Wednesday, 28 October 2015

Stickiness in the IP services sector: not the same as friction

A couple of weeks ago, this weblog hosted a short piece by former Nokia VP for R&D and Director of IP, now current Aistemos consultant Donal O'Connell, about business development for IP businesses.  Here's a further piece from Donal, which offers a novel way to look at a problem many businesses experience: he calls it "Stickiness".  

But what does he mean? Explains Donal:
"No this paper is not as such about glue or adhesive. Rather, it looks at the degree to which the existing use of a product or service encourages its continued use as opposed to that of a competitor. This stickiness is sometimes called ‘lock-in’, customer retention or simply loyalty, although some would argue that these are similar but not identical.

“Stickiness” may be defined as a method of acquiring and retaining customers, by provided outstanding, products or services plus excellent customer service. Another definition is the nature of your customers to continue to use your products or services, to “stick” with you, to renew, upgrade, and never leave you.

In this paper, I shall specifically focus on the stickiness of the products or services supplied by IP Firms (those focused on the legal aspects of IP), IP Service Providers (those focused on the non- legal aspects of IP) and IP Solution Providers (those focused on IP systems, IP tool and IP data) to their corporate in-house IP function clients".
Donal's final thoughts read like this:
"Stickiness is the quality that every IP product or service needs in order to ensure client retention and build their client base into brand evangelists.

The key to thinking about stickiness is that if the corporate in-house function gets rid of an IP Firm, IP Service Provider or IP Solution Provider, will they miss you?"
This blogger notes that, even in the physical world, "stickiness" is not the same thing as "friction", although the two concepts may occasionally deliver parallel results. One should be careful not to generate static electricity by rubbing clients up the wrong way in the belief that they will stick to you by default.

You can read this five-page paper by clicking here.

Monday, 26 October 2015

Mapping and data visualisation:an initiative from Oxford

Oxford University is one of the oldest educational institutions in the world. But age and tradition count for nothing today, where education and research must be cutting-edge if they are to make any mark at all in the contemporary data-savvy environment in which they compete for students, funds and credibility.

In this context Aistemos notes the initiative taken by the Oxford Internet Institute which it brands the Information Geographies Project. The Institute explains:
“This project proposes a comprehensive mapping of contemporary geographies of knowledge.

Information is the raw material for much of the work that goes on in the contemporary global economy. As such, it is important to understand who produces and reproduces, who has access, and who and where are represented by information in our contemporary knowledge economy.

Our goal is to produce a comprehensive atlas of contemporary information and Internet geographies, that will draw on four years of focused research conducted at the Oxford Internet Institute. Specifically, the atlas will draw on unique data, visualisations, and maps in order to tell a story about three key facets of global information geographies (access, information production, and information representation).

We aim to broadly disseminate this work in a variety of open and accessible formats including free and interactive ebooks, an interactive website, and a printed atlas. We’re still at early stages of the work, but keep an eye on this site for all of our updates”.
The potential relevance of this project to IP analytics is obvious, in that the creation and publication of information through the patent system fall within its scope and the data which its research already addresses provides greater understanding of the location and magnitude of potential markets for information-based products.  Internet penetration, broadband access and the extent to which web-enabled products are used is not just a matter of social curiosity: it's important for anyone investing in the development and sale of hardware and necessary software that drives the sector.

The Institute's published work so far appears to be tangential to the IP/innovation nexus rather than central to it. The imbalance of both the availability of information and its use are among subjects tackled so far, with stunning graphics (an example of which is shown below) -- some of which are interactive.

The project's content is not merely accessible but is governed by a generous Creative Commons Attribution-NonCommercial 3.0 Unported License (here).

It is hoped that the Institute's work will continue to open up fresh vistas in terms of being able to gain a better understanding of where information is created and how it moves, and that it will assist in putting more meaning into IP analytics in the future.

Thanks go to beSpacific for alerting us to this project.

Friday, 23 October 2015

No going back, but patent quality must improve: serious thoughts from a birthday party

Last night Aistemos marked its second anniversary with a reception at London's stylish Hospital Club, an unfamiliar venue for many but a cosy retreat and handy base for many of the most imaginative members of the creative industries. Predictably, since this was a gathering of people involved in various aspects of intellectual property management, exploitation, investment and analytics, the conversation was a good deal more serious than that which one might expect from a birthday party: earnest voices, furrowed brows and attentive nods were as much in evidence as the mandatory nips and nibbles.

