The Rise of Intellectual Property

The rate of technological progress is greater than ever in the known history of humankind, and simultaneously we are living through two industrial revolutions, IR4 and IR5.  Processes, methods and apparatus are all being either supported, displaced or replaced by technology.    

Industries that once competed in service alone have added a new dimension. We are in the midst of the rise of Intellectual Property. The patent law market is currently the fastest growing area of law in the U.S. and shows no sign of stopping with the patent market overall growing at more than 13% CAGR.   

But why is this?  

With technology enroute to enhance everything we do as humans, technology companies recognize services that once would have been unpatentable are now patentable. The staffing and recruitment industry serves as a great example; a highly human capital-intensive industry is now undergoing major Human Resource Technology transformation. The processes that technology is now conducting, which would have once been provided by a human, are now software that can be patented and protected. 

Institutional Backing 

Private equity and venture capitalists are looking for more within the assets they invest. Ideas, execution and profit are no longer enough; there needs to be protection, especially downside protection. Patent protection is one of the only assets in which a company can invest and, if properly executed, no matter what the fate of the company, the patents have a major asset value. There is now a shift to institutions willing to back companies with debt, secured against their IP assets. This institutional push is a highly impactful catalyst for the growth of the patent market.  

Is it too late?  

According to Inc Magazine, the fastest growing IP and Patent Law firm in the U.S. is Caldwell IP. Thankfully I have a wonderful relationship with the firm's founding partner Keegan Caldwell. For the purposes of this article, I conducted an interview with him and he was kind enough to share his views on saturation and growth in the IP market.  

“AI will touch every part of human lives; we are just at the beginning of patent protection within AI,” Caldwell said.

Keegan shared with me the key markets that are yet to see any form of saturation, areas where investments and technology start-ups could see major upside opportunity. 

Manufacturing Automation  

I was very surprised to hear that this market was lacking IP protection when you consider the length of time robotics has been present in the process of manufacturing, as well as other areas such as Computer Aided Manufacturing (CAM). I assumed that this would have been secured long before. Arguably, as AI development continues, the further growth of automation where software enhances the hardware will naturally continue to evolve and improve. It makes sense that we are only scraping the surface of what IP could be protected now and in the future.  

SaaS

Software as a service will continue to grow exponentially as we see further digital transformation and the creation of technologies that work within the crevasses of consumer-facing platforms and B2B service providers. The constant evolution of these services, the infrastructure and the outcome of delivery will provide an almost unlimited path to IP protection over the coming decades.  

AI 

This was the strongest point Keegan Caldwell shared with me when it comes to open white space within the patent landscape. There are so many areas that AI will touch, that is hasn’t touched yet, and we will see a sea of patent creation and enforcement as technology businesses of tomorrow look to carve out their commercial real estate and securitize the future of whatever industry they look to transform.  

Blockchain 

Apparently the fintech use of the application of blockchain is now in a state of high saturation, similar to all other areas of fintech. However, the application of blockchain in other verticals such as healthcare, HRTech and logistics is still a huge open white space for IP protection that is available for those innovative companies that look to use the application of blockchain within their technology stack.   

Summary

Patent protection and enforcement, in my opinion, represents one of the largest strategic growth markets over the next decade. Companies and their financial backers cannot ignore the advantages this strategy offers, as well as truly being able to show intangible asset values for their business. IP protection is fundable and has a measurable value. It will inherently make the competitive market in all verticals far more aggressive, resulting in further consolidation. It will also drive innovation as companies looking to differentiate will have to push harder than ever before to show the technological distinction from competition. 

I personally find this moment in time very exciting as so many areas of business that once would have never seen a value attributed to their methods will possibly see the greatest level of value creation, realization and recognition in the history of commerce. It will also make the investment of institutional capital more fluid, create a greater science in the valuations of businesses and increase the downside protection of failed business execution. All in all, it will assist businesses that offer true innovation a greater route toward capital and growth in the future. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.