IP Management in an Open Innovation · PDF fileManila, Philippines June 2009 ... IP Management in an Open Innovation Environment ... Manufacturing Engineering, and Licensing Activities

Intellectual , Inc.MAXIMIZE YOUR RETURN ON INTELLECTUAL PROPERTY ASSETS

IP Management in an Open Innovation Environment

LESI Annual MeetingManila, Philippines

June 2009Presented by Dr. Paul Germeraad

June 2009 Copyright 2009 2 Intellectual , Inc.MAXIMIZE YOUR RETURN ON INTELLECTUAL PROPERTY ASSETS


• Please Briefly Introduce Yourself – Name– Company / Affiliation– Role


Agenda• Mini-Plenary Elements:

1. How managing IP and conducting Open Innovation are inter-related;

2. How the six steps of finding and integrating Open Innovation technology with the help of IP databases can increase the quality of projects and decrease time to market;

3. How development projects based on market share, growth rate and IP density give appropriate project selection criteria for one company but induce an Open Innovation partner to behave differently;

4. How to decipher IP patterns for appropriate Open Innovation decisions;

5. How the geographic distribution of IP tells you where to develop and to first commercialize new products; and

6. How Open Innovation applies to IP management.

7. Summary

• Mini-Plenary Behavior: Vivid Learning Encouraged


Element 1

• How Managing IP And Conducting Open Innovation Are Inter-related


Open Innovation Is A Network Process

•Goal: "Sustainable Growth Driven By Innovation"

•Requires Creation And Management Of New Innovation Networks

•Idea Flow Is No Longer "Internal Only"

•Derivative Innovation Is Likely to Occur


Open Innovation Is Built on an Integrated IP Management Competency

•Management Focus Evolves Over Time

•Driven by Progress In Information Technology and Integrated Management Information Systems

• IP Focus To Efficiently Find Opportunities And To Ensure An Advantaged Commercial Position


Business Return on Innovation Investment Requires Intellectual Property Support

• Even Open Innovation Is Not Free– Businesses Need To Have Positive Cash Flowing From Their

Innovation Investments in R&D, Business Development, Manufacturing Engineering, and Licensing Activities

In-License For Open InnovationSpeed R&D TimelinesOut-license for RevenueMaximize Revenue Streams

Ability To Exclude CompetitionProfitable Products Have Advantaged Positions

Freedom To OperateNo Disturbance Or Surprises On Balance Sheet

IP SupportIP SupportBusiness NeedsBusiness Needs


Be Clear On What IP Does…and Doesn't

• IP Is A Grant Variably Given By Governments To Inventors, Enforceable In Court With ExpenditureOf Time and Money

• IP Is Not a Right Of Possession Like Personal or Real Property– Given By National Law or International Treaty


Types of Intellectual Classifications

• Intellectual Property– Copyright, Trademark, Patent, Trade Secret– Trade Dress, Mask Works, Utility Models– Intellectual Property Can Be Asserted In Court

• Intellectual Asset– Know-how, unprotected Trade Secret, artifacts– Intellectual Assets Are Not Easily Asserted In Court

• Intellectual Capital– Human book knowledge (facts & process), experience, insight


Exercise: Which Types of IP Do Companies Need For An Advantaged Position?

• Please Rank Order The Following By Greatest Value To A Company*– Copyright

– Patents

– Trademarks

– Trade Secrets

• Be Prepared To Discuss Your Selection

* 1 Is Highest Value

__________Company

Know-howTrade SecretCopyrightTrademarkPatentsMarket


Exercise Results: Companies Need for IP Varies By Industry

• Please Rank Order The Following By Greatest Value To A Company*– Copyright

– Patents

– Trademarks

– Trade Secrets

* 1 Is Highest Value 43125Entertainment

54231Univ/Gov't

12543Industrial

23541Electronics

23541Health

Know-howTrade SecretCopyrightTrademarkPatentsMarket


Exercise: Where Can Companies Likely Obtain Each Type of Protected Innovation?