Aistemos CEO Nigel Swycher welcomed everyone, reminded them that IP might be intangible property but it was far from being invisible and warned that, so far as recognition of the importance of patents and other IP rights in business today was concerned, there was no going back (not that anyone present in this highly pro-IP gathering was about to disagree). He then introduced Brian Hinman (Chief Intellectual Property Officer of Philips, Eindhoven, formerly with Allied Security Trust, IBM and Unified Patents).

Brian gave a short, sharp keynote address in which he emphasised the importance of good quality patents, both in terms of the value they promised their owners and as a prophylactic against the activities of those non-practising entities that harnessed poor-quality patents, those with unclear scope and dubious validity, as a means of engaging in unworthy forms of trolling.

Even with a 50-strong IP intelligence team at his disposal, monitoring and handling a portfolio of some 76,000 Philips registered patent rights still required the use of smart tools that could add value to the company's appreciation of its intangible assets. This was the context in which external smart tools such as those developed by Aistemos were so useful.

Returning to the theme of quality, Brian praised the European Patent Office as being number one when it came to focusing on the quality of its granted patents; however, both the Chinese and Japanese Intellectual Property Offices were learning fast and were now doing lots of benchmarking.

Brian concluded by assuring his audience in jocular fashion that, if you are working in patents today, you are guaranteed good prospects of job security: people always need to hire someone who can drive their business innovations, and if something goes wrong they then need someone to handle their litigation.

Thursday, 22 October 2015

IP Due diligence -- making a difference: a roundtable discussion

Innovation, with its associated intellectual property rights, is often the deal driver -- but how often are the IP specialists in the room when the deal is done?

Aistemos, being an IP strategy and analytics company that has developed an innovative approach to enhance the quality and reduce the cost of IP due diligence, has organised a roundtable discussion about the future of IP due diligence, and about IP risk assessment more generally. Topics up for discussion include:
* how deals are make: the investment banker’s perspective;
* how corporates use and assess due diligence: a view from the inside;
* IP analytics: how data science can increase efficiency and provide insight.
To keep the discussion focused, this event is only open to anyone who is actively involved in the management of IP due diligence projects, not just those which relate to M&A but also more generally to those projects that cover licensing and monetisation. 

The object of the exercise is to provoke a discussion that challenges the current norms of counting and scheduling, and to look at ways of opening up new approaches in an area that we and others believe requires fresh thinking.

The discussion will take place on Thursday 3 December 2015, up on the 3rd floor of 90 Long Acre, London WC2E 9RA, with registration at 5.00 pm, a prompt start at 5.30 pm (the discussion can continue over drinks at 6.30 pm).

Space is limited, so early registration is a good idea if you want to participate.  If you fit the description of an active due diligence person, it will be great to share our thoughts with you, and vice versa. You can register by following this link.

Tuesday, 20 October 2015

Not quite white elephants, but more patents have been sent packing

Patents are potentially assets of great value -- but if you have to keep paying for their upkeep and for the protection of their validity but they aren't earning you anything, they come preciously close to being white elephants (though you can just let them lapse, an option not open when it comes to pachyderms). Assiduous followers of the media may have picked up a short item on Business Matters ("The UK's leading SME business magazine") yesterday with the alarming title "“Abandoned” patents jump as businesses slash intellectual property costs". This piece picked up on recent detailed research, published in IAM as "Assessing patent renewal decisions in the United States and Europe", by Ocean Tomo's Matthew Beers and Maria Lazarova, and reads thus, in relevant part:
As abandoned patents rise, the number of new patent applications filed is also soaring, by 47 per cent in the US and 39 per cent in Europe over the past decade.

Joff Wild, editor of IAM, told CityAm that “patent hoarding” was no longer a viable option for businesses as cost pressures rise: these figures suggest that calculating which patents to ditch is becoming almost as much a business-critical issue as protecting them [this is actually the norm in most sectors at most times, though in recent years the notion of retaining patents in the hope that they may be licensed or infringed has played a more prominent part in some business models than simply retaining patents to protect their own products and processes].

