FOURTH QUARTER 2012
1st QUARTER 2013
Volume 3, Number 1
INSIDE THIS ISSUE:
M∙CAM ADVANCES ON THE PUBLIC POLICY FRONT
M∙CAM Advances on the Public Policy Front
Freedom to Operate Plat‐ form: Surpassing the Joneses
By Ken Dabkowski
Not Just a Summer
Innovation Economy: Not a Cliché
The OECD Conference in the City of Love
What is Code, Really?
The Waves of Change and the Tides of Innovation
A Historical Treasure Trove: M∙CAM to Launch Historical Patent Database
Spotlight on Amusement Park Entertainment
Featured Community Mem‐ ber of the Quarter
Human creativity has no value. At least, that is how the current financial system accounts for it. Government granted rights create “innovation assets”, but these assets are not currently in‐ cluded in any construction of enterprise value. Assets like patents, copyrights, trade‐ marks, licenses do not count towards the value of an enterprise. In addition, executory con‐ tracts and off‐take agreements are rarely ac‐ counted for in collateral frameworks because banks do not have a pathway to consistently and reliably ascribe a value to these assets. We think the system should be organized dif‐ ferently and aligned with human creativity. Creativity is accessible by all human be‐ ings. Innovation assets, the assets that allow us to transact creativity, are the core value driver of every enterprise because they allow enterprises or individuals to control the marginal cash flows associated with a business. Therefore, innova‐ tion assets allow enterprises to control marginal profitability in the markets they choose to pro‐ cure. What are we doing to change this global policy? We engage the policy makers of course! Over the past several months we have
reported on the great progress made educating members and staff of the U.S. Senate and House of Representatives. Early 2013 has been no dif‐ ferent. January started a very busy calendar on Capitol Hill. The Fiscal Cliff passed, a new Con‐ gress was sworn in, and a full scale government spending “Sequester” has begun. Through the turmoil, we have continued to execute our over‐ sight awareness campaign on both banking com‐ mittees and continue to pursue a hearing on the topic of bridging intangible (innovation) assets into regulated financial markets. Our responses to the Federal Reserve, Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) Notices of Proposed Rulemaking on bank regula‐ tory capital (NPRs) last October have spread our message within the bank regulator commu‐ nity. We have our responses posted on the Federal Reserve and OCC websites. In Janu‐ ary we had a very productive follow up meeting with the FDIC rule makers and plan to do the same with the OCC shortly. In addition to the FDIC and OCC, we have been pursuing educational meetings with the Federal Reserve Board. In early March, we had the op‐ portunity to spend time with Dr. Carol Cor‐ rado. Dr. Corrado is one of the foremost aca‐ demics in the area of intangible asset finance
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FOURTH QUARTER 2012
M∙CAM ADVANCES ON THE PUBLIC POLICY FRONT (CONTINUED) Continued from page 1 finance. She has written extensively for the Federal Reserve Board and served as the FRB’s Chief of Industrial Output. Currently, Dr. Corrado serves as a Senior Advisor and Research Director in Eco‐ nomics at The Conference Board. Accompanying the Federal U.S. regulators, the White House has taken an interest in the topic. In late February we had the opportu‐ nity to present the concepts above to the White House Office of Science and Technology – High Growth Entrepreneurship sec‐ tion. In a very productive meeting, we offered up several pathways to eliminate government waste, increase commercial and industrial lending, and increase job growth by folding innovation assets di‐ rectly into our enterprises. We will be following up in the coming weeks. Furthermore, we have been raising awareness about our programs globally. In mid‐February, we traveled back to the The Organization for Economic Co‐operation and Development (OECD), in Paris. The OECD is the premiere global standard setting organization. The February conference focused on Growth, Innovation and Competi‐ tiveness – Maximising the Benefits of Knowledge‐Based Capi‐ tal. M∙CAM’s Chairman, Dr. David Martin presented the Keynote
speech at the event putting M∙CAM's advocacy for innovation‐ based capital reform on a global stage. Lastly, we have also spent a great deal of time working on the issue of intangible asset quality. Intangible asset quality is critical for our business. We need to know when someone actually “owns” an asset, and if it is held, where we can transfer it if we come to own it. Asset quality relates to our overall mission because as we de‐ velop a high quality intangible (innovation) asset class, the easier it becomes to appropriately underwrite the assets . When there is less counterfeit innovation in the system, confidence around inno‐ vation adoption and finance increases. An example of how we over came this was issue was presenting at the January 11th United States Patent and Trademark Office (USPTO) roundtable on ‘Real‐ Party In‐Interest.’ This roundtable aimed to obtain public input from organizations and individuals on how the USPTO could change its rules of practice to collect and provide such ownership informa‐ tion and make it publicly available. Dr. David Martin spoke along with several other panelists and his full presentation can be seen HERE. Our relationship with the USPTO is continuing, as its Chief Economist is scheduled to be in our offices in late March.
