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Managing and Exploiting Intellectual Property Assets
Guriqbal Singh JaiyaDirector, SMEs Division
World Intellectual Property Organization (WIPO)[email protected]
Spotlight is on knowledge in today’s economy
• Knowledge, Weightless, Information, Digital or Service Economy
• Factors of production: Land, Labor, Capital, Intangibles (Knowledge)
• Knowledge as useful Information (or Service)
• Information as a “Public Good”• Information as Property
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Learn
Innovate
Collaborate
Lever
Integrate
KM Framework - Knowledge Cycle
Mobilising channelsto market
Sell & exploitCreative
combinationwith existing IP
Mobilising competenciesand resources
Knowledge Discovery
Market-oriented Economy
• Playing Field: Unfair competition; free riding• National Legal Systems: Diversity
(bilateral/regional/ international treaties or agreements)
• Adding Value : Meeting or exceeding market needs or expectations
• Market research: Consumers’ needs, competing products or substitutes, gaps
• Technological innovation as an element of marketing
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The challenge of adding value in today’s economy
• Raw materials/Inputs: Processing (Value addition) = Value added output/component; product; sale; Profit
• Value addition: Better: Functional/technological or aesthetic/non-technological; Rational/Emotional (More for Less)
• Price; access/availability; consistency• Individual, Enterprise (legal person), Chains,
Networks; consortia; Open Innovation (Industry-Government-Academia)
• Ownership vs. access to knowledge
Levels of ProductLevels of Product
BrandName
QualityLevel
Packaging
Design
Features
Delivery& Credit
Installation
Warranty
After-Sale
Service
CoreBenefit
orService
CoreBenefit
orService
ActualProductActual
ProductCore
ProductCore
Product
AugmentedProduct
AugmentedProduct
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Tangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgenciesAirlines
InvestmentManagement
ConsultingTeaching
Fast-foodOutlets
Fast-foodOutlets
From Invention to Innovation
From Invention to Innovation
While invention depends upon creativity, successful technologicalinnovation requires integrating new knowledge with multiple business functions.
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Innovation Innovation –– What is it?What is it?
The creation of new ideas/processes which The creation of new ideas/processes which will lead to change in an enterprisewill lead to change in an enterprise’’s s economic or social potentialeconomic or social potential
[P. Drucker, ‘The Discipline of Innovation’, Harvard Business Review, Nov-Dec, 1998, 149]
What is Innovative Thinking?– A means of generating innovation to achieve two objectives that are
implicit in any good business strategy:• make best use of and/or improve what we have today• determine what we will need tomorrow and how we can best
achieve it, to avoid the « Dinasaur syndrome »
– Innovative thinking has, as a prime goal, the object of improvingcompetitiveness through a perceived positive differentiation fromothers in:
• Design/Performance• Quality• Price• Uniqueness/Novelty
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Obstacles to Successful Obstacles to Successful InnovationInnovation
•• Competitive positionCompetitive position
•• Market judgementMarket judgement
•• Technical performanceTechnical performance
•• Manufacturing expertiseManufacturing expertise
•• Financial resourcesFinancial resources
How to classify newness and degree of innovation and what to focus on:
• New to the firm? • First in the market?• First in the world?• Incremental or radical innovation?
Innovation
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The Development of Technology: From Knowledge Generation to Diffusion
The Development of Technology: From Knowledge Generation to Diffusion
Basic Knowledge Invention Innovation Diffusion
IM ITATION
ADOPTION
Supply side
Demand side
Innovation Process
•• The adoption of an The adoption of an innovation by similar innovation by similar firmsfirms
•• Usually leads to Usually leads to product or process product or process standardizationstandardization
•• Products based on Products based on imitation often are imitation often are offered at lower prices offered at lower prices but with fewer featuresbut with fewer features
InventionInvention
InnovationInnovation
ImitationImitation
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The Innovation Process
• An innovation starts as an idea/concept that is refined and developed before application.
• Innovations may be inspired by reality (known problem). The innovation (new product development) process, which leads to useful technology, requires: – Research– Development (up-scaling, testing)– Production – Marketing– Use
• Experience with a product results in feedback and leads to incrementally or radically improved innovations.