While some major corporates – notably the tech giants – may still have the power to stockpile huge numbers of patents, this research suggests that many intellectual property owners are having to be much more strategic in prioritising which assets to keep.

The study found that cost-cutting and legislative developments were the main factors driving this change.

This news follows on a recent study which found that one in three intellectual property experts worry about the low quality of US patents [this might be taken as a reflection on the quality of US patents or on the quality of IP expertise]. ....
In an earlier Aistemos post this August, "Can the death of a patent be a sign of life for the patent system?", here, we wrote:
Lapsed and lapsing patents and patent applications are arguably an important sub-class of their own. Apart from their technical content, they provide a wealth of information about the business decisions taken by those who have initially filed for them and then let them go. They also provide a sort of snail-trail that describes the path taken by a technology as its players try out new product lines, new manufacturing techniques and so on.

Taken in bulk, the abandonment figures look large and might be viewed as a problem in terms of wasted effort by competitors in the market and resources consumed in vain by patent-examining offices. Is there any need to be despondent about this waste? No. It exists wherever competition within and between products can be found. Whether there is a good patent system, a bad one or none at all, you will still be likely to find businesses committing resources towards developing the same products or creating processes that achieve the same objectives. One will always be ready first and that fact can render the investment by others theoretically wasteful. Most products do not succeed in the market place, just as most brands do not become successful and most trade marks on the register are of little or no commercial value. 
Clearly, cost-cutting and legislative developments, not to mention case law developments such as the Alice decision, on the patent eligibility of computer-implemented inventions, have an impact both individually and cumulatively on the decision to keep a patent or ditch it. Ultimately, however, the decision to retain or abandon patents and patent applications remains a question of what to do with one's resources. If you can't earn money by persisting with them and can't find a buyer for them, there is no commercial rationale for retaining them.

There's one further point to ponder. Now that we are some years from the economic crash of 2008, the money invested in new products and things you can do with them is starting to come to fruition. Technology does not stand still; nor does it travel in linear progressions. It would be good to know what proportion of the lapsed patents and inventions in the past couple of years can be accounted for by the fact that they have been sidelined by history, as the technology they relate to becomes outdated, unfashionable, expensive or environmentally unfavourable.

Questions like this can be addressed on a sector-by-sector basis by appropriate analytics, though the answers may still seem a little historical: after all, it's the patents that we don't yet know about -- the ones that have not yet been applied for but which reflect investment in innovation over the past couple of years -- that are likely to give the closest guidance as to which patents to keep and which to let go.

Monday, 19 October 2015

Strange Brew: beer patents under the microscope

"Strange Brew: beer patents under the microscope" is the title of the latest Aistemos IP Analytics feature to be included in an IAM Weekly update.  For those readers who didn't read it last week via IAM, we are pleased to post this analysis in full below.


The annual Munich Oktoberfest is not just the world’s best-known beer festival; it is a magnet for economists too, as evidenced by features published by the Wall Street Journal and the Harvard Business School.  Curiously, it has attracted little attention in terms of the impact of intellectual property.  This being so, it is plainly time to examine the beer industry through the eyes of patent analytics.

The first surprise is that, while patenting in the beer industry is actively pursued, only a small percentage of patents held by leaders in the brewing industry relate to the drink itself: packaging, beverage dispensers and manufacturing processes are far more likely to be patented. Table 1 below illustrates this:  while Japanese brewer and distributor Kirin, with 310 beer-related families, is well ahead of the pack, this holding accounts for just 20% of its patent portfolio. 
Table 1 - Beer producers, beer related patent families 
Beer related patent families
% of total portfolio
Total portfolio
AB Inbev
Boston Beer
CR Snow

Source: Cipher and Thomson Reuters
Kirin’s portfolio is echoed by the practices of its Japanese competitors, which tend to own significantly larger patent portfolios than either European or US brewers. The four top positions in the patent-owning table are held by Suntory, Asahi and Sapporo, which itself holds exactly eight times as many beer-related patents as the highest-placed non-Japanese company, AB Inbev.