FREEDOM TO OPERATE PLATFORM: SURPASSING THE JONESES By Rod Jackson
Patent Troll (n): individuals or entities that file patent lawsuits to enforce patents against one or more alleged infringers in a manner considered predatory and opportunistic, with no intention to manufacture or market the product covered by the patent in suit.
patent trolls. Businesses have been receiving assertion letters stat‐ ing they have been or are currently infringing upon the IP portfolios of patent trolls. In these situations, trolls provide businesses with two undesirable options ‐‐ either go to court or take “a more favor‐ able route”, and pay a settlement fee. The unfortunate part is, if they decide to settle with the patent trolls, they will have essentially posi‐ tioned their company to continue to pay others in the future. Ironically, Anti‐Trust and Racketeering laws make price fixing illegal. Yet justice turns a blind eye toward this business practice which explicitly uses cost of litigation as the "price" for protection.
When carefully observing the behav‐ ioral patterns of businesses today deal‐ ing with patent infringement litigation brought on by patent trolls, the phrase “Keeping up with the Joneses" comes to mind. I am not referring to the great classic by Billy Paul "Me and Mrs. Jones". The Joneses, in this case, are large corporations like Apple and Google, who have billions of dollars to spend “resolving” patent litigation. Small businesses have Fueled by the proliferation of low quality patents and predatory trolls, businesses across the country have been left to cope with the adopted the same approach as the Joneses to managing patent and messy aftermath and legal ramifications of lawsuits brought on by IP litigation proceedings and are either losing their hard‐earned Continued from page 3
FOURTH QUARTER 2012
FREEDOM TO OPERATE PLATFORM: SURPASSING THE JONESES (CONTINUED) Continued from page 2 profits by paying court fees, losses that they can never recover, or setting themselves up for failure by choosing to settle. One of the alleged luxuries of being the Joneses is the availability of relatively large amounts of disposable income to cope with these legal situations as they arise. Small businesses and start up organi‐ zations, on the other hand, do not have the disposable funds to spend going to court with patent trolls. Small businesses have ob‐ served the Joneses hiring lawyers and legal teams and spending big bucks to solve these issues, and presume this must be the appro‐ priate and most effective way to deal with trolls’ accusations. While the Joneses may have the monetary means to take the trolls to court and really fight for their IP, what if I told you there is a pathway to resolve these disputes without ever stepping foot in‐ side a courtroom? As a result of M∙CAM’s unique involvement with banks specializing in intangible assets as collateral, we have a distinctive perspective
and approach to solving this quandary. M∙CAM works with com‐ panies who are under attack by trolls to create a Freedom to Oper‐ ate (FTO) platform. By supplying asserting parties extensive infor‐ mation that may undermine the validity of their patents, the cost of case management starts to grow for the patent troll making the low‐cost opportunistic behavior less and less desirable. The FTO platform is comprised of IP assets which are in the public domain through expiration and abandonment. At the client's option, we even do the troll the "favor" of copying our enforcement review to the USPTO so that everyone can benefit from the disclosure of va‐ lidity challenging information. If you know of an individual or business that could benefit from our FTO platform, please have them call 434‐979‐7240 and ask to speak with me. I welcome the opportunity to help companies and indi‐ viduals protect themselves from patent trolls through our FTO of‐ fering.
NOT JUST A SUMMER INTERNSHIP By Kimberly Schreiber, M∙CAM Intern (Summer 2011)
I had the opportunity of interning with M∙CAM dur‐ ing my last year at the Uni‐ versity of Virginia in 2011. I spent every Friday at the office and interned during the summer as well. It was an incredible experience that was indispensible to my intellectual and profes‐ sional development. I worked on various projects throughout the year includ‐ ing writing several Patently Obvious reports, perform‐ ing an Integral Accounting audit for a foundation in Nepal, and analyzing intel‐ lectual property. The M∙CAM team has become a second family to me, and I’m so grateful for their ongoing support and advice. During my internship, I was exposed to the world of intellectual property and had the opportunity to learn from some of the world’s leading experts in this field as I grappled with the extensive reaches of IP law and its place in the world economy. It was both refreshing and enlightening to learn about M∙CAM’s concept of Integral Accounting. The ability to identify value beyond the con‐ fines of monetary figures while working in a financial setting is an important skill I will carry with me forever.