Translation of a Creative Idea into Useful Application
Analytical Planning
Organizing Resources
Implementation Commercial Application
To Identify:Product DesignMarket StrategyFinancial Need
To Obtain:MaterialsTechnologyHuman ResourcesCapital
To Accomplish:OrganizationProduct DesignManufacturingServices
To Provide:Value to CustomersRewards to EmployeeRevenue to InvestorsSatisfaction of Founders
The Innovation Process
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The Profitability of InnovationThe Profitability of Innovation
• Legal protection
• Complementary resources
• Ease of imitation of technology
• Lead time
Profits from
Innovation
Value of an innovation
Innovator’s ability to
appropriate value from an
innovation
Value Value Appropriation Appropriation
from from InnovationInnovation
Barriers to IntegrationBarriers to IntegrationDifferent TimeDifferent Time
InterpersonalInterpersonal
Different GoalDifferent Goal
Formality ofFormality of
OrientationOrientation
OrientationOrientation
OrientationOrientation
StructureStructure
Facilitators of Facilitators of IntegrationIntegration
Shared ValuesShared ValuesLeadersLeaders’’ VisionVision
EffectiveEffective
Budget AllocationBudget Allocation
CommunicationCommunication
Appropriating Value from InnovationAppropriating Value from Innovation
CrossCross--Functional Functional Integration/Integration/
Design TeamsDesign Teams
Time to Time to MarketMarket
Product Product QualityQuality
Creation of Creation of Customer Customer
ValueValue
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Product Life CycleProduct Life Cycle
SalesSales
TimeTime
IntroductionIntroduction
GrowthGrowth
MaturityMaturity
DeclineDecline
New Product DevelopmentStages in a New Product Development process:
• Idea Generation• Idea Screening • Concept Development and Testing • Business Analysis • Beta Testing and Market Testing • Technical Implementation • Commercialization
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Technology Adoption Technology Adoption –– Diffusion of InnovationDiffusion of Innovation
EarlyAdopters
InnovatorsLaggards
EarlyMajority
LateMajority
Take up Rate
Time
Innovators:Innovators: venturesome; greatest needventuresome; greatest needEarly adopters:Early adopters: opinion leaders; needs drivenopinion leaders; needs drivenEarly majority:Early majority: deliberatedeliberateLate majority:Late majority: skepticsskepticsLaggards:Laggards: traditionalists; suspicioustraditionalists; suspicious
New Business Models EmergeThen…
One Integrated Company
Now…
Many Distributed Companies
Product Development
Cycle
Product Development
Tool Companies
Testing Services
CRO’s CRM’s
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New Regional Model EmergeThen…
Manufacturing
Research
Development
Trials/Testing
Services
Self-contained regional clusters
Region A
Region E
Region B
Region F
Region D
Region C
Region G
Now…
Specialized, networked regions
Commercialization Model• Strategic Investment is the Foundation of a
Successful Commercialization Model
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Innovate -Business Issue/Drivers
• Good ideas not being captured across organisation - “leaking intellectual capital”
• Need to improve rate of innovationRatio of old to new products increasing/at best not improving
• Staff being poached by orgs. with more innovative culture
Collaborate -Business Issue/Drivers
• Failure to exploit expertise across organisation• Unable to unlock value trapped within
organisational stovepipes• Failure to leverage functional skills knowledge
and experience across geographic/sector-based teams
• Need to reduce numbers / push for a federal org. / homeworking, but fear losing critical knowledge
• Organisation now a highly networked structure -suppliers and customers need to be brought more “inside”
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Integrate -Business Issue/Drivers
• Organisation now a highly networked structure - suppliers and customers need to be brought more “inside”
• Critical information on customers, projects, products etc. not integrated
• Inaccurate/out of date or non-existent information sources causing poor decision making, process delays and lost opportunities
Lever -Business Issue/Drivers
• Companies making as much money from selling advice and consultancy as old core product
• Intellectual assets (e.g. patents and internal consultants) not systematically managed and exploited
• Need to improve the value delivered to increased range of influential stakeholders e.g. community
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Complementary ResourcesComplementary Resources
Bargaining power of owners of complementary resources depends upon whether complementary resources are generic or specialized.
Manufacturing Distribution
Service
Complementarytechnologies
OtherOther
Marketing
FinanceCore
technological know-how
Risk & Return
CompetingResources
Examples
LicensingOutsourcing
certain functions
Strategic Alliance
Joint Venture
Internal Commercialization
Small risk, but limited returns also (unless patent position very strong
Limits investment, but dependence on suppliers & partners
Benefits of flexibility; risks of informal structure
Shares investment & risk. Risk of partner conflict & culture clash
Biggest risks & benefits. Allows complete control
Few Allows outside resources & capabilitiesTo be accessed
Permits pooling of the resources/capabilities of more than one firm
Substantial resource requirements
Konica licensing its digital camera to HP
Pixar’s movies (e.g. “Toy Story”) marketed & distributed by Disney.