• Please Fill In The Below Matrix To Show Where Companies Can Likely Find Each Type of Innovation They Need

Other Companies

Co-Development Partners

External Individuals

XInternal

TrademarkCopyrightPatentTrade Secret

Innovation Source

X


Exercise Results: Companies Likely Ability To Obtain IP Varies By IP Type

• Not All IP Can Be Easily Obtained From All Sources• This Allows IP To Aid Open Innovation Initiatives' Search

For New Technology and Innovation

Another Company's Work Outside Its Core Interests

Other Companies

New Innovation Sponsored and Done By Internal and External Resources

Co-Development Partners

Committed InventorsExternal Individuals

Inventors Inside Your Own CompanyInternal

TrademarkCopyrightPatentTrade Secret

Innovation Source


Structural Capital(Generic Assets)

Intellectual Assets

Complementary Business Assets(Differentiated Assets)

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Intellectual Capital(Unique Assets)

Value Creation Value Extraction

HumanCapital

(Lead Time)

•IP Value Is Created When OI Is Leveraged Through Complementary Assets•When Companies Have Different Complementary Asset Strengths They Will Need Different Intellectual Capital, Intellectual Assets, and Intellectual Property

How Open Innovation Sourcing and IP Needs Mesh Together At The Industry Level

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(Lead Time)

•Most value is in Trademark, Trade Secret, Distribution and Sales•Favors Co-Development & With Some Open-Company Innovation

Beverage Company Profile

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(Lead Time)

•Most value is in Know-How, Trademark, Manufacturing and Sales•Favors Some Open-Company Innovation•Note That IP Contribution From Patents Is Not Likely To Have Commercial Value

Paper Company Profile

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(Lead Time)

•Most value is in Human Creativity, Patents, and Trademarks•Favors Co-Development and Open-Company Innovation

Pharmaceutical Company Profile

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•Most value is in Human Creativity, Trademark, Copyright, and Distribution•Favors Open-Company and Open-Individual Innovation

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Exercise: What Is Your Company Profile

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1. Approximate The Percent of Your Company’s Value (Market Capitalization) That is Protected By This Asset

2. Your Company Industry___________________________ (Draw your own line)


When Is IP Heavily Used In Business?

Pro

duct

Ado

ptio

n Li

fe C

ycle

Time Product In Market

CopyrightPatent

TrademarkTrade Secret

Freedom To Operate

Ability To Exclude

Provide Revenue

It Is The Business Value Of IP That CountsIt Is The Business Value Of IP That Counts

•• All Products Free and ClearAll Products Free and Clear•• Freedom To Operate Freedom To Operate

•• Create and Sustain An Advantaged Create and Sustain An Advantaged PositionPosition•• An Ability To Exclude An Ability To Exclude

•• Support New Business DevelopmentSupport New Business Development•• Create Additional RevenuesCreate Additional Revenues

IP Use Is Governed By Position In Life IP Use Is Governed By Position In Life CycleCycle

••Complementors vs. CompetitorsComplementors vs. Competitors••““Crossing The ChasmCrossing The Chasm”” ModelModel

All IP Must Have Its Genesis At The Start All IP Must Have Its Genesis At The Start Of The Product Life CycleOf The Product Life Cycle


Open Innovation Projects Must Have an IP Strategy

• What is an IP Strategy For a Project?– IP strategy describes how the project will be managed to gain

advantaged positions derived from patents, trade secrets, trademarks, copyrights and know-how versus key competitors

• What Advantaged Positions Can Be Gained? – Number and Scope of Claims Coverage– Geographic Coverage– Filing Velocity– Size of IP Portfolio– Number and Scope of Trademarks– Number and Scope of Copyrights– Withheld, Embedded/Implied Use Rights