I had more to learn at M∙CAM as I concluded my fourth year at UVA. However, I had post graduation plans to travel around the U.S. on a six month rock climbing expedition. Before I left on my road trip, I worked on a two‐month contract with M∙CAM as a Fi‐ nancial Analyst. I conducted an extensive review on the Indian Cement Industry to assess the feasibility of implementing our cli‐ ent’s technology in the Indian market. This Global Technology Assessment was a wonderful learning experience and tested the skills I had developed as an intern. During the middle of my climbing trip while living in Yosemite, I attended M∙CAM Chairman David Martin’s TEDx talk in Sacra‐ mento, California. David introduced me to his friend and colleague Cory Johnson at Bloomberg TV West who indicated he was looking for some help with the show. Following our introduction, Cory offered me a position as a Financial Analyst to assist him with his work on Bloomberg as well as his radio broadcast and written arti‐ cles. Before I moved out to San Francisco to start my position at Bloomberg, I was invited to work at the foundation in Nepal for which I had performed the Integral Accounting audit while intern‐ ing at M∙CAM. It was a dream come true to spend a month work‐ ing in person with Kevin Rohan Memorial Eco Foundation. I feel very fortunate to have been a part of the M∙CAM team and my experience there has had a great impact on my future. Both the skills and the relationships I developed while interning and working at M∙CAM are invaluable.
FOURTH QUARTER 2012
UNFINISHED BUSINESS By Dr. David Martin
Three years ago, M∙CAM was introduced to the world of marketing and advertising by our colleague Adam Tepper. Within the context of socializing his then‐new posi‐ tion at the company (far removed from Los Angeles and his network of friends) he kept having conversations about the inca‐ pacity of the advertising world to quantify the effect of their work. This created a situation in which agencies continued to struggle with, and on behalf of, corporate Chief Marketing Officers to justify the im‐ portance of their collective work. Add to this struggle the austerity‐imposed com‐ pressing budgets in many organizations and the tension appeared intractable. After many of his conversations, he’d re‐ turn to Charlottesville convinced that there must be some mechanism for a firm like M∙CAM to address this problem. There was. Working together with a team at Omnicom’s TBWA\Chiat\Day in Los An‐ geles, we collaborated on evolving a plat‐ form that we’d piloted years earlier with Niko Canner (then Managing Partner at management consulting firm Katzenbach Partners) for work at MasterCard and Pfizer. Using M∙CAM’s unique conver‐ gence of unstructured data assessment and intangible market value metrics, we created a commercial offering that would precisely measure the consequence of advertising campaigns and marketing mes‐ sages. By understanding this consequence – in some instances even modeling the likely consequence prior to their launch ‐ marketing resources could be more accu‐ rately aligned to business objectives. Modeling the signal propagation of previ‐ ous campaigns by firms and their unlikely cohorts, we could accurately tune mes‐ sages to achieve desired responses while avoiding identifiable missteps. After months of collaboration, Epiphany™ ‐ a comprehensive data analytic service plat‐ form – was born. Finally agencies could quantify their effect and work to change their business model to more readily measure the economic impact of their deliverables. All that was needed was a complete alteration in how the industry interacted with client firms – including
changing the point of sale, involving more constituents within client organizations, and completely altering pricing and incen‐ tives. Five major brand prospective campaigns later, the obstacles to the rapid assimila‐ tion of Epiphany™ became evident. And, as is often the case in the advertising busi‐ ness, several members of the team moved on to other ventures or to form entirely new agencies. The brilliance of the im‐ pulse that led to our initial platform, like the impulse with Katzenbach and subse‐ quently Booz & Co (who had acquired Katzenbach), flickered and nearly went out. Another piece of M∙CAM’s unfinished business. But, the merits of Epiphany™ were too good to abandon. The component of the business associated with identifying the convergence of message and technology was taken up by Jimmy Smith in his new venture, Amusement Park Entertainment. Realizing that marketing, advertising and media have become synonymous with the technology through which they are deliv‐ ered, Jimmy’s team sat down with M∙CAM and formed AP∙Q. Most of you will recall “Q” from the James Bond 007 movies. Q is the technology geek who equips James Bond with his secret weapon or device that invariably is vital in completing Bond’s mission. In AP∙Q, M∙CAM identifies and creates the pathway to have ownership of, or freedom‐to‐operate around, the tech‐ nologies for the media developed by Amusement Park Entertainment.