Apple and Sharp build the “Newton”PDA
Microsoft and NBC formed MSNBC
TI’sdevelopment of Digital Signal Processing Chips
Alternative Strategies for Exploiting InnovationAlternative Strategies for Exploiting Innovation
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Uncertainty & Risk Management in Tech-based IndustriesUncertainty & Risk Management in Tech-based Industries
Sources ofuncertainty
Technologicaluncertainty
Selection process for standards and dominant designs emerge is complex and difficult to predict, e.g. future of 3G
Customer acceptance and adoption ratesof innovations notoriously difficult topredict, e.g. PC, Xerox copier, Walkman
Marketuncertainty
Strategies formanaging risk
Cooperating with lead usersearly identification of customer requirements
–assistance in new product development
Flexibilility—keep options open—use speed of response to adapt
quickly to new information—learn from mistakes
Limiting risk exposure—avoid major capital commitments
(e.g. lease don’t buy)—outsource—alliances to access other firms’
resources & capabilities—keep debt low
Innovation riskInnovation risk
RISKSRISKS COSTSCOSTS
RESEARCHRESEARCH DEVELOPMENTDEVELOPMENT COMMERCIALISATIONCOMMERCIALISATION
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Mortality of New Product IdeasMortality of New Product Ideas
The “ Right” Innovative Product?
The right product is one that becomes available at the right time (i.e., when the market needs it), and is better and/or less expensive that its competition.To have the right product, therefore, one must:
Predict a market needEnvisage a product whose performance and capability will meet that need Develop the product to the appropriate time scale and produce it.Sell the product at the right price
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TimelyTimelyTimely
Difficult forcompetitors to imitate
Difficult forDifficult forcompetitors to imitatecompetitors to imitate
Commercially exploitablewith present capabilities
Commercially exploitableCommercially exploitablewith present capabilitieswith present capabilities
Innovation and Competitive AdvantageInnovation and Competitive Advantage
CompetitiveAdvantage
CompetitiveCompetitiveAdvantageAdvantageProvides significant
value to customers Provides significantProvides significantvalue to customers value to customers
Strategic Entrepreneurship and Innovation
• Entrepreneurship is concerned with:– The discovery of profitable opportunities– The exploitation of profitable opportunities
• Firms that encourage entrepreneurship are:– Risk takers– Committed to innovation– Proactive in creating opportunities rather than
waiting to respond to opportunities created by others
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EntrepreneurshipCreativity is at the heart of entrepreneurship, enabling entirely new ways of thinking and working. Entrepreneurs identify opportunities, large or small, that no one else has noticed. Good entrepreneurs also have the ability to apply that creativity—they can effectively marshal resources to a single end. They have drive—a fervent belief in their ability to change the way things are done, and the force of will and the passion to achieve success. They have a focus on creating value—they want to do things better, faster, cheaper. And they take risks—breaking rules, cutting across accepted boundaries, and going against the status quo.
EntrepreneurshipDefining entrepreneurship is difficult because there is no universal, clear-cut definition of the term. In its most basic sense, entrepreneurship is manifest in a business venture when an individual is able to turn a novel idea into a profitable reality. In practice, however, entrepreneurship is more multifaceted, ranging from operating a small business in one’s own home, to bringing a national franchise to a small town, to turning a new and unique idea into a high-growth company. Entrepreneurship can involve starting a business that brings a new store to main street, offering a product or service previously unavailable to a community, or acquiring an existing business that has had a long-standing presence in a community and helping it evolve to reflect one’s own vision and personality.
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EntrepreneurshipThe word entrepreneurship literally means, "to take or carry between" in the sense of an economic transaction; to be a market-maker. It does not literally convey the notion of innovation that we commonly associate with the term. Joseph Schumpeter (1883-1950), one of the more well known theorists on entrepreneurship, defined an entrepreneur as one who reorganizes economic activity in an innovative and valuable way. That is, an entrepreneur is one who engages in a new economic activity that was previously unknown. An entrepreneur is a risk taker because being innovative means there are few rules or history for guidance.
