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off the intangible
Living off the intangible
You don't have to understand the technology to appreciate the achievements
of this cutting-edge company
The desk in Tony Kitchener's office is cluttered with technical drawings, completed
prototypes of air compressor parts and the general flotsam and jetsam of any
working desk.
Smack in the middle of it all is a porcelain cup and saucer set detailed with
a delicate filigree of china blue on an almost translucent white. The set is
an antique and yet it holds its own amongst items reflecting world beating technology.
Both represent Cash Engineering Research Pty Ltd, a company with a long history
and revenue gained solely from the sale of air compression technology to massive
multinationals based in the US and Europe.
Cash Engineering deals in the intangible: intellectual property-patents and
know-how.
Located in a back alley in Richmond, one of Melbourne's older suburbs, Cash
Engineering was established in 1938 by Tony Kitchener's maternal grandfather,
one of his sons and one of his brothers.
The men had come off of the land following the catastrophic effects of the
Depression. Somehow they found themselves manufacturing machine tools. Business
was good and then came the war-World War II.
In 1945, the government of the day dictated that the company would manufacture
air compressors. As the heir to the steam engine, air compressors create a clean,
safe energy source replacing electricity and hydraulics, for instance.
At the Richmond factory there are examples of early air compressors which sound
and look like ancient industrial life forms. Right next to these dinosaurs is
the absolute latest in air compressors, with their sleek look and modern innovations.
This continuity from museum piece to current technology highlights Cash Engineering's
progression. By the late 1970s, after 30 years of experience and with a dozen
or more patents already granted, it's safe to say that they knew air compressors
inside and out.
But the penny dropped in 1981 when Tony convinced a significant European manufacturer
to license Cash Engineering technology while he was attending a trade fair in
Hannover, Germany.
By 1985, the company was making its 'living' from licensing its intellectual
property. According to Tony, the progression was a natural one, but making a
living from IP is both wonderful and awful. His insights were recently showcased
at a seminar held by IP Australia for businesses interested in becoming IP savvy.
'Licensing intellectual property is basically about getting the fear and greed
levels balanced between both parties,' says Tony.
'The licensor fears they won't be able to off-load their technology. The licensee
fears that if they don't buy the technology their competitor will buy it - and
blow them out of the water. The licensor wants as much as possible for their
intellectual property, and the licensee wants to give as little as possible.'
'Once you get this all sorted out - with lots of hair pulling and tears - you've
got yourself a license agreement.'
'Every innovator is enormously optimistic, eccentric and a bit mad, but they
are also paranoid. I use to worry that everyone was about to steal my technology
until I went about trying to sell it. Then I couldn't give it away,' says Tony.
Of course, Cash Engineering technology is tremendously valuable. In fact, two
foreign take-overs have occurred out of the mistaken belief that the subsumed
companies were the originators of the air compression technology, when in fact,
it had been licensed from Cash.
Though license agreements can be lucrative, many Australian businesses view
the expense of intellectual property protection, such as patents, registered
designs and trade marks, as unjustified. According to Tony, they don't realise
that it is crucial to being in the game.
'We hold around 50 patents. They represent a significant financial investment,
but this is the commodity we deal in.'
'Anyone can have an idea, but no one has ever made a cent from 'an idea'. They
have made money from being able to establish their idea as a reality. IP protection
- a patent, for instance - is bricks and mortar,' says Tony.
From the street, where Cash Engineering sits quietly amongst old warehouses
being gutted and polished for yuppies, a Korean import company and a carriage
house or two, it's impossible to know how they make a quid. Looks like an old
fashioned outfit.
Of course, if you were in the air compression business - whether for 4 years
or 40 years - you would know Cash Engineering.
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