, that ice cream now includes more than five ingredients including those considered unhealthy and/or unnatural such as corn syrup and tara gum. Due to its changes, some of the brand’s ice cream is now labeled as “frozen dessert” rather than ice cream.

Breyers ice cream was among very few in the industry that promoted natural ingredients. Today, finding ice cream without corn syrup, tara gum, and other hard-to-pronounce ingredients is very difficult and nearly impossible. While Unilever claims it changed the ingredients of its ice cream to appease its consumers, based on consumers’ online rants, many wonder if the ingredients were changed to save money. For a society that is trying to promote better and cleaner eating habits, Unilever’s changes do not fit consumer goals. Furthermore, the changes made to the ice cream were not advertised. If these changes were meant to appeal to consumers, wouldn’t the company advertise the changes? It seems the company hoped that consumers wouldn’t notice. After all, those who purchase Breyers frequently would assume the recipe remained the same. However, these are also the same consumers who began to notice a difference in taste and texture. While specific sales for Breyers ice cream are not available, it is a safe bet that Unilever began to lose consumers who specifically chose its ice cream for its natural ingredients.

The same has happened to other companies that made changes to their popular brands. Whenever companies fail consumer expectations, they place themselves at great risk. For consumers and companies alike, brand image means a great deal.

Robin Williams’ Suicide Effect on Estate Value

Recent headlines announcing the death of comedian/actor Robin Williams shocked the nation. However, perhaps the most startling aspect of this news is the nature of his death. Although past celebrities have died from drug overdoses, alcohol abuse, and other self-destructive methods, these types of deaths are easier to brush off as accidental—whether true or not. In Williams’ case, evidence indicates that he purposely took his life. For some people, death by suicide is simply inexcusable. Based on his untimely death and public scrutiny, how does this affect his estate’s value?

As one of the most charismatic actors in the entertainment world, Williams enjoyed a large fan base and many career opportunities spanning four decades. His career began as a stand-up comedian, which gained him notoriety and led him to the acting world. He tackled all types of acting including film, television, and theater. And he was good—so good that he earned numerous awards including Oscars, Emmys, Golden Globes, Grammys, and Screen Actor Guild awards. His movies grossed $6 billion, with him as the lead character in more than half of those films.

At the time of his death, Williams’ net worth was valued at $50 million. Despite rumors that Williams was broke and forced to sell one of his homes and work on a television series, his estate likely still held value. Williams appeared in more than 100 movies and television shows, many of which are likely still earning royalties. At the time of his death, Williams had completed four movies that had yet to debut. In light of his death, these films may actually fare better as people grab an opportunity to pay him tribute and get a glimpse of an admired man. Sales of his movies will likely soar in the event of his death. Furthermore, use of his likeness in future material will help bring value to his estate.

While suicide conjures up mixed emotions among the public, the nature of his death has little bearing on his estate’s value. He was a powerful presence in people’s lives throughout the years, as evidenced by the mention of him in social media. In fact, less than a day after his death, Twitter showed 7.3 million mentions of his name. He was too likeable and talented for his death to affect all that he accomplished in life. Those who choose to boycott anything to do with Williams based on the circumstances of his death will be too insignificant to matter. While Williams’ death is truly tragic, his celebrity status and the public mention of his suicide—an often private affair—may help raise suicide awareness. In the meantime, his estate will continue to retain value in many ways.

Pharmaceuticals and Their Outrageous Costs Explained

Nearly everybody faces the cost obstacle when it comes to medication. Prescription medication is often exorbitantly priced, especially brand name drugs. While generic versions often provide cost relief, they may not always prove to be the best medication for a given situation. As a result, spending on specialty drugs continues to increase as it reached $92 billion in 2012, with an expected $235 billion by 2018. Overall prescription drug spending rose 3.2% to $329.2 billion in 2013 due to fewer patent expirations, more people using health care services, and the introduction of new drugs. While spending continues to increase, so does the number of Americans who cannot afford their medications at approximately one in five.

Much of the cost of new drugs stems from a long and arduous clinical research process. Often, pharmaceutical companies spend many years, countless man-hours, and an enormous amount of money on drug trials—only to have a drug fail somewhere along the process. In fact, less than 1 in every 10 drug succeeds. According to Cutting Edge Information, a business intelligence firm, costs per patient during clinical studies vary per phase: Phase 1 at $15,700; Phase 2 at $19,300; and Phase 3 at $26,000. Overall, average drug development can cost a company upwards of $4 billion. The amount of time spent in the development process also takes away from potential earnings a drug could make in the market. In fact, the average lifetime of a drug on the market is only approximately 11 years, if the company is lucky enough to get its drug approved.

After many years, numerous resources, and billions of dollars, a drug that succeeds in clinical trials is ready to go to market. However, in order to introduce the drug, pharmaceutical companies must advertise. According to eMarketer, pharma spent more than $27 billion in 2012 on promotional expenditures. FDA labeling limitations complicate a drug’s introduction to market. Therefore, companies must consider the best way to market their products. The FDA label guidelines restrict the value products could create if companies were allowed to market products for a variety of indications. Companies must be creative and determine the best avenue to retain value when marketing their products.

Also, during the development process, a company must file for a patent in order to protect the innovation. Patents are expensive. One patent can cost between $10,000 and $50,000, and as much as $250,000. Defending patents is even more expensive. A typical patent lawsuit in the United States costs $3 million or more. Although expensive, patents provide critical value to pharmaceutical companies by keeping competitors at bay, providing rights in the event of willful infringement, and allowing for higher market prices. In fact, the most valuable patent in history turned out to be the pharmaceutical Lipitor, a cholesterol-lowering drug. While the Lipitor patent has expired and is now worthless, it is likely that Lipitor would not have been so successful if it did not have the patent to protect it to begin with.

As shown, the high risk and costs pharmaceutical companies have to expend to get a drug to market are stupendous. Even more sobering is that only about 3 out of 10 drugs that reach the market ever earn back money that exceeds or meets R&D. For these reasons, pharmaceutical companies charge high prices to make up for lost time, resources, and money. If consumers do not pay these high prices, the incentives for pharmaceutical companies to continue researching new solutions to life-threatening problems may cease. Although this explanation does not ease the cost burden on consumers, perhaps understanding the reasons behind the costs will provide consumers more peace of mind.