keting research firm DB5 and carried M∙CAM’s unstructured signal intelligence capabilities into a suite of new product offerings sold to clients who are seeking to expand the range of market insight they can acquire. Working with M∙CAM’s mathematical and programming team, DB5 is at the forefront of making sense out of a myriad of signal generators ranging from social media to what’s becoming generally known as “Big Data”. And, to be clear, the TBWA\Chiat\Day rela‐ tionship has been actively maintained by Nick Drake, recently promoted to Manag‐ ing Director. In February, Nick joined David Martin at the Organization for Eco‐ nomic Cooperation and Development (OECD) Knowledge Based Capital confer‐ ence in Paris where he spoke of the evolv‐ ing econometric understanding of brands and their importance in the economy. Nick’s involvement at the OECD repre‐ sented a major step forward in the organi‐ zation’s understanding of the effect of branding and advertising – a topic largely ignored in previous policy inquiries. This intrepid team continues to collabo‐ rate on a number of big ideas. Along the way, what started as unfinished business has become a Hydra of opportunities. Our Odyssey is well underway and together, we’ll figure out how to thread the arrow through the axe heads.
Niki Weber, one of the co‐creators of the Epiphany™ framework, has integrated M∙CAM’s strategic advisory capabilities into work for several start‐up firms in the greater Los Angeles region. Recognizing the absence of market intelligence around technology and intellectual property‐ heavy entrepreneurial ventures, she’s linked M∙CAM into numerous opportuni‐ ties and continues to provide valuable industry expertise to M∙CAM’s brand and marketing related activities. Dan Goldstein became a partner at mar‐
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FOURTH QUARTER 2012
INNOVATION ECONOMY: NOT A CLICHÉ By Alex Stott
There are many economic metrics one may use to gauge the health of the underlying economy. To get a good idea of this health, one would ideally take a group of the metrics together, or a rational ensemble variable to get a modestly accurate assess‐ ment. The one that has come to dominate the minds of the pub‐ lic and the pundit alike is the Dow Jones Industrial Average (DJIA). Since the 19th century, this Index has been a conventional stan‐ dard for describing a proxy for the economy's performance. But this formula‐derived shortcut is woefully lacking in its assumed understanding of what really drives growth. Everyone agrees that intangible assets have some effect on value. On the other hand, almost no one knows what that value is. This is why the General Intangibles Lien exists in nearly every loan agreement, but borrowers do not get any collateral credit for their intangibles even as they are liened. To understand what that value is, let's take a look at the hallowed DJIA. The thirty component members taken as an aggregate are supposedly an accurate barometer of the economy as a whole. But this is based on the assumption that industrials drive the economy. Leaving aside the debate as to whether this assumption was ever true, we present the hypothesis that it is innovation which is the driver of economic growth. To test this, we constructed another index based on the Dow, which we will call the Global Innovation 30, and then compare the performances of the respective indices. To begin, we have taken each of the members of the Dow Jones, and defined an "innovation cohort," the Dow component firm and a short list of companies holding Innovation assets which cover
the same innovation space. Then, based on the priority and origi‐ nality of the IP of each of the cohort members, we assigned an IP fitness score to each company. The company within each cohort with the highest IP fitness earned membership in the Global Inno‐ vation 30. Sometimes, that meant that the original Dow company stayed. If the Dow component was the sub‐par asset holder it was replaced. We chart the performances of the two indices below with each cohort given the same weight as in the Dow, and nor‐ malized to the same starting price. The difference is obvious and striking, with the Global Innovation 30 more than doubling the returns of the DJIA, without any in‐ crease in volatility. This shouldn't be surprising. Intuitively, we would expect that, in general, companies that are on the cutting edge of technology would be the first to market or deliver better products and reap the respective rewards. Intuitively, we would expect that those with the intellectual property that most clearly controls an innovation space would benefit from it monetarily. Intuitively, we would expect to be able to measure this, and, in‐ deed, we see this borne out in our simple comparison. After all, innovation assets are supposed to assist firms in controlling mar‐ ginal cost and protecting pricing power in the face of commoditi‐ zation pressures. This is a powerful new piece of data confirming the idea that we exist in an "innovation economy" in more than just a vacuous, superficial way. Innovation, as measured by intangible assets, leads to very real, tangible economic advantages. It's long past time for us to treat it as such.
