April 7, 2014

Exploring New Approaches to Licensing, Valuation, Standards in the Internet of Things. DRM for IoT Anyone?

The people charged with defending IP positions, determining standards participation and codifying monetization strategies in tech and media markets – members of the Licensing Executives Society – are uncovering myriad opportunities and challenges in the Internet of Things — IoT.


They came very close to summing it up with the need for a DRM (Digital Rights Management) Playbook for IoT.

(We agree. INEX is working on one. A few of our clients and portfolio companies are testing it now.)


Efrat Kasznik, from ForeSight Valuation in Silicon Valley, and the Licensing Executives Society moderated a panel exploring some of the specific challenges and opportunities in IoT IP licensing, valuation approaches and standards development.

We were thrilled to be on a panel that included senior executives from ARM Holdings, GE, IBM and GEOINT commercialization firm GMI.

The 90-minute panel was part of the LES Mid-Year Meeting in Times Square, NY this week.

Efrat launched the panel with a simple question to the ballroom crowded with attorneys, entrepreneurs, CTOs and corporate development personnel: Who is familiar with the term ‘Internet of Things?’ Who has a working definition of the term?



Half of the room raised their hands.

In other words, depending on which broader survey of IoT knowledge among executives you believe, LES members are somewhere in the middle with respect to their self-reported understanding of IoT.

Following are a handful of highlights from that session.


On the same day that AT&T, Cisco, GE, IBM and Intel distributed their Industrial Internet Consortium press release calling for a stronger, more focused standards development effort aimed at accelerating IoT market demand, the audience was keen to talk about the state, status and role(s) of standards in IoT.

Findings In The Room:

1. Standards development is, and will be, a critical part of IoT technology, market and corporate development and these standards will play a critical role in IP development and monetization strategies. The room was clear: Standards are NOT always a good thing for IP holder monetization.

2. Standards will be fragmented on a number of dimensions, beginning with technical standards in a number or IoT solution stack elements and dimensions, making coordination among peers critical to minimizing the potential negative impact of byzantine market characteristics being codified in a conflicting collection of competing standards. The room, their clients and partners, agree that there will not be a single standard for IoT, and that it is likely that there will be multiple standards for a period of time, perhaps indefinitely given the complexity of IoT markets and solutions.

3. Standards requirements go far beyond technical however and include also:

a. Data definition standards – asset, application, market-specific semantic and ontologies

b. Data policy standards – standards of conduct associated with ownership/ control/ access/ authorization

Value and Values

Given the focus of the LES, we obviously spent a lot of time exploring fundamental questions associated with where value is created in IoT markets and solutions.

Findings in the Room:

1.  Recent transactions in IoT – including Google/ Nest and PTC/ Thingworx among others – were not elevated as ‘clear comparables’ but rather, early points in an emerging data set. The room, like the industry, had splintered views on the drivers of the transactions, strategies for value creation in the combined entities, and the likely outcomes, including impact on IoT markets overall.

2. In much the same way that standards will be fragmented, so too are the approaches to designing, developing and deploying IoT solutions. The room recognized that even the simplest tech stack representation of IoT solutions revealed a number of potential centers of value creation, depending on the application. Most insightful was the conclusion that assuming hardware is a commodity; apps will be free; or core value is in the cloud would likely lead to limited monetization/ ROI options over time, and potential disaster in the worst cases.

3. Crafting licensing strategies and policies in IoT could be more complicated than in some of the LES members’ current tech and media markets. Why? The immediate, now-term ROI from the initial point solution, crafted for a specific customer or customer set may justify deployment of the required infrastructure, but may be only a fraction of the value creation potential – quickly or over time – of instrumenting that physical asset, inventory or operating environment.

The big challenge, and the great opportunity for the LES community, it seems, lies in the ability of IP. Licensing and valuation professionals – and their clients and partners – to make their first order of business the creation of licensing strategies that take into account second and third and fourth order market opportunity scenarios.

And not solely for the benefit of the companies that are manufacturing the products to be instrumented, or rolling out the services based on the harvesting of the manufactured products’ digital exhaust. But for a broader perspective-enabled set of stakeholders who are keen to create value, and make money, in part with paid-for access to new classes of IoT intelligence subscriptions.

The most powerful instrumentation of the most valuable physical assets will enable the greatest breadth of value creation opportunities for the broadest collections of stakeholders with unique interests in a singular asset.

For the best IoT IP will have implications far beyond traditional two-party buyer-seller transactions.

And if the room left with nothing else, they left with this clearly: There is a lot of money and a lot of meaning to be made in IoT.



April 7, 2014