EntrepreneurshipEntrepreneurship is the process of creating or seizing an opportunity, and pursuing it regardless of the resources currently controlled. The Webster’s Third New International Dictionary defines an entrepreneur to be “one who organizes, owns, manages, and assumes the risks of a business”
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EntrepreneurshipThe entrepreneur shifts resources out of an area of lower and into an area of higher productivity and greater yield.[J. B. Say, French economist, circa 1800]Entrepreneurship is creative destruction. Dynamic disequilibrium brought on by the innovating entrepreneur, rather than equilibrium and optimization, is the norm of a healthy economy and the central reality of economic theory and practice. [Joseph Schumpeter, Austrian economist, 1911]The entrepreneur searches for change, responds to it, and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service[Peter Drucker, 1985]
EntrepreneurshipEntrepreneurship drives innovation, competitiveness, job creation and economic growth. It allows new/innovative ideas to turn into successful ventures in high-tech sectors and/or can unlock the personal potential of disadvantaged people to create jobs for themselves and find a better place in society.
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EntrepreneurshipEntrepreneurship, in small business or large, focuses on "what may be" or "what can be". One is practicing entrepreneurship by looking for what is needed, what is missing, what is changing, and what consumers will buy during the coming years.
EntrepreneurshipEntrepreneurs have:– A passion for what they do– The creativity and ability to innovate– A sense of independence and self- reliance– (Usually) a high level of self confidence– A willingness and capability (though not
necessarily capacity or preference) for taking risks
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EntrepreneurshipEntrepreneurs do not (usually) have:– A tolerance for organizational bureaucracies– A penchant for following rules– A structured approach to developing and
implementing ideas– The foresight to plan a course of action once
the idea is implemented and established
Entrepreneurial Success1. People (Entrepreneur /Entrepreneurial
Team)2. Opportunity (Marriage of Market and
Product/Service)3. Access to Resources (Land. Labor,
Capital, Knowledge)
And the fit amongst these three elements
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Major factors determining success of a new product in the market
• The product provides functional advantages
• Lower price for comparable product
• More attractive design (look)• Reputation of brand• Easy access: Available in the main
retail shops• Consistent product quality• Excellent after-sales services
Competitive AdvantageCompetitive AdvantageCriteriaCriteria……
Low cost producerLow cost producer
Product differentiationProduct differentiation
Niche marketNiche market
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New Product
Development
BreakthroughBreakthroughInnovationInnovation
?
Need two processes: NPD and NB(usiness)D
?
Innovative Innovative New ProductsNew Products
NewNewBusinessesBusinesses
New Business
Development
An opportunity driven path to
market-a different
business design
The Intellectual Capital of the Firm
Human Capital
Experience
Know-how
Skills
Creativity
Intellectual AssetsPrograms MethodologiesInventions DocumentsProcesses DrawingsDatabases Designs
Intellectual PropertyPatentsCopyrightTrademarksTrade Secrets
(Sullivan, 2000)
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Protection of IPProtection of IP
IdeasIdeas
ResearchResearch
TechnologiesTechnologies
ProductsProducts
Utility models, Patents
Collaborative ResearchAgreement
Confidentiality or Nondisclosure Agreements (Trade Secrets)
Technology LicensingAgreement, Branding
ValueValue addingadding
Intellectual Property Questions
Intellectual Property (IP) Issues/questions during New Product Development (NPD): Can the innovation be legally protected? For how long? How does one protect an innovation from imitators? How much will it cost? When to protect? Do you need to rely on an IP expert?The answers are complicated by the fact that one or more types of legal frameworks may be used to protect a particular innovation, product, process, or creative work. These include trade secrets, trademarks, designs, patents, and copyright. It is necessary to know which are applicable and when each is appropriate. This varies somewhat from jurisdiction to jurisdiction. The advice of a lawyer that specializes in these matters is essential
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Intellectual Property Questions
•It is necessary to know which types of intellectual property rights (IPRs) are applicable and when is each type of IPR appropriate. This varies somewhat from one country to another. •The advice of an IP lawyer is desirable if not essential.
What Investors Look for?What Investors Look for?