FOURTH QUARTER 2012
THE OECD CONFERENCE IN THE CITY OF LOVE By Colleen Martin
Dr. David Martin had the exclusive honor of being the only keynote speaker at the “Growth, Innovation and Competitiveness – Maximiz‐ ing the Benefits of Knowledge‐Based Capital” OECD Conference in Paris, France this February. His presentation entitled “Bank Lending and the Crisis: Unlocking the Collateral Value of Knowledge Capital” highlighted some of the work he and M∙CAM have been doing over the last 17 years. In attendance were Finance Ministers, policymak‐ ers, and analysts from various OECD member countries. David’s par‐ ticipation and our commitment to maintaining transparent and genuine relationships continues to place M∙CAM in globally strategic and influential world changing positions. The conference was the completion of a 2 year program of work examining the effects that knowledge‐based capital (KBC) has on investment and growth in the economies of OECD member coun‐ tries. The goal of the gathering was to inform future OECD policy recommendations and analysis by reviewing the “state‐of‐the‐art” research and policy experiments and spotlight gaps in the develop‐ ment of policy. David Martin’s presentation was the solitary voice in presenting an actual regulated capital markets solution to the ques‐ tions presented.
Above: Long‐time friends and partners, Dr. David Martin and Nick Drake of TBWA\Chiat\Day discussed the ever growing relevance of Knowledge Based Capital in today’s global economy at the OECD conference in Paris, France.
In listening to the moderators and panelists throughout the confer‐ ence, it became abundantly clear the global “state‐of‐the‐art” stan‐ dards are lagging behind M∙CAM’s data, analytics, approach, and solution. The OECD was interested in looking at three types of KBC: computerized information or “big data”, innovative property, and economic competencies including such areas as brand equity and organizational know‐how that increases enterprise efficiency. M∙CAM’s capabilities address and provides answers to all of these areas. Possibilities for data and research collaboration as a result of our conference contribution include the United States Council of Economic Advisors, the United States Conference Board as well as numerous global Finance Ministers and policymakers. Several of these parties have entered into subsequent communication for more in‐depth conversations with M∙CAM to access data and gain insight to M∙CAM’s solutions to the knowledge‐based capital issues. I was honored to personally participate in this monumental event. Being a part of this journey from the beginning and seeing David on stage in this venue was and continues to be a deeply profound ex‐ perience. The impact we are making in this world has ramifications that are foundational, long‐lasting and forward‐looking. There is no issue that is truly unsolvable! David Martin’s message continues as he was asked to submit the policy briefing for the May 2013 OECD Ministerial Council Meeting. David’s full speech can be viewed HERE. M∙CAM’s partner Nick Drake, Worldwide Managing Director at TBWA\Chiat\Day also presented at the event in regards to brand management and his speech can be viewed HERE.
Above: While the purpose of the trip to Paris was to participate and attend the OECD Conference, David and Colleen still man‐ aged to squeeze in some fun! They walked around the beauti‐ ful city of Paris and visited some of the historical landmarks including the Eiffel Tower.
FOURTH QUARTER 2012
WHAT IS IT TO CODE, REALLY? By Sharadha Ramakrishnan, M∙CAM Intern (Summer 2010)
Sometimes I have an over‐ powering urge to come up with something new. It took me a while to under‐ stand “new” exists primarily in terms of incremental‐ ism and innovation, not in terms of invention. Then again, it depends on whether you think of the wheel as an incremental improvement on a round log or as the child of neces‐ sity. It’s hard being a program‐ mer in 2013 because in order to make a mark, you need to be really darn good. Graduating from PSG Tech with a Masters de‐ gree, I was pretty proud of myself. I started my career as a pro‐ grammer by starting my own company. Actually, I incorporated my own company. I was a naive, confident, rebellious, Indian girl who thought too much about herself. Two years ago, I didn’t understand what programming was. Five years of school and a postgraduate de‐ gree later, I didn’t know what it meant to write code. And maybe I still don’t fully understand, but I do have a better idea. I’m still naive, rebellious and very much Indian, but I would like to think it’s for the right reasons. To code is to love understanding how things work ‐ together. Last summer I was accepted into a program called Hacker School. The very first day, my whole world came crashing down. Here I was thinking I can whip up IRC servers in Java when some‐ one asks me how a socket works. My mind reaches back to my networks class and I’m thinking hard, but I turn up with nothing but: ServerSocket s = new ServerSocket(); These “moments” started repeating and they had a pattern. Over and over again, I was asked a question and I didn’t have the answer. That’s when I started to realize how wrong I had gotten my college education. Good thing that it’s never too late to start asking what, how and why. I resolved never to take anything for granted again.