Anyone thinking of investing in a beer producer will want to know not just what its market share and trade mark portfolio look like but also about its prospects for expansion into new markets and different products, and this is where patents come in.  A beer brand (think Budweiser or Heineken) may have a zero chance of succeeding on a whisky, an aperitif or a soft drink, but technologies relating to bottling, packaging, storage and maintaining the shelf-life of active ingredients may have commercial applicability way beyond the original beer product base. So let us take a look at the clusters of patents held by Kirin, Heineken, AB Inbev and Tsingtao respectively:
Source: Cipher and Thomson Reuters

Source: Cipher and Thomson Reuters

Source: Cipher and Thomson Reuters

Source: Cipher and Thomson Reuters
These tables show a more even spread among Kirin’s holdings, where patents for derivatives, active ingredients, acids, agents and other innovations which may well have applications which lie well beyond the company’s core activities are a clear strength, while Heineken appears to have concentrated its innovation in fields relating to pressure, valves, containers and the like.   Tsingtao, as befits an enterprise based in the world’s main manufacturing zone, focuses on the manufacturing process itself.  AB Inbev is the only one of the four to look beyond processing a product, engaging consumers and beer consumption by devoting 6% of its portfolio of patent families to “user/social accounts”.

Will the current Japanese patent hegemony continue? Figure 1, illustrates patent families filed since 1995 and growth in patenting since over the last three years. They suggest that a shift in the geographical balance of power in the beer industry is already happening. Although Japanese companies have been dominant and are likely to remain so for some time, it appears as if they are slowing down and others might be closing the enormous gap in patenting we can see over the last decades, with the strongest growth is found among Chinese companies.
Source: Cipher and Thomson Reuters
Curiously, given that beer is a commodity that is consumed in most of the world’s markets, the tendency towards a global or at least regional strategy when it comes to brand protection through trade mark registration does not appear to be closely mirrored by patent filing.  This is because the Asian companies appear to have adopted a patent filing policy that most closely fits the footprint of their local markets, while the European and US companies appear to have opted for a wider patenting strategy.  Figure 2 illustrates this well: China’s Tsingtao brewery is focused only on China; likewise Asahi patents in Japan alone.  Heineken and AB Inbev have however spread their portfolios more widely across the board.
Source: Cipher
Aside from the analytics, one point should be emphatically made.  The beer industry is one of the most competitive in the world. Barriers to market entry are extremely low, there is little industry regulation and the incentives to enter the market and compete in it attract both the giants of the sector and the continued growth of micro-breweries suggests that this is one of the easiest product markets for a start-up to enter (see here).   This competitiveness does not appear to have been harmed or hampered by the large number of patents, trade marks and other registered rights that abound; rather, the opposite: protection of investment in innovation makes it all the more worthwhile for those who would improve their product, its presentation or its production.

Wednesday, 14 October 2015

Expectations versus experience? 50's not too old for IP analytics startup

"Life begins at 50: The man who waited until his sixth decade to start his own business" is the title of Simon Brooke's feature on Aistemos CEO Nigel Swycher, published yesterday in Real Business.  This piece gives a bit of background and context to Nigel's vision of Aistemos's Cipher (described on its website as "the world’s first IP analytics platform to aggregate, analyse and visualise IP data relating to patents and related events including litigation and licensing") as well as his willingness to take one risk -- in exchanging the security of a successful legal practice -- in order to help others reduce theirs, through the ability to secure a better grasp of the data and variables that are found in every major IP-related business decision.

Simon's article reads like this:
How old is too old to start your own business? Nigel Swycher was 53 when he launched Aistemos, a company that handles risk and valuation in intellectual property (IP). He’d spent his working life with big companies including City solicitors Slaughter and May, where he was a partner, before quitting to set up his own company. “While partners are owners, there is a big difference in running a startup,” he explained. “There’s a dynamic and level of excitement in Aistemos that I have never experienced before.”

His age might have been unusual but his motivation was very common – he saw a gap in the market. “I spent 20 years advising on major M&A deals and corporate transactions and always felt that technology could improve the traditional approach to due diligence,” detailed Swycher.
“More recently, the financial markets, most notable the banks and insurers, have been struggling to understand the importance of intangible assets, and intellectual property in particular. Providing access to the world’s IP data seemed like an obvious solution to all these problems.”
In this post industrial world, ideas, algorithms, technology, brands and other elements of IP have become more valuable than ever. IP risk and valuation calculations that used to take two weeks to conduct by an IP specialist can now be generated in a couple of minutes thanks to Cipher, Aistemos’ analytics product.