Decline• Decision not to renew or

inability to renew• Low Patent

Intensity/Velocity• Aggressive Monetization• Abandoning Previous

Generation Technologies

How IP Strategies Differ Along A Business “S” Curve

Busi

ness

Per

form

ance

or

Valu

e

Time

Growth• High Patenting Intensity/Velocity

• Compositions and Applications• Making/Buying/Allying are All

Sources of Innovation• Setting Up the IP and Options for

Maximum Value Extraction

Core• Business growth through next generation

offerings and new IP advantaged positions

• High Patent Intensity/Velocity for Next Generation Innovations

• Making/Buying/Allying are Continued Sources of Innovation

• Sustaining the IP position and Options for Maximum Value Extraction

Mature• Buying/Allying Are Important Sources

Of Innovations• Patenting Processes And Derivative

Uses• Trademark And Branding Are Important• Licensing-out Fields Of Use,

Geographies And Previous Generation Offerings


Together Innovation and IP Management Create Success

• Coordinating Sources and Types Of Innovation Along with IP Protection and Licensing Creates Business Growth–Current Generation Growth

• Incremental Innovation• Geographic and Market Share Expansion• IP Commercially available to the Industry• Company technology well publicized• Rely on Trade Mark and Copyright• Favors Open-Individual Innovation

–Next Generation Growth• Step-out Innovation• Creating Competitive Advantage• IP Restricted to company applications• Competitors are known to be blocked• Rely on Patents• Favors Open-Company Innovation

–Breakthrough New Business Growth

• Changing the Business Model• IP known only by development team members• Rely on Trade Secrets and Non-Disclosure• Favors Co-Development Innovation


IP Strategies Are Based On Degree of Open Innovation and Industry Maturity

Claims CoverageGeog. CoverageFiling VelocitySize of IP Portfolio



FocusedSpecificRapidGrow

N/AN/A N/AN/A

NarrowNarrow SlowPrune

NarrowNarrowOpportunisticPrune

BroadWideRapidBuild

FocusedSpecificModestSustain

NarrowSpecificSlowPrune

BroadWideRapidGrow w/ Fences

BroadSpecificRapidGrow

BreakthroughNext GenerationIncremental

ProjectBusiness

Gro

wth

Mat

ure

Cor

e

Advantaged Positions


OI and IP Also Correlate When Companies Use The Same Game Theory For Innovation

• Industrial Research Institute (IRI) Studied Innovation– IRI Focuses On R&D Management Methods

• During The Early 2000's An IRI Sub-committee Looked At Company Metrics In An Effort To Determine If There Were Higher Level Organizing Concepts Above The Industry Sector Classifications– Company -> Industry -> "Is There Something Here?"

• Survey Instruments Were Developed And Over 700 Companies Participated– Built On Work Done By CIMS At Lehigh University From 1970's -

1990's


Industry Segments Utilize Innovation Game Types That Return Business Success

• Of Interest Was That Industry Sectors Using Similar Innovation Game Type Were Not Necessarily Obvious

• Clustering Companies By Innovation Game Type Was Useful For CTO's Wishing to Benchmark Their Organizations' With Others Outside Their Industry


Each Innovation Game Environment Supports a Distinct IP Strategy

• If A Company Is Sourcing Innovation From Another Game Environment:– The IP Portfolio May Not Be Optimized:

• Too Big A Portfolio Is a Financial and Resource Burden• Too Small A Portfolio Weakens Cross-Licensing Opportunities• Presence or Lack of "Choke-Point" Art Can Affect The Sustained Advantaged Position

Acquired by External Open Innovation Sources– IP May Be Of Small Value When Compared To Know-How

• Each Innovation Game Type Has Distinct Best IP Management Practices


Market and IP Dynamics Typical / Best Suited For Success For Each Type of Innovation Game 1/3

[ IP Desert = 10's of patents ][ IP Forest = 100's to low 1,000's ][ IP Jungle > 10,000 ]






Exercise: For Your Company, What Innovation Game Are You Playing?

• Please Fill In Your Company's:

– Industry Segment, Major Product Description, Innovation Game Type

• Please Compare The Charts' IP Strategy With Your Viewpoint:

– What Elements Are Applicable?

– What Upgrades Do You See?