hack and work around the problem. Sometimes that’s enough, but sometimes, it’s not. To code is to understand limitations and optimize for maximum results. Understanding and scoping out a problem is one of the most important parts of coding. What good is your 1000 LOC if it needs more CPU bandwidth than you can afford? This is where the desire arises to write beautiful code. Sculpting and molding it to fit requirements and constraints is an art by itself. To code is to want to share and collaborate. When you’re writing code, you’re writing an instruction manual. The whole point of an instruction manual is for the benefit of other people. For some reason, it is called “code” meaning it can be read only by those people who understand how to read it. The least we can do is make sure it is easy for fellow program‐ mers to read our code and build on it. The want to own beautiful code is well and good, but the maturity of understanding con‐ stant evolution of technology and accepting a better solution is part of being a great programmer. To code is to make programming part of life. As a software developer, you are a day job holder. As a pro‐ grammer, you are an artist. What we fail to understand is the fact that once you know what programming is about, it helps you apply all those principles in real life. Suddenly, I was curious about how the plumbing in my house works and why my fan made that awful noise. Programming is a lifestyle that doesn’t end with a computer. It is who you are. It is who I am. I like spelling out instructions, I like fixing broken things, I like to break things, and I like to get a whole bunch of minds involved in breaking and then fixing them. I like the challenge of working under impossible conditions. It’s who I am; it’s not what my education made me.
That’s why I don’t take frameworks and libraries at face value. If I don’t know how they are structured, what they look like, and how I can change them to maximize utilization, I have a physical itch. It was then that I started understanding what it is really like to code. I started understanding the power of knowing. I started connecting the disconnected. To code is to want to understand why things don’t work. “Have you ever tried turning off the system and switching it back on?” Debugging is one of the most important parts of coding and it takes a lot of technique to be a good one; a pre‐requisite being an inquisitive mind. It doesn’t take two seconds to introduce a
Above: Shar (pictured far right) was part of the 2011 Heritable Innovation Trust internship team that went to Papua New Guinea.
FOURTH QUARTER 2012
THE WAVES OF CHANGE AND THE TIDES OF INNOVATION By Dylan Korelich When waiting for a ship to arrive with your good fortune, what are the risks you would have to account for as the ship travels across the ocean to reach its destination safely? What is the information you would need to know and how do you measure it? More im‐ portantly, how do you make sense of it? As a person deeply curi‐ ous about signals, waves, and communication technologies, I pon‐ der the analogies I can draw between how M∙CAM interprets data and information and a ship at sea carrying its good fortune. This analogy helps me unveil the complexity of what we learn and how to convey M•CAM's unique approach to interacting in the world. Many of the forces that present risks for businesses are observed in the capital markets. In this first analogy, the capital markets are the weather and the indicators for what is to come are the price of equities and bonds. These indicators (price of equities and bonds) are ephemeral, changing every day with major quarterly shifts and minor daily announcements, much like the weather. Despite this, much of the capital market indicators are driven by the confidence of investors looking at data that is easily available and generally well correlated. Businesses that perform well are rewarded and their stock goes up. The connection could be drawn that investors are assessing the risks of business much like a captain of a ship would assess the weather. As an M•CAM analyst we look at a variety of data points including data that’s not obvious to the average investor who, even if they had manageable access would have no understanding of how to go about assessing the value and risks with regards to their invest‐ ments. In this analogy, innovation ‐ represented by patents and intangible assets ‐ are much like the tidal forces in the oceans that businesses must travel across. These market controls are like large
waves that cycle slowly and have immense impact on directional flow. The USPTO's current estimation of patent pendency is 31 months which to a business is six reporting periods. The ability to fully understanding the strength and harmonics of how these forces work is one of the unique skills of an M•CAM analyst. The effects of a tidal force is much more profound than simply predict‐ ing amplitude and frequency of a tide through calculating the align‐ ment of the earth, moon and sun and projecting those calculations out into time. This is because the apparent relevance of the tide to a ship is less consequential when it is out at sea. To understand the tides of innovation, M∙CAM assesses the subtle effects on the enterprise (the ship at sea) and on the competitive environment (the whole ocean). A term we use often when talking about the data we study is “velocity”. When analyzing data, it is the direction and speed at which the subjects, forces, and objects in the ecosystem are mov‐ ing towards or away from one other that is important for us to observe. The ability to understand the changes in relationships and what impact those changes will have help us to determine the possibility and significance of an event. Now in this analogy, we have a ship sailing (a business) and tidal forces (the market con‐ trols and patents) acting upon it resulting in an object. Without tidal charts for ports, shipping is a fruitless exercise. Con‐ sider the contours of depth as commercial pathways for the cap‐ tain and his ship (the business) to navigate successfully and its shal‐ lowness as a way to discern and avoid obsolete pathways. When we couple the curvature of the bathymetry with the tide's (the patents) amplitude or strength represented by the combined vec‐ tor of height and direction, it then becomes very important what time the captain and his ship have arrived to enter the port. This is because it will determine the ease in which the ship will safely reach the port de‐ livering good fortune or the velocity at which the ship and its captain will be beached in obsolescence. To the left is a chart of Apple Inc. U.S. patent portfolio from 2000 to 2012. It represents the size and the commercial fitness of Apple's portfo‐ lio. It reveals a minor increase of Apple's com‐ mercially fit patents when compared to the increase of its lesser quality pat‐ ents. On June 29, 2007
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FOURTH QUARTER 2012
A HISTORICAL TREASURE TROVE: M∙CAM TO LAUNCH HISTORICAL PATENT DATABASE By Denise Holman On the morning of December 15, 1836, the United States Patent Office was destroyed by a massive fire resulting in the loss of approximately 7,000 models and 9,000 drawings of pending and patented inventions. Most importantly, lost in the rubble were literally thousands of valuable patents and pending applications that without supporting documentation were to be deemed in‐ valid. In the 46 years prior to the fire, the United States had is‐ sued approximately 10,000 patents. Following the fire, con‐ gresses acted to restore the records, but were only able to re‐ cover a limited amount.
