The activities of such companies as Texas Instruments and IBM make it clear what a strong portfolio of intellectual property rights can mean to the bottom line.
In 1997, Texas Instruments purchased loss-making Amati Communications for $450 million, 35 times the $13 million worth of sales the acquisition had made over the previous 12 months. In doing so, Texas Instruments' chief executive officer, Tom Engibous, got his hands on a patent portfolio centred on digital subscription lines, the technology behind modems that offer high data capacity over ordinary phone lines.
Nowadays, DSL modems produced anywhere in the world contain chips based on designs licensed by Texas Instruments, so giving the company a valuable stake in a market that is set to generate $4 billion of sales this year.
At IBM, a licensing business that was worth $30 million a decade ago is forecast to bring in $1.7