• What Industry Do You See As The Most Likely Source Of External Open Innovation?

– What IP Strategy Problems Might Exist?


Element 2:

• How The Six Steps Of Finding And Integrating Open Innovation Technology With The Help Of IP Databases Can Increase The Quality Of Projects And Decrease Time To Market


Six Steps Of Finding And Utilizing Open Innovation Technologies

High ActivityAreas

Top Companies

InvestmentRate

BusinessLandscape

TechnologyChanges

CompanyChanges

1.Understandthe OverallLandscape

Strengths:• Despite the Company’s apparently weak

patent base, the Company is well positioned, especially when teamed with Company C

Weaknesses:• Company B is a generalist competitor for

the Company to watch

Opportunities:• Company A and Company C are weak

generalist competitors that could represent licensing opportunities for the Company

Threats:• Company A’s patenting efforts are

concentrated in the area of Yarn Constructions, so the Company needs to understand their business plans

SWOTAnalysis

00.10.20.30.40.50.60.70.80.9

1Total Patents and Applications

US PatentsEPO Patents

JPO PatentsRecent US Applications

Recent EPO Applications

Recent JPO Applications

Recent WPO Applications

Unexpired US Patents

% US with references

Average references

3sigma reference value

# with 3sigma references

% US cited-by othersAverage cited-by

3sigma cited-by value# with 3sigma cited-by's

% citing own patents% Competitors citing

% Non-Competitors citing# US classes

3sigma US classes

# IPC's

3sigma IPC's

Age of Portfolio

% > 5 Years Of Life

% Unexpired Patents

Top Inventor's Portfolio %

Average # of inventors

3sigma inventor value

% portfolio with one inventorAverage # of assignees

3sigma assignee value% portfolio with one assignee

Size & CoverageStrength & ValueRevenue OpportunityCapability to Innovate

IP PortfolioAnalysis

ClaimsLandscape

ClaimConceptSearch

Top Cited-by Art

White-SpaceOpportunities

UniversityOpportunities

2.Understand

RecentTrends

4.UnderstandAvailable

Art

5.EstimateFreedom

To Practice

6.Determine WhoTo Watch And

Leverage

Companies’Momentum

Strategic Direction

Companies’FocusAreas

3.UnderstandClose Art

Data Information Knowledge + Experience InsightInvestment Location

Litigation Heat Map

Applications


1. Overall View of the IP Landscape: Assignees

•Background:–General Field of Membranes

•Findings:–The industry segment is dominated by large Japanese companies; Mostly because of the fuel cell applications of this technology

–None has to be feared or has to be partnered with to succeed


1. Overall View of the IP Landscape: Investment Rates

•Findings:–Document counts are approaching around 3000 per year; the total number is growing recently at over 10% per year

–An area that people believe can return solid business results

–An “IP Jungle” that requires thoughtful IP management


1. Overall View of the IP Landscape: Technologies & Uses

•Findings:–Of the major applications, fuel cells, batteries, and water treatment, membrane constructions have been most closely tied to fuel cell work

–A water treatment or pharmaceutical application has a good chance of being a novel approach


2. Recent Patent Patterns: Assignees

•Findings:–Air Products, GE, Millipore, Pall, and Sartorius have the largest ongoing investment in this field

• An Open Innovation opportunity for non-core uses

–Decreases in Amersham and Cuno

• Represents a good Open Innovation purchase opportunity


2. Recent Patent Patterns: Technologies and Uses

•Findings:–Separation Processesdominate the way in which this art is described, versus materials

–Batteries dominate the applications covered, followed by water purification

–Open Innovation options exist for other uses


3. Understand Close Art: Assignee Participation

•Findings:–The top integrated assignee was Millipore

–Top Tier 2 companies were LG, Mykrous, Pall, 3M, Amersham, Hammen, Mitsubishi, UOP, Asahi, and BioRad

–Most companies have made focused investments in a particular technology and use

–Open Innovation "holes" possibly exist even in this "IP Jungle"