Cipher launched a year ago after being piloted by 70 of some of the most well-respected companies in the City, including ARM, Deutsche Bank and EY. Many of these have now converted to clients.

Swycher’s big break came when he put his idea to the international financial data company Thomson Reuters. “Not only did they agree, but they offered to license the world’s most accurate patent data to enable and accelerate the development of Cipher,” he said.

His decades of working in business provided him with useful contacts when it came to pulling together the necessary investment. “We have raised nearly £4m from my network,” he revealed. “In the mix are investment bankers, lawyers, accountants, CEOs and GCs of major corporates – and my brother. One of the Aistemos in-jokes is that the investor group would make a decent board for a major multi-national.”

Swycher has been involved in the IP world for 30 years and working on the largest and most complicated deals means that he has met a lot of what he calls “interesting people.”

“As intangible assets have accelerated in importance in the boardroom the IP ecosystem has become ever more active and closely knit,” he said.

In other words, there have been plenty of experts in well connected but growing networks able to offer constructive criticism and advice. In particular, before Cipher was released, 70 major organisations joined a pilot group, providing feedback that has enabled Swycher and his team, including his CFO, to build a product that the market wanted – rather than building something new and simply hoping that clients would appreciate it.

He has inevitably faced challenges, some of which are very different to those he experienced when working for large corporates. He also learnt the lesson familiar to so many small people running their own businesses – the highs are higher and the lows lower.

“The downside of my natural optimism is that things do not always turn out as I expect,” he admitted. “So, failing to persuade a client to engage with Aistemos is always hard – especially when I believe that we would do a great job.” Doing a presentation to a group of SMEs with a bandaged nose after he walked into a glass partition was another challenge.

He is confident about this new phase of his life. “One thing is clear. Companies, advisers and investors are hungry for better access to IP business and competitive intelligence,” he said. “Our ambition is to provide what they need in the way they need it. While our focus is currently on Europe, the US and Asia will be important markets for us in the future.”

Aistemos is coming up to its second birthday this month and the business is expanding fast with a growing roster of clients. Thanks to big data and other evolving technology automation of all aspects of the legal profession is increasing.

Does Swycher regret taking so long to start his own business? Quite the opposite, in fact.

He said: “If I could go back in time and have a chat with my 25-year-old self, I would tell myself not to rush. Everything about transforming a business idea into reality takes time, and usually a lot more time than you would think. It’s okay to be impatient as long as you’re not unreasonable in your expectations."

Monday, 12 October 2015

Mind your own IP business -- but first find your opportunities

"Biz Dev for IP Firms" is the somewhat informal title of a fairly serious paper prepared by Donal O’Connell, which we are pleased to share with our readers. Donal, for the record, is no random person. Formerly a Vice-President of Research & Development and a Director of IP at Nokia, he is the author of Inside the Patent Factory: The Essential Reference for Effective and Efficient Management of Patent Creation, published by Wiley in 2008, and and Harvesting External Innovation: Managing External Relationships and Intellectual Property, published by Gower in 2011.  An Adjunct Professor in the Imperial College Business School, London, Donal also works alongside the Aistemos team on a range of IP Strategy initiatives.

This paper, which is in a reader-friendly format and covers just seven sides of A4, sets the IP-led opportunities for business development within the wider context of issues that IP service providers must tackle, offering a simple two-by-two matrix which each can use in order to give its own IP-based opportunities a meaningful framework. Donal concludes:
"Business development can be many things. It really depends on the IP Firms, their current state and their strategic objectives. In my mind, however, the role of business development is to find new strategic opportunities for the IP Firm and start the IP Firm on the path to execute. It is not uncommon for business developers to have a combination of strategy, marketing & sales, finance, legal, and operations background as depending on the strategic objectives, the role may involve partnership development; strategic market development and sales; strategic marketing; mergers, acquisitions, and financing; new business line exploration; channel sales and/or new product or service development.

