“R&D intensity” – a benchmark, but does it include the legal costs of IP development and protection?

An article in strategy + business, Winter 2009 at 42, states the “R&D intensity” for 1,000 global companies. In 2008, the R&D intensity, which is the percentage of sales devoted to R&D, was 3.6 percent, the same as in 2007. Two thoughts deserve mention related to this benchmark.

Is it accurate to say that R&D spends typically around six times what legal spends (See my post of Jan. 12, 2009 #1: R&D spend is 7 times total legal spend.)? Compare the R&D percentage to the typical 0.4 to 0.7 percent of sales that legal departments typically report (See my post of Aug. 21, 2008: total legal spend as percent of revenue with 9 references and one metapost.).

Second, does R&D spend exclude the costs of patent prosecution and protection and of trademark registration and protection? (See my post of March 2, 2009: R&D with 12 references.). No company should double count these costs, so there needs to be a consistent definition of what’s an R&D cost and what’s a legal cost.

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