Novelty; worldNovelty; world--class; evidence of commercial class; evidence of commercial interest; clear path to marketinterest; clear path to market
Unencumbered, or encumbered by reasonable Unencumbered, or encumbered by reasonable conditions (Equity, royalties)conditions (Equity, royalties)
Protection (NonProtection (Non--disclosure agreements, disclosure agreements, Patents, Designs, Brands, Copyright)Patents, Designs, Brands, Copyright)
IP protected by one or more Patents is the IP IP protected by one or more Patents is the IP required to implement the business planrequired to implement the business plan
““Freedom to OperateFreedom to Operate””
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Bringing it All TogetherExample No. 1Example No. 1
• Decades ago, Coca-Cola decided to keep its soft drink formula a secret
• The formula is only know to a few people within the company
• Kept in the vault of a bank in Atlanta• Those who know the secret formula have
signed non-disclosure agreements• It is rumored that they are not allowed to
travel together• If it had patented its formula, the whole world
would be making Coca-Cola
Bringing it All TogetherExample No. 2Example No. 2
• Patent for stud and tube coupling system (the way bricks hold together)
• But: Today the patents have long expired and the company tries hard to keep out competitors by using designs, trademarks and copyright
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Bringing it All TogetherExample No. 3Example No. 3
• Patent for the fountain pen that could store ink
• Utility Model for the grip and pipette for injection of ink
• Industrial Design: smart design with the grip in the shape of an arrow
• Trademark: provided on the product and the packaging to distinguish it from other pens
Source: Japanese Patent Office
® Registered Trade Mark
‘TM’ UnregisteredRegistered Design
Copyright: Labels & Artwork
Patents: Several dozen!
Bringing it All TogetherExample No. 4Example No. 4
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Bringing it All TogetherExample No. 5Example No. 5 : Personal Computer• Patent protection for the innovative functional
features of the computer• Trademark protection for the brand name that
goes on the box• Copyright protection for the software that runs
inside• Trade secret protection for the semiconductor
processing techniques used to create the processor
IP TRIGGERS• Starting up, investing in, buying or selling a business• Selecting a name or logo for a product, service, or company• Developing a new product or service (biotechnology,
software, devices, and instruments)• Improving an existing product or service• Applying for a government grant • Entering into a government, academic, or corporate
collaboration• Bringing on a key employee or contractor for design,
research, or development work• Providing business or technical information to suppliers,
customers, partners or investors• Launching a major sales effort or marketing initiative• Maintaining or expanding a customer list• Searching for advantages in a competitive market• Setting up a website for your business
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Key Message 1IP adds value at every stage of the valuechain from creative/innovative idea to putting a new, better, and cheaper, product/service on the market:
Literary / artisticcreation
Invention
Financing Product Design
CommercializationMarketing
Licensing
Exporting
Patents / Utility Models/Trade secrets
Copyright/Related Rights
Patents / Utility models
Industrial Designs/Trademarks/GIs
Trademarks/ GIsInd. Designs/Patents/Copyright
All IP Rights
All IP Rights
Key Message 2
• IP Strategy should be an integral part of the overall business strategy of an Enterprise
• The IP strategy of an Enterprise is influenced by its creative/innovative capacity, financial resources, field of technology, competitive environment, etc.
• BUT: Ignoring the IP system altogether is in itself an IP strategy, which may eventually prove very costly or even fatal
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Key Message 3 (More for Less)
• Own Use • Licensing• Franchising• Merchandising (Mickey
Mouse, Hello Kitty)
Key Questions
– What are the IP assets of a business?– Status of the company’s IP Portfolio?– How important are IP assets to the business?– How does the company protect its IP assets?– How does the company protect itself from the
IP assets of others?– What is the company’s IP policy and
strategy? – Is the Company’s business strategy and IP
strategy aligned ?– Is the company getting the best value out of
its IP assets?
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Protecting Inventions
Manage Competition
Hierarchy of IP Value
Design Freedom
Build Markets and Relationships
Deliver Revenue
Pote
ntia
l Ret
urn
Biz Strategy Driver
Stage 1: IP Health Check
Identification/Documentation/Product review:
• patents, trademarks, copyright
• technical specifications, manufacturing and design documents
• benefits statements, product descriptions, marketing statements
IP Management:
• process
• capture, registration
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Stage 2: IP Consolidation
IP Protection:
• IP Gap/Risk Analysis
• includes DRM focus
IP Management:
•IP Register (Build/Refresh)
•IP Management Process
“Like financial management, IP management must be disciplined and process rich to be effective”
Stage 3: IP Management
IP Register
IP Management Process
IP as an Asset – Culture
Resultant IP – IP Capture process/tools
“The interaction between a company’s IP and the IP of others (eg key suppliers of operating software, infrastructure and services) in our increasingly interconnected world is a rich source of resultant, and ultimately valuable, IP”
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Stage 4: IP Commercialisation
‘To Market’ advantage for your valuable resultant IP
An IP lifecycle management advantage
New or enhanced IP revenue streams
Constantly refresh and extract from your IP repository
IP ROI
“Uncaptured, unidentified and/or ill-managed IP cannot contribute to the overall IP ROI businesses must aspire to realise”
IP Management Tips• Integrated management of all IP• Allocate responsibility
– Inside and outside• Conduct research• Create, maintain, and enforce rights• Careful timing of decisions