Of course there will be some differences between boutique IP Firms with limited resources and larger IP Firms in how they approach business development. That said, there seems to be a lack of general knowledge and awareness and poor skill and competencies in the IP profession in this area of business development. Even the larger IP Firms who often employ non attorneys to conduct business development can improve".
You can read "Biz Dev for IP Firms" by clicking here. Do let us know what you think of it.

Friday, 9 October 2015

Aistemos discussions on LinkedIn: why not join us?

Last month this weblog posted an item on nine discussion topics which we have started on the Aistemos LinkedIn Group. Since then, we've added a further three topics, which are listed here:
* Why is a return on investment (ROI) on Big Data spend so elusive? Our blogpost at speculates that accessing and using Big Data may require a different internal management skill-set to that used for processing, absorbing and exploiting regular data. We also suggested that a good system for managing even small units of data is also imperative, since humans have to adapt to new routines involving data and information. Thoughts on these issues are very much welcome.

* In a tweet yesterday, we observed that, while there's a growing body of data on returns on investment on various forms of patent-backed innovation, there's precious little information concerning lending institutions themselves: what sort of ROI do they enjoy on patent-supported ventures? Does it vary as between the US, where lenders seem to be more plentiful, and the EU, where lenders are harder to find and even harder to please? Is it right that there should be such an asymmetry of information as between borrowers and their lenders?

* A recent exchange of tweets involving Aistemos and @TheIpHawk turned on the use of inter partes reviews of patent validity in the US. Essentially, how does one calculate the advantage that may be gained by seeking an IPR in a dispute with a patent owner against the interests of (i) one's own shareholders and investors, given the cost of an IPR and the uncertainty of its outcome and (ii) the possible boomerang effect on the IPR applicant and other players in the same market if the IPR fails. Thoughts, anyone?
The Aistemos LinkedIn Group is a serious and responsibly moderated LinkedIn Group which welcomes discussion and debate. Do join and feel welcome to share your thoughts and opinions with us.

Thursday, 8 October 2015

Not just for giants: why smaller businesses need IP strategy too

Earlier this week, Real Business published an article by Aistemos CEO Nigel Swycher "Having an IP strategy is not just for tech giants". This piece is intended for a wider audience than just that of IP specialists, being a timely warning to anyone running a business that, if that business has any IP of its own or is trading in a market in which its competitors own IP -- and that's almost every business of any sort these days -- the time to think about the "what-ifs" is before they happen, not afterwards.

If you missed Nigel's article when it come out, you can read it here:
Intellectual property is not something that only large companies or unicorns should protect. Here is why SMEs must also stay on top of their intellectual property rights.

A few years ago, the only connection between patents and unicorns was a bizarre patent filing (No. US4429685) that related “to a [surgical] method of growing unicorns in a manner that enhances the overall development of the animal.” Today any company less than ten years old and valued at $1bn or more is known as a unicorn [you can read more about unicorns here and here]. These modern day unicorns, along with all the major tech companies, have almost certainly heeded Bill Gates’ advice from 2004:
“CEOs must now be able to formulate strategies that capitalise on and maximise the value of their company’s intellectual property assets to drive growth, innovation and cooperative relationships with other companies."
In short, they will have in place Intellectual Property (IP) strategies that do not simply set out to maximise value or minimise risk, but which deliver strategic advantage. Key to that is understanding that risk and value are intrinsically linked and striking a balance between them, in line with wider corporate objectives related to innovation, expansion and competitive pressures.

These days, striking that balance is a genuine business imperative, and one that is not limited to highly capitalised companies. It is arguably even more important for start-ups.

IP is a valuable asset

It is estimated that 70 per cent of corporate value is wrapped up in intangible assets, with IP accounting for a significant proportion of that total. However, in a world where startups are increasingly peddling ideas (see Tom Goodwin’s much referenced point about Uber, Airbnb and so on), IP may be an even more significant proportion of start-up corporate value.

In turn, this means that any startup’s value and risk exposure may now be disproportionately affected by the quality of its IP strategy, which can help to overcome early problems, as well as support longer-term strategy.

For instance, one issue for smaller startups is the initial time and cost associated with registering patents, including hiring professionals to trawl the IP landscape for similar inventions or designs – potentially across multiple jurisdictions with different rules.

