NOTES
Introduction The Edison Prophecy
1. The Papers of Thomas Edison: The Wizard of Menlo Park, Ed. Paul B. Israel, Keith A. Nier, Louis Carlat (Baltimore/London: Johns Hopkins University Press, 1998), pp. 844–850. This entry appears in the journals of Francis Upton, recording (presumably faithfully) the words of Thomas Edison. The editors note that Edison “signed and dated these notes.” (See p. 850, note 1.) They also state that in this and surrounding passages, “Upton appears to be recording Edison's thoughts.” (See p. 852, note 20.)
2. The number of worldwide patents exceeds this number greatly. Non-U.S. patents passed the 6 million mark nearly 20 years ago: “The Scientific Library of the Patent Office contains… over 6,000,000 volumes of foreign patents in bound volumes,” quoted in “Patents, Law of,” Encyclopedia Americana (Grolier, 1982), p. 386.
3. Uniform Trade Secrets Act, Section 1ff., 14 U.S.C.A. 541.
4. Margaret M. Blair and Thomas A. Kochan; editors The New Relationship: Human Capital in the American Corporation (Washington, D.C.: Brookings, 2001), p. 1.
5. As stated in note 1, this passage comes from The Papers of Thomas Edison.
6. From encyclopedia.com, under Edison, Thomas Alva.
7. This history is based on a variety of sources, including the Edison books cited in other notes to this chapter. The portion on Langmuir comes from Robert Buderi, Engines of Tomorrow: How the World's Greatest Companies Are Using Their Research Labs to Win the Future (New York: Simon & Schuster, 2000), p. 76.
Chapter 1 Level One—Defense
1. This court is one of 13 federal circuit courts of appeal. (The other dozen serve the 12 main legal regions in the United States.)
2. Federal Courts Improvement Act of 1982 (Pub. L. No. 97–164, 96 Stat. 25 (1982)).
3. Patrick Sullivan, Value-Driven Intellectual Capital: How to Convert Intangible Assets into Market Value (New York: John Wiley, 2000), p. 129.
4. Hisamitsu Arai, “The Facts Behind Japan's Technology Explosion,” Managing Intellectual Property, May 2000, pp. 19ff.
5. This quotation is based on an interview conducted by the authors. From now on in this book, all quotes are from interviews, unless otherwise identified.
6. The following section is adapted with permission from an Andersen source: Solange L. Charas, “Eureka: How to Recognize and Reward Innovation,” HR Director: The Arthur Andersen Guide to Human Capital (New York: Profile Pursuit, 1998–1999), pp. 140–145. For the complete text of this article and other articles on human capital, see us.andersen.com/humancapital/resources.
8. Bush is quoted in Kevin G. Rivette and David Kline, Rembrandts in the Attic: Unlocking the Hidden Value of Patents (Boston: Harvard Business School Press, 2000).
9. Karen Hall, “Genome Ground Zero,” Corporate Counsel, July 2000, p. 62.
10. Stephen Fox, “Intellectual Property Management: From Theory to Practice,” quoted in Patrick Sullivan, Profiting from Intellectual Capital: Extracting Value from Innovation (New York: John Wiley, 1998), p. 147. In his more recent interview with the authors, Fox confirmed the continuing vigor of this program.
12. Hisamitsu Arai, “The Facts Behind Japan's Technology Explosion,” op. cit.
13. Paul Israel, op. cit. (note 1), p. 318, reports that by 1888, Edison had become discouraged about patents, and had vowed to avoid them entirely. “Thus, his plan to develop many of his inventions as trade secrets.”
14. This list is reprinted from Alexandra R. Lajoux and Charles M. Elson, The Art of M&A Due Diligence: Navigating Critical Steps and Uncovering Crucial Data (New York: McGraw-Hill, 2000), p. 297.
15. Krysten Crawford, “Robot, Esq.,” Forbes, October 2, 2000, pp. 60ff.
16. Rivette and Kline, op. cit., p. 104.
17. Summary of all reported patent damage awards from 1982 through 2000, compiled from a proprietary database maintained by Kathleen M. Kedrowski and Jennifer L. Knabb of Andersen.
Chapter 2 Level Two—Cost Control
1. Press release dated June 16, 1998, from BTG in Gulph Mills, Pennsylvania. See also Technology Licensing: Corporate Strategies for Maximizing Value, Ed. Russell L. Parr and Patrick H. Sullivan (New York: John Wiley & Sons, 1996), pp. 79 and 107.
2. For more on these practices at Xerox, see Joe Daniele, “The Intellectual Asset Manager,” in Patrick Sullivan, Profiting from Intellectual Capital: Extracting Value from Innovation (New York: John Wiley & Sons, 1998), pp. 186–204.
3. D.K. Smith and R.C. Alexander, Fumbling the Future: How Xerox Invented, Then Ignored, the First Personal Computer (New York: William Morrow & Company, Inc., 1988).
Chapter 3 Level Three—Profit Center
1. The estimate of ignored technology assets is based on the following findings: The National Science Foundation found that U.S. companies spent $550 billion on research and development from 1993 to 1998, that 60 percent of companies' R&D was spent in-house, and that of this research, 35 percent went unused. This is a conservative estimate, since $1 spent on R&D usually yields more than $1 in sales.
2. Del Jones, “Business Battle Over Intellectual Property Courts Choked with Lawsuits to Protect Ideas—and Profits.” USA Today, August 2, 2000.
3. Russell L. Parr and Patrick H. Sullivan, Technology Licensing: Corporate Strategies for Maximizing Value (New York: John Wiley, 1996), p. 87.
Chapter 4 Level Four—Integration
1. See detailed story in Kevin G. Rivette and David Kline, “Discovering New Value in Intellectual Property,” Harvard Business Review, January–February 2000, p. 63.
4. For example, the Economic Espionage Act of 1996 makes the theft of trade secrets a criminal offense punishable by fines to the corporation, as well as fines and imprisonment of corporate officers. This Act could place employees and corporate officers at risk of criminal indictment for theft of such trade secrets.
5. Lisa Naylor, “Procter & Gamble's Next Product: Advice,” The Industry Standard, April 3, 2001.
Chapter 5 Level Five—Vision
1. This chart is adapted from two boxes appearing in a presentation by Robert McLean, President, MatrixLinks International, Inc., on “Turning Knowledge Into Profit…Turning Intangible Assets Into Cash” McLean, a consultant to the Canadian Institute of Chartered Accountants, spoke at the June 29–30, 2000, seminar on intellectual capital management hosted by The Conference Board.
Chapter 6 The Dow Chemical Company—A Case Study
1. William S. Stravropoulos, Chairman, Dow Board of Directors, current; President and CEO, 1995–2000; interview, 1999.
2. The ICM Model used by Dow was developed by the ICM Pioneers: G. Petrash, H. St. Onge, L. Edvinsson, C. Armstrong.
3. Disruptive Technology terminology applied by Dow was developed by Clayton Christianson at The Harvard Business School.