case study dd

Client

Service Provider for the Oil & Gas Operators Worldwide (the “Company”)

Background

Metis Partners was approached by the Company’s board out of concern that IP generated at the Company was not being properly identified or managed, particularly given that most of the filings in the Company’s patent portfolio had remained in prosecution for a number of years with no sign of any imminently granting.

The Company, which originally focused on research & development (“R&D”), had recently transitioned to a commercial/sales-oriented business model which would capitalise on fully developed technologies, while also looking at ways of enhancing these technologies over time.

Assignment

Metis Partners was asked to identify intangible assets vesting in the Company, in the form of both registered and unregistered IP, and assess their importance in relation to the Company’s competitive advantage. The Company sought to better understand both the breadth of IP assets which it had generated and/or relied upon in conducting business, as well as gaps which may have existed in the Company’s current IP strategy.

Ultimately, the findings from our IP audit were to be used to inform a revamped IP management approach and strategy within the Company, including steps which the Company could take to strengthen weaknesses in its patent portfolio, and improve the confidence of its board and investors.

Our Approach

Metis Partners met with the Company’s executive, management and technical personnel to learn about the business, its technologies and products, R&D activities and the current, key commercial operations.  Throughout the course of this process, we were able to identify and map intangible assets including patents, know-how and trade secrets, and highlight their link to historic and forecasted Company revenues.

We assessed the information collected during our meeting alongside other significant Company documentation, including financial and strategic documents. This approach allowed us to identify the IP assets most critical to the Company’s competitive advantage (and hence most relied upon), as well as areas of weaknesses where critical IP assets, i.e. those assets which drive the Company’s market differentiation, were being overlooked or neglected.

The Outcome

Our assessment of the Company’s patent portfolio revealed that the majority of the Company’s patent filings remained pending in excess of 4 years, with filings in key territories facing a string of rejections by patent examiners.  These patent applications were in the process of having claims limited and deleted to an extent which could arguably diminish any value the Company might obtain in any negative right afforded by the resulting patent.  We looked beyond patents to see whether there were other IP assets (i.e. trade secrets and know-how) vesting in the Company which could provide assurance to the board that the business could maintain ( some degree of competitive advantage without the protection registered patents would afford.

Our findings indicated that there was significant know-how in the minds of key individuals within the Company that was both critical to the business and which likely constituted a trade secret. In fact, particular elements of know-how were so critical to the provision of one of the Company’s top-revenue generating services that, without the individual holding this know-how present, the Company would struggle to provide the service.  This know-how, however, was not recorded, was not shared amongst staff and was at serious risk of loss or leakage.

As part of our assignment, we advised the Company on first steps it could take in order to implement a sound IP management approach and strategy which addressed critical IP-related risks, including measures to ensure that individual staff know-how was recorded and properly secured in a timely manner.

In the months following completion of our assignment, we learned that the key staff member holding the critical know-how referenced above had resigned from the Company under a month’s notice period.  The Company’s management and board, having read our report, had taken early steps to mitigate the IP-risks associated with the departure of this particular staff member, systematically requiring them to record all standardised processes, correlative data used for analysis and any “negative know-how” used for making sense of anomalies and outliers in tests.  By following our recommendations and taking the first steps in implementing a sound approach to managing IP, the Company was able to circumvent what would have otherwise been a significant impairment to the Company’s ability to conduct business as usual.

By virtue of both the board and management’s acknowledgement of IP’s importance to its business, as well as our early involvement in assessing the Company’s IP assets and existing gaps in IP management, the Company was able to mitigate a major IP risk. By being proactive in their management of IP, rather than reactive, the Company was able to eliminate the potential need to conduct damage control in response to the impairment the business might have otherwise suffered once this key employee would have left.

Photo credit: Ed Schipul