– Timely filings– Budget planning for expensive actions
• Avoid liability and ownership disputes– IP owners– Customers – Collaborators
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IP Management
• Legal• Technical• Business• Export• Financial• Relationships
• Accounting• Tax• Insurance• Security• Automation• Personnel
An Aspect of Good Management• People Management – because IP is generated by people and
used by people
• Knowledge Management – because a lot of knowledge is informal and may or may not crystallise as recognisable category of IP
• IT Strategic Planning – because a lot of IP is IT-related; some of the more complex IP issues arise in IT context
• Contract Management – because IP is often created (or improved) in context of a contract (eg, supply contract or joint venture
relationship)
• Asset Management – because IP is an asset, albeit intangible; it has a value
• Risk Management – because there are risks to an organisation flowing from its actions, or failure to act, in relation to IP (including
risk of lost opportunity)
with permission of P Crisp, AGS, 2003
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Strategic Alignment of Intellectual Capital
CorporateVision &Objectives
Strategy
Roles for ICValueExtraction
ValueCreation
(Sullivan, 1998)
Strategic Reasons for Implementing a Formal IP Program
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Offensive Reasons• Market advantage – Leverage exclusive rights to
the SME’s developments, sue to obtain injunction and/or damages
• Injunctions – Ability to shut down infringer• License to obtain royalties or other business
benefit• Marketing advantage – real/apparent• Enhance/maintain first mover advantage• Protect investment in R&D• Occupy field in and/or surrounding key
standards
Defensive Reasons• Defend against patents of competitors• Cross license if accused of infringing• Counter sue if sued – use as bargaining
chip• Bolster settlement position• Partners/investors want to know if “idea”
is protected• Competitor who independently develops
idea can obtain IP rights
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Importance of Formal IP Program
• Convey importance of IP to all employees
• Educate employees on steps necessary to benefit from IP/avoid loss of rights/reduce liability
Goals of IP Program
•Protect technology and market position
•Exploit IP – Use as a business tool/source of revenue
•Avoid or reduce liability
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Essentials for Successful IP Program
• Technical – must identify inventions; comply with procedures
• Business/Sales/Marketing – must be aware of what can cause loss of rights; know about technology that can be exploited
The IP Program• Create and distribute/make accessible
patentability and program reference• Use online collaborative workroom to
enhance inventor/counsel interaction• Provide access to and instructions for
completing invention disclosure forms• Use procedure for receiving, logging and
tracking invention disclosure forms• Involve key business personnel
– IP council–Management support
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IP Program Considerations• Employee issues (existing employees,
new hires, departing employees)• Contractors and Consultants (ensure
ownership of IP, confidentiality, etc.)• Manufacturers, distributors, joint
ventures• Indemnity• Mechanisms for identifying IP
–Submission procedures–Status chart
IP Program Considerations• Documentation (notebooks, invention
disclosures, etc.)• Pre-release reviews – avoid loss of rights
(speeches, publications, trade shows, etc.)
• Avoiding liability• Insurance• Clearance process for new products and
processes – non-infringement options
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Identifying and Harvesting Inventions
• Identify business units that may generate inventions
• Identify key personnel in each business unit to monitor handling of inventions
• Educate and train key personnel regarding patentability and key issues
• Provide seminars for other personnel to enlighten and inspire
• Reward and recognition program for inventors
Identify Existing IP• For existing IP that is not protected, immediate attention should be directed to determining whether and how it may be protected, and if protectable, deciding whether to protect it.
• Critical to do this to avoid inadvertent loss of rights.
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Identifying IP• Identify IP being developed and any timing issues
• Identify key areas of development early – sometimes broad ideas can be protected and details added later
IP Protection – Implementation• Review audit list• Develop strategy (what to protect, how, etc.)• Prioritize, group, budget• Decide• Prepare and file applications• Avoid infringement of third party rights• Get indemnities• Consider insurance• Conduct clearance search; seek expert opinion,
if necessary
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IP Protection – Implementation
•For mergers, acquisitions, investment, partnerships: IP due diligence can be critical to:–Ensure protection–Identify potential liability–Valuation
IP Protection - Respect•Respect the IP rights of third parties
•Educate associates•Documented corporate guidelines
•Part of Integrity Program
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Conversion Mechanisms
• Value Extraction– Sale– Out-license– Joint Venture
– Donation
• Strategic Positioning(Value Creation)– Strategic Alliance– Integrate with Current
Business– Create New Business
(Sullivan, 1998)
ICM Gathering IP Management System
InnovationProcess
IPPortfolios
BusinessStrategy
and Tactics
CompetitiveAssessment
Patenting Criteriaand Decision Process
Valuation of theOpportunity
ValueExtraction
StrategicPositioning
Store
ObtainTechnologyInternally
ObtainTechnologyExternally
DecisionProcessAssess the
Need of NewInnovation
(Davis, 2001)
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Best Practices to Control Costs
• Relate the patent portfolio to business use• Establish an IP committee with cross-
functional members• Establish a process and criteria for
screening patents• Set detailed guidelines for patent filing and
renewal• Regularly and systematically review the
portfolio to prune patents not worth maintaining.
