IP rights prove crucial in dealmaking

Technology companies have played a major role in forcing the investment community to start taking intellectual property seriously. Telecoms and their equivalents in the software and biotechnology sectors, for example, are all dependent to a greater or lesser extent on patents and other forms of intellectual property.

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.