3. Understand Close Art: Assignee Investment Velocity

•Findings:–Millipore and LG Chem have sustained efforts in this area

• Other companies have entered and left

• New players are entering such as Murata, Kolon and Beijing

• Unknown and Explorer intensity is significantly increasing

–This area is ripe for Open Innovation exploitation


4. Understand Available Art: White Space Analysis

•Background:–Recent art around the map edges represents new approaches

•Finding:–Art around edge offers hope for Open Innovation access to Breakthrough technology


4. Understand Available Art: Citation Analysis•Finding:–Top companies in this field are actively building patent fences around their key art (green highlights)

–In 4/10 cases there was a company having over 20% of the citing art (red highlights)

• There are IP Sharks or dominant fast-following company present

–There is predatory IP behavior present in the field

–Open Innovation access should be obtained carefully


5. Business Estimate of Freedom To Practice: IP Claims Landscape

•Findings:–Art of potential interest is located in an area of relative low IP density

–There were 27 documents surrounding the patent or "pointed to" by the software

–Although the art of interest could represent a unique technology, the related art needs careful diligence as part of the Open Innovation process


5. Business Estimate of Freedom To Practice: Litigation Heat Map

•Findings:–Coloration shows litigation activity with Green being high and Red low activity

–Most of the companies have low litigation rates and are not likely to engage in stick-licensing unless provoked


Six Steps Of Finding And Utilizing Open Innovation Technologies

High ActivityAreas

Top Companies

InvestmentRate

BusinessLandscape

TechnologyChanges

CompanyChanges

1.Understandthe OverallLandscape

Strengths:• Despite the Company’s apparently weak

patent base, the Company is well positioned, especially when teamed with Company C

Weaknesses:• Company B is a generalist competitor for

the Company to watch

Opportunities:• Company A and Company C are weak

generalist competitors that could represent licensing opportunities for the Company

Threats:• Company A’s patenting efforts are

concentrated in the area of Yarn Constructions, so the Company needs to understand their business plans

SWOTAnalysis

00.10.20.30.40.50.60.70.80.9

1Total Patents and Applications

US PatentsEPO Patents

JPO PatentsRecent US Applications

Recent EPO Applications

Recent JPO Applications

Recent WPO Applications

Unexpired US Patents

% US with references

Average references

3sigma reference value

# with 3sigma references

% US cited-by othersAverage cited-by

3sigma cited-by value# with 3sigma cited-by's

% citing own patents% Competitors citing

% Non-Competitors citing# US classes

3sigma US classes

# IPC's

3sigma IPC's

Age of Portfolio

% > 5 Years Of Life

% Unexpired Patents

Top Inventor's Portfolio %

Average # of inventors

3sigma inventor value

% portfolio with one inventorAverage # of assignees

3sigma assignee value% portfolio with one assignee

Size & CoverageStrength & ValueRevenue OpportunityCapability to Innovate

IP PortfolioAnalysis

ClaimsLandscape

ClaimConceptSearch

Top Cited-by Art

White-SpaceOpportunities

UniversityOpportunities

2.Understand

RecentTrends

4.UnderstandAvailable

Art

5.EstimateFreedom

To Practice

6.Determine WhoTo Watch And

Leverage

Companies’Momentum

Strategic Direction

Companies’FocusAreas

3.UnderstandClose Art

Data Information Knowledge + Experience InsightInvestment Location

Litigation Heat Map

Applications


IP Is Handled By On Same Timeline As Other Partnership Activities


Element 3

– How Development Projects Based On Market Share, Growth Rate And IP Density Give Appropriate Project Selection Criteria For One Company But Induce An Open Innovation Partner To Behave Differently


Growth and Share Set Innovation Postures

– Standard Marketing Position graph

•Competitor positions shown as colored dots

– Innovation Posture Contours Are Super-imposed

– EXERCISE:•Where do you think your company is located?