(Davis, 2001)
Best Practices for IP Integration
• Align IP strategy with corporate strategy• Manage IP and intellectual assets across
multiple functions• Conduct competitive assessment• Codify IP knowledge and share with all
business units• Focus on strategic value extraction• Patent strategically. Identify and exploit
trends in your own industry to create new rules of the game
• Institute a performance measurement and reporting system.
(Davis, 2001)
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Business Perspective:Business Perspective:•• Local market factors, customer needsLocal market factors, customer needs•• Return on investment = incentive to Return on investment = incentive to
innovate, and to employinnovate, and to employ•• Many innovations require substantial Many innovations require substantial
investmentsinvestments•• IP protection encourages investment and IP protection encourages investment and
innovation, reduces riskinnovation, reduces risk•• Business modelBusiness model
•• You need a return You need a return -- one way or another one way or another •• Build business and meet customer needs Build business and meet customer needs
by keeping IP, by sharing IP, or both?by keeping IP, by sharing IP, or both?
ChoicesChoices•• Copyright or patent?Copyright or patent?
–– Most investment in innovation is at Most investment in innovation is at the R&D stagethe R&D stage
•• Patent or trade secret?Patent or trade secret?–– Patents are a more open alternativePatents are a more open alternative
•• How to use patents?How to use patents?–– exclude or licenseexclude or license
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B1B1 B2B2 B3B3RequirementsRequirements
DesignDesign& &
SpecSpec
Implement in CodeImplement in CodeReleaseReleaseVerificationVerification
betabetaBBnn
TrademarkTrademarksearch for search for
published namespublished names
Secure patent rights Secure patent rights in innovationsin innovations
Define license Define license rights through EULArights through EULA
Enhance copyrightEnhance copyrightprotectionprotection
through registration through registration
Licensing in of Licensing in of 33rdrd party code or party code or
patentspatents
Managing IP RightsSoftware Product Development
Process
MicrosoftMicrosoft’’s IP Strategys IP Strategy•• Carefully manageCarefully manage the code that goes into products the code that goes into products
•• Secure protectionSecure protection for innovationsfor innovations
•• License inLicense in additional rights and additional rights and respectrespect the IP rights the IP rights of othersof others
•• License outLicense out patents to others on commercially patents to others on commercially reasonable terms reasonable terms
•• Stand behind our products with customer Stand behind our products with customer indemnificationindemnification
•• Promote effective Promote effective IP law reform and enforcementIP law reform and enforcement
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Microsoft was historically a trade secret reliant companyMicrosoft was historically a trade secret reliant company
Increasing reliance on patentsIncreasing reliance on patents•• Substantial R&D investmentsSubstantial R&D investments
•• More interdependent environmentMore interdependent environment
IP Policy Launch (2003)IP Policy Launch (2003)•• Reorientation of IP licensing and planning Reorientation of IP licensing and planning –– sharing, not sharing, not
exclusive use of patents exclusive use of patents
•• Microsoft is Microsoft is ““open for businessopen for business”” for licensing IP, even for for licensing IP, even for competitors competitors and OSS vendorsand OSS vendors
Active licensing programActive licensing program
MicrosoftMicrosoft’’s IP Strategy in s IP Strategy in contextcontext
Open InnovationOpen Innovation: : A Shift In Innovation A Shift In Innovation Paradigms From Closed To Open Paradigms From Closed To Open
(from Henry Chesbrough(from Henry Chesbrough’’s s ““Open Innovation: The New Imperative for Creating Open Innovation: The New Imperative for Creating and Profiting From Technology)and Profiting From Technology)
The sharing of knowledge and innovation through IP to The sharing of knowledge and innovation through IP to foster economic growth and meet customer needsfoster economic growth and meet customer needs
Closed InnovationClosed Innovation Open InnovationOpen Innovation
The smart people in our field work for usThe smart people in our field work for us Not all the smart people work for us. We Not all the smart people work for us. We need to work with smart people inside need to work with smart people inside
and outside the companyand outside the company
To profit from R&D, we must discover it, To profit from R&D, we must discover it, develop it, and ship it ourselvesdevelop it, and ship it ourselves