This spring, M∙CAM will launch a database that includes many of the “forever lost” patents dating back to July 31, 1790.
M∙CAM’s historical patent database is truly a one‐of‐a‐kind. The patents in M∙CAM's proprietary collection date from July 31, 1790—to July 2, 1836 and have been carefully transcribed from original patents and patent applications. It has never before been easier to read these significant historical documents and to gain insight from them. This historical groundbreaking database has been a long term project that has taken many years to reach completion. These patents cannot be transcribed through Optical Character Recog‐ nition (OCR), a mechanical or electronic conversion of scanned images of handwritten, typewritten, or printed text into machine‐encoded text. They have all been carefully hand‐entered and then quality con‐ trol checked by M∙CAM staff. Each transcription has been tran‐ scribed into parce‐able raw XML data and entered into an easily searchable database and are available in a legible PDF docu‐ ment. The database will be launched later this Spring. Stay tuned via our website and Facebook for the announcement of the official launch date. Above: The United States Patent Office (1936), Washington, D.C. burns to the ground losing all patents filed from 1790—1836.
Above: A screen shot of the Historical Patent Database demon‐ strating its searchability and easy to read interface.
THE WAVES OF CHANGE AND THE TIDES OF INNOVATION (CONTINUED ) Continued from page 8
Apple launched the iPhone ‐ the year their U.S. patent holdings peaked. Since then, Apple's commercial patent holdings have de‐ clined with current numbers below what they held in 2000 and their poor quality holdings almost double. What this graph indicates is that the tide has been moving Apple towards shallow sea and its velocity is increasing. With the current headwinds of tough compe‐ tition, the stock has significantly declined (note that the white line, representing Apple's market cap, benefited from Apple's powerful market brand despite a declining quality of innovation assets). However, Apple is still operationally fit. It will be interesting if their new captain and crew will be able to steer Apple away from the shoals of obsolescence unlike the great ship Kodak. In our endeavor to find opportunity and reduce risks, as an M•CAM analyst, we observe and study the interrelationship of the direction and speed that businesses, market controls, and ecosystems move. We collect data and find different ways to measure it and make sense of it. For me, it is these great journeys inspired by our data and our approach that inspires me to wonder what will happen next.
FOURTH QUARTER 2012
SPOTLIGHT ON AMUSEMENT PARK ENTERTAINMENT By Denise Holman
New to The Navigare is a segment highlighting Companies and ini‐ tiatives M∙CAM sees as leaving a positive footprint in our world. We want to enlighten as many individuals as we can about these pivotal business models and innovative, creative solutions to conducting business in today’s economy. Our newsletter is an excellent net‐ working tool for global relationships and connections to be created. If you are interested in featuring your business or nominating some‐ one you know, please contact Denise Holman at dlh@m‐cam.com.
“Gatorade Replay.” All of these were highly successful and critically acclaimed. “Gatorade Replay” was even nominated for an EMMY. Amusement Park recently won our first ever industry award for “Discovered” ‐‐ Not bad for a company that is only a year and half old! “Discovered” is a Microsoft Kinect video game we created for Intel’s Ultrabook. Check it out HERE. Our latest work is an app for Mondelez. It’s called Oreo Skies. Us‐ ing augmented reality technology, the app allows you to leave mes‐ sages in the stars for your friends and family. Check that out HERE. I met David Martin, Chairman and Founder of M∙CAM, through a mutual friend, Nick Drake. Nick is the Worldwide Managing Direc‐ tor of TBWA\CHIAT\DAY. David and I discussed the chasm between branded entertainment and technology, especially in regards to Intellectual Property (IP). Traditional ad agencies do not understand IP. Many agencies are like raging bulls in china shops when it comes to understanding and managing their IP. They unknowingly trample on the IP rights of others and set themselves up for lawsuits. In general, most tech firms, particularly the engineers, don’t understand how to create content and marketing opportunities for their IP. David and I saw this as a huge opportunity for our two companies.