–(Please Draw a Circle)


The IP Landscape Also Affects Open Innovation Options

•The Density Of IP Determines The Entry Business Development Scenario:

–If there is little art: IP “Desert”•Company has to invest its own R&D

–Hundreds of documents: IP “Forest”•Company has the option Make, Buy or Ally With Others

–Tens of thousands of documents: IP “Jungle”•Best to Buy, License, or Take Business Risk to Ignore

Open–Company or Individual

Internal or Co-Development

Internal or Open-Company


Innovation Posture and IP Landscape Sets Innovation Tactics


Open Innovation Sourcing Based On Business “Need” and “Readiness”

No External R&DContract R&DJoint Venture

ConsortiaMfg Process

Technology Needs To Be Developed

Contract R&DContract R&DJoint VentureConsortia (Standards)

Contract R&DProduct Features


No External R&DLicenseAcquisition

License(Scan)

Mfg Process

Technology Exists

LicenseAcquisitionJoint Venture

LicenseAcquisition

License Acquisition

Product Features

Technology Exists

Breakthrough New Product Concepts For Business

Next Generation New and Improved Products

Incremental Upgrade of Existing Commercial Products

NEED

READINESS


Example Open Innovation Users

•Companies Tend To Specialize In One Or A Few Forms Of Open Innovation

•Open Innovation Should Be Organized By Business Line Rather Than By The Whole Company

No External R&DContract R&DJoint Venture

ConsortiaTI, 3M, Avery

Mfg Process


Contract R&DContract R&DJoint VentureConsortia (Stds)

Contract R&D

Product Features


No External R&DLicenseAcquisition

License(Scan)

Mfg Process

Technology Exists

LicensePfizer, LillyAcquisitionMicrosoftJoint VentureIntel

LicenseHPAcquisitionCisco, Microsoft,P&G

License Acquisition

Product Features

Technology Exists





Example Open Innovation Suppliers

•Suppliers Tend To Specialize In One Or A Few Forms Of External R&D

•Open Innovation supplier relationships should be selected based on their expertise

No External R&DContract R&DBattelle, SRIJoint Venture

ConsortiaGov’t labs Scandia etc.

Mfg Process


Contract R&DIdeo, Media Lab, Innocentive

Contract R&DJoint VentureConsortia (Stds)

Contract R&DNineSigma, YourEncore

Product Features


No External R&DLicenseOceanTomo, Yet2comAcquisition

License(Scan)

Mfg Process

Technology Exists

LicenseInnocentiveAcquisitionJoint Venture

LicenseOceanTomo, Yet2comAcquisition

License Acquisition

Product Features

Technology Exists





Element 4:

• How To Decipher IP Patterns For Appropriate Open Innovation Decisions– How IP Density and Velocity Influence Open

Innovation Initiatives' Chance Of Business Success


IP Density Is Like Mother Nature

Remember: "Don't Mess With Mother Nature"

Open Innovation Sweet Spot


IP Velocity Is Like Father Time

Rapid SporadicSlow

Rate of Investment In New Technology & Services(Patent Documents Published / Issued per Year)

Remember: "Time Is The Enemy"

Tough Open Innovation Area


Element 6:

• How Geographic Distribution Of IP Tells You Where To Develop And First Commercialize New Products


Develop Business Where IP Is Open

•Companies Get In A Rut; Holes Exist

•This Example Shows Grain Technology

•Use Open And Co-Dev Innovation In Countries Where Scale-up Is Allowed


Use Foreign Operations To Move Fast• Use Foreign R&D Labs And Operations To Advantageously:

– Conduct R&D, – Test Market New Ideas, – Improve Manufacturing Capabilities, And – Secure Next Generation IP Rights Without Undo Interference By Other IP Holders

• Build Business Relationships, Manufacturing Sites, Distribution Networks, And Sales Channels By Entering Foreign Markets With Open, Old And Expired IP

– Invest In Developing Countries Using Your Competitors’ Best Technology• The Goal Is Faster R&D Processes And Manufacturing Learning

• Caution: If You Own IP: – Don't Assert IP Before The Region "Crosses The Chasm"


Element 6:

• How Open Innovation Applies to IP management – Developing Open Innovation / IP Management Best-

Practices


Open Innovation Didn't Happen Overnight

Internally Done1850 - 1996

Internal & Externally Done

1996 - 2005

Open Innovation2005+


IP Skill Development Is Required Open Innovation

IP Prosecution Accumulation

Asset ValuationWeed Portfolio

Out & Cross-LicensingCollect Revenues

In-Licensing & Standards Setting"Open & Protected Innovation"

IP Treated As A Legal Asset

IP Treated AsA Cost Asset

IA Regarded As A Business Asset

IC Managed For Strategic Potential

Competence & ActionCulture & Behavior

Freedom of ActionFreedom of Action

Cost ControlCost ControlReturn On InvestmentReturn On Investment

Value CreationValue Creation

Value Value RealizationRealization

∫∫

LicensingLicensing

LitigationLitigation

Befo

re 1

990

199

0-19

95

1995

-200

2 2

002-

>


IP Management Capability Needed For Open Innovation Programs


Components Of An Integrated IP Workflow Supporting Open Innovation


IP Management Capabilities Are Built In A Planned Manner

• Building An Integrated Capability Requires Stepwise Change

– Based On "Maslow Hierarchy"

– Change Methods from "Total Quality", "Re-Engineering", and "Enterprise Resource" Management

• One Step At A Time Yields Success

• Exercise: Where Is Your Company? (Circle Level)


Lessons From Open Innovation Implementers

• Don't Carve Up The Pie Before It Is Baked– It's About Value Creation, Not Share Of Value– Remember "Log-normal Value Distribution"

• Not All Projects Are Worth Doing– Use External Market & IP Data To Assess Value Propositions

• Fight for Win/Win– Win/Lose Is Really Lose/Lose– Use IP To Illustrate Win/Win Opportunities– Protect The Other Party; Avoid Asymmetrical Deals & Too Much

"Advice"


Lessons From Open Innovation Implementers Continued

• Don't Kill A Good Project By Insisting On A Perfect Deal– Keep A Business Head That Values Speed and Productivity– Making The Pie Bigger Requires Different Deal Structures and Terms;

IP Licensing Enables Many Good Business Options• Value Ongoing Relationships

– Experience Curves Still Reign• Time Halves And Value Doubles With Each Cumulative Experience With

Same Partner• Applies To IP Competence As Well

• Metrics Count– Use Simple Outcome Metrics; Include IP and Know-how

• Recognize Success– Extrinsic More Powerful Than Financial


Summary

• IP Strategies Associated with Open Innovation – Find And Qualify The Best Potential Partners And Sources Of

External Technology With The Aid Of IP– Structure Open Innovation Agreements Appropriately

• Structure agreements to provide the right balance of opportunityand protection (including alternatives to IP ownership)

• Focus on costs of IP ownership and SWOT of license versus owning art

– Integrate Open Innovation IP And Technology Into The New Product Development Process


Open Innovation IP Strategy SWOT

Strengths:– Open Innovation Will Bring New Capabilities To New Business Development Efforts– Increasing Product Development Speed

Weakness:– Must Be Able To Negotiate And Manage IP Realistically Based On Business Value

Opportunities:– Finding Good Sources / Partners Quickly As A Competence– Creating Freedom To Operate and Ability to Exclude– Using The Type of External R&D That Is Most Effective and Efficient

– Actively Creating and Managing IP Portfolios To Create Shareholder Wealth

Threats:– New Products and Services Will Be Leaked / Shared If They Are Valuable– Inventors Rights– Inability To Find / Pick Companies Whose Business Strategy, and Competencies Align


Who Should Care?

“CEO’s must now be able to formulate strategies that capitalize on and maximize the value of their company’s intellectual property assets to drive growth, innovation and cooperative relationships with other companies.”

Bill Gates, Chairman Microsoft Financial Times November 12, 2004



• Questions?

• Follow Up:Dr. Paul GermeraadIntellectual Assets, [email protected]