External R&D can create significant External R&D can create significant value; internal R&D is needed to claim value; internal R&D is needed to claim
some portion of that valuesome portion of that valueThe company that gets an innovation to The company that gets an innovation to
market first will winmarket first will winBuilding a better business model is Building a better business model is better than getting to market firstbetter than getting to market first
If we create the most and best ideas in If we create the most and best ideas in the industry, we will winthe industry, we will win
If we make the best use of internal and If we make the best use of internal and external ideas, we will winexternal ideas, we will win
We should control our IP, so that our We should control our IP, so that our competitors doncompetitors don’’t profit from our ideast profit from our ideas
We should profit from othersWe should profit from others’’ use of our IP, use of our IP, and we should leverage othersand we should leverage others’’ IP whenever IP whenever
it advances our own business modelit advances our own business model
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Managing IP in OSSManaging IP in OSS•• ““FreeFree”” rights to view, modify, redistribute source rights to view, modify, redistribute source
code defined in IP licensecode defined in IP license•• Supporting some business modelsSupporting some business models•• Mixture of OSS and proprietary = commonMixture of OSS and proprietary = common•• Some efforts by OSS vendorsSome efforts by OSS vendors
–– IP asset management and complianceIP asset management and compliance–– IP licensing/crossIP licensing/cross--licensing among competitorslicensing among competitors
•• Open Innovation NetworkOpen Innovation Network
–– Partial patent pledges and other Partial patent pledges and other ““giftsgifts””–– Vendor indemnificationVendor indemnification–– Insurance and risk mitigation services (Insurance and risk mitigation services (OSRMOSRM))
•• Aug. 2004: 283 patents potentially infringed by LinuxAug. 2004: 283 patents potentially infringed by Linux
–– The The Patent Commons Project Patent Commons Project
CoCo--opetitionopetition and Microsoftand Microsoft•• Participation and contributions to Open StandardsParticipation and contributions to Open Standards
–– XML, Web ServicesXML, Web Services–– Standardization of document file formatsStandardization of document file formats–– Open Specification PromiseOpen Specification Promise
•• Agreements with competitorsAgreements with competitors–– OSS vendors: OSS vendors: SugarCRMSugarCRM, , JBossJBoss, , ZendZend ……–– Traditional competitors: IBM, Sun, Nokia, RealTraditional competitors: IBM, Sun, Nokia, Real……–– LinuxLinux--related: Novell, related: Novell, LinspireLinspire, , XandrosXandros, Samsung, Fuji Xerox, , Samsung, Fuji Xerox,
LG ElectronicsLG Electronics
•• OSS Interoperability Lab at MicrosoftOSS Interoperability Lab at Microsoft•• Interoperability Vendor AllianceInteroperability Vendor Alliance•• Microsoft OSS projects on Microsoft OSS projects on SourceForge.netSourceForge.net and and
CodeplexCodeplex
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Microsoft Microsoft –– Novell AgreementNovell Agreement•• A bridge between the open source and A bridge between the open source and
commercial software worlds commercial software worlds –– A model for respecting IP while also A model for respecting IP while also
innovating on behalf of many customers innovating on behalf of many customers with mixed source environmentswith mixed source environments
•• Responding to customer feedback:Responding to customer feedback:–– Technical challenges of managing a Technical challenges of managing a
heterogeneous environmentheterogeneous environment–– Vendors should resolve IP issues directlyVendors should resolve IP issues directly
•• Components:Components:–– Technical Interoperability CollaborationTechnical Interoperability Collaboration–– Patent Collaboration AgreementPatent Collaboration Agreement–– Business CollaborationBusiness Collaboration
Models ofModels of CoCo--opetitionopetition??•• Competition as fierce as everCompetition as fierce as ever•• Customers want competition Customers want competition and and
cooperationcooperation•• Competitors finding ways Competitors finding ways
–– to enhance interoperabilityto enhance interoperability–– to share intellectual propertyto share intellectual property–– to build bridges between communities, including to build bridges between communities, including
OSS and proprietary software communitiesOSS and proprietary software communities•• The IP system is flexible and can be used to The IP system is flexible and can be used to
enhance coenhance co--opetitionopetition
