AUSTRALIA'S NEXT GOLD RUSH: INTELLECTUAL PROPERTY

INTELLECTUAL property expert David Martin sees a new gold rush coming in Australia, but it has nothing to do with mining.

There are 88 million patents registered in the G20 nations - the major proportion of the world's pool of innovation - but international companies are rarely filing for protection in the Australian market, and that is where Martin (pictured) is digging for gold.

"150 years ago, there were gold strikes in Victoria and Western Australia and other parts of the country, but today Australia's gold mine is the world's intellectual property that has not been protected here," the founder of financier M.CAM tells Business News Australia.

"For whatever reason, Australia is not a big enough market to protect technologies and the consequence is there is more access to open source innovation in Australia than in any of the other G20 countries.

"Australia has the greatest raw material for innovation on the planet."

Martin, who has relocated from the United States to Melbourne, was involved in a recent review for the Defence Industry Council in Adelaide. He demonstrated that most of the technology for the large defence procurements that the Australian Government recently announced did not have patents protecting them.

The lack of patent protection will allow businesses within supply chains to conduct R&D without the fear of infringing on third-party intellectual property protection.

"Australia wasn't seen as a commercial threat and that led to rather lazy position on the part of multinationals," Martin says.

"They assume Australia will pay a premium to integrate technologies and not become an innovation hub. From that complacency comes a really great opportunity.

"The prohibition around R&D in Australia is significantly less than in the US and the EU. That gives a competitive advantage to the Australian market, largely through the neglect of these large companies."

Martin has relocated to work on his own project to create a "world-first" quantitive equity index he says will rival the Dow Jones Industrial Average, while also facilitating Melbourne Polytechnic's new Centre for Applied Innovation.

At the recent Big Blue Sky event on the Gold Coast, Martin spoke about a renaissance in the way new ventures are financed - "a new capital impulse" - where intangibles such as intellectual property are given a greater emphasis.

"Now, what we require is to morph into a flexible and dynamic system with returns based on more than just economic return for its own sake," he says.

"The emergence of a new capital impulse is integration of both financial returns with returns in other domains."

As this new model takes hold, businesses have to communicate what their value proposition is.

"It is not dollar in, lottery ticket coming out anymore," Martin says.

"The 'dollar in' is assessing how you impact the supply chain, how you impact culture and how you impact knowledge training and the knowledge economy, and the financial impact.

"As we move into a shift from industry to knowledge, the hard physical assets have less material value, but to value intangible assets you have to know how to value intellectual capabilities and creativity - those are the real drivers of value."

The problem is, currently those value drivers do not have a role on the balance sheet, so it is difficult to measure their worth in traditional financial models.

While there is the opportunity to measure 'goodwill' and intangibles, Martin says these are only given a value when a business is bought or sold.

"Under international accounting standards, the only time goodwill or intangible assets get treatment is when the business is the subject of a merger or acquisition," he says.

"Usually it values the technology developed in the firm for its own use. Otherwise, it gets no treatment."

Martin believes Australian firms have undersold themselves, especially when being acquired by US companies.

"You really are valued when you leave these shores, but Australian firms are notoriously thin on their ability to use goodwill which is somewhat tragic if you care about the Australian economy," he says.

However, things could change with the founding of the Centre for Applied Innovation at Melbourne Polytechnic, which Martin has a hand in.

"This is a place where we will have a global innovation commons - a public library of innovations in any topic and available for public use,"  says Martin.

"There will be roughly $2 trillion worth of research and development related to both corporate and government.

"We want to make sure the creativity that is out there is findable and is implemented in ways that creates value."