Above: Jimmy Smith, CEO and Chief Creative Officer of Amuse‐ ment Park Entertainment poses for a feature in Forbes Amusement Park Entertainment is a transmedia, branded content studio. What’s that mean? It means we create, develop, and pro‐ duce branded messages across multiple media platforms. What’s that mean? It means the advertising we create looks nothing like a 30 second TV spot, magazine ad, or billboard. Our ads are gaming apps, video games, TV shows, events, and even tech products; hence the name of our company, Amusement Park … ENTERTAIN‐ MENT. You see, generally speaking, people don’t like advertising, but people do like to be entertained. They’ll interact with enter‐ tainment, but they’d rather get up and go to the bathroom than watch advertising. Our philosophy is if you want to get your product and/or brand message across in a way that produces results, it better be enter‐ taining. Entertaining to the point where a consumer wants to en‐ gage with your piece of entertainment over and over and over, again.
Amusement Park Q (AP∙Q) is a revolutionary partnership between two unlikely businesses that represent opposite realms of reality: The “what ifs” and the means to make them happen. Inspired by Ian Fleming’s James Bond, and his technology con‐ sigliere Q, AP∙Q leverages unprecedented creativity and mind‐ bending analytics by: Using best‐in‐class analytics to map out the ecosystem, threats, and opportunities, around the impulses of innovation. Identifying and developing new IP‐based product offerings to provide unique opportunities to our partners. Structuring a “freedom to operate” for brands at the intersection of creative content and technology. If the Lord is willing and the creek don’t rise, 2013 will see the first fruits of our joint partnership! To learn more about Amusement Park Entertainment, check out their website: http:// amusementparkent.com/#page1 and “like” them on Facebook: http://www.facebook.com/ AmusementParkEnt
I co‐founded Amusement Park because a lot of the work I was cre‐ ating in the traditional world of advertising often became some‐ thing non‐traditional. For example, my traditional ad work for Nike and Gatorade often found its way into non‐traditional media and/or entertainment products, like the coffee table book “Soul of the Game,” EA Sports’ video games, “NBA Street 2 and 3,” MTV’s “Nike Battlegrounds” TV series, and the Fox Sports Network series ‐
FOURTH QUARTER 2012
M·CAM COMMUNITY MEMBER OF THE QUARTER Name: Bill Hess Age: 45 (I don’t feel it) Hometown: Baltimore, MD Education: B.A., Engineering and Art, Dartmouth College B.E., Mechanical Engineering, Dartmouth College M.S. Biomedical Engineering, Northwestern University Favorite memory at M∙CAM so far: The 2010 trip to Mongo‐ lia to build a green house What occupies your spare time? (Hobbies/activities): hiking, skiing, playing, dancing with my wife, Wendy and our chil‐ dren Solomon and Althea Three random facts about yourself:
I am an accomplished glass artist having taught, pub‐ lished, and shown my work internationally.
I was captain of my high school swim team
I have created (among other things) a children’s game about reducing waste and conserving energy.
Above: Bill enjoys hiking with his family and friends on the week‐ ends. Luckily, the Charlottesville area is home to many of Bill’s favorite hiking locations.
Favorite thing about M∙CAM: Seeing someone’s eyes widen as I discuss the many facets of M∙CAM and the numerous pathways for collaboration.
Above: Bill fixed a broken water pipe in Mongolia. Before joining the M∙CAM team in 2010, Bill was the Owner/Principal of Ideas on Legs where he consulted and created original glass and metal products and sculptures.
GET IN TOUCH WITH US!
TEDX (MAY 3, 2013) DELRAY BEACH, FLORIDA Dr. David Martin will be participating in his 2nd TED talk this Spring in DelRay Beach Florida. This TED event will focus on “The Human Experience” and will unite the world’s most creative minds and forward thinking indi‐ viduals. Dr. Martin’s speech for the event is titled “Flowers in the Barrel of a Gun” and he will address the economics of abundance to an “unsolvable” world conflict. For more information regarding the event or how you can pur‐ chase tickets, please visit the website: http://www.ted.com/tedx/events/6420
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