Then there is IP litigation, which continues to grow in volume and severity and can represent a significant threat to any startup, whether a challenge comes from a non-practicing entity or not.

A dream? Or a realistic aim?
Both of these issues can be at least partially mitigated if a focused IP strategy is part of early business planning. This could be a strategy that answers questions like: “In which markets do we need patent protection?” and “Could seeking to license existing IP reduce our risk exposure?”.

Given these complexities, and the growing importance of IP strategy for long-term success, it is worrying that many start-ups still do the bare minimum. All too many still take a pre-digital approach that virtually ignores IP, which results in missed licensing opportunities, vague valuations, naïve sales to NPEs and vulnerability in the face of aggressive challenges.

IP strategy is essential

The inescapable truth is an IP strategy is essential. Though some specialist support may be required, developing one boils down to a three-stage process. 
The first stage is education and awareness. This exercise must be inclusive and establish the views, needs and requirements of each relevant part of the business. This is the essential first step to developing a strategy that is not only fit-for-purpose, but also the bedrock of establishing support for, and understanding of, the IP strategy.

It's easier to get the balance right if
you know the direction you're going
The second stage is implementation. Value derived from innovation (including patents, where appropriate) of R&D, and creativity more generally, is captured and protected. Consistent policies are applied to the supply chain for both suppliers and customers, to maximise rights ownership and minimise indemnity risk. Risk management is extended to involve direct risks, such as litigation, and indirect risks such as any applicable indemnity.

The final stage deals with governance. Once a company has developed an IP strategy, then aligned and integrated it into its business strategy more generally, it is essential that a governance structure be established. This ensures the strategy is continually managed, monitored and reported on.

In recent times, this has seen many companies form IP strategy groups, with participation from across the business, and the emergence of a new role, the Chief Intellectual Property Officer (CIPO).

As startups become ever more defined by their IP, their long-term success will be driven by their ability to both protect and strengthen their IP positions – to both manage risk and maximise value. And that is why IP strategy cannot be an afterthought – the start-ups that engage with IP early, developing and implementing well thought out IP strategies, will be much better equipped to become unicorns – with or without major surgery.

Tuesday, 6 October 2015

Prosthetics: the next IP battleground?

"Prosthetics: the next IP battleground?" is the title of the most recent Aistemos IP Analytics contribution to IAM's Weekly Industry Reports (published by IAM last week here). This feature discusses prosthetics -- a US$ 20 billion dollar market but an area of IP investment that rarely features in any analytics -- and describes the key elements of a market that can expect substantial growth in the coming decades. We are reproducing this analysis here for the convenience of those of our readers who may not yet had a chance to read it.


The concept of improving people’s lives using artificial limbs is as honourable as it is old (prosthetics have been around since the ancient Egyptians substituted missing toes with wooden replicas). Up until the latter part of the 20th century, prosthetics were essentially static limbs; but more recently prosthetic limbs – and joints especially – saw tremendous innovation and a surge in the number of companies entering the market. Add to that recent advances in materials science (eg, carbon) and electronics, and the prosthetics market is undergoing another change.
Figure 1 shows patenting happening over a long period of time, with a surge since 2000.
Source: Cipher, Thomson Reuters
As always, necessity is the mother of invention. With a large number of wars fought in recent decades, one of the many unfortunate side effects has been a surge in the number of disabled former soldiers (an ageing and increasingly overweight population is also contributing to this growth). Many armies, as well as being centres for excellence in electronics and materials science, have prioritised the care of soldiers, which in turn has led to the development of interesting technology. This has also helped to pave the way for prosthetics as a feasible, cost-effective solution for many, leading to a number of innovative small companies entering the space. More recently – with materials, software and electronics becoming the key elements of prosthetics – there has also been a move away from traditional medical doctor-based companies or research institutes to more high-tech driven ventures. With such substantial research requirements and an expensive end product, the need for IP protection is clear. This industry typically relies heavily on mergers and acquisitions, as well as venture capital, and for smaller companies this translates into intellectual property becoming their bargaining chip.
A mixture of technologies is always a hotbed for intellectual property, especially if elements of electronics are involved. Pharmaceuticals, telecoms and electronics are usually what come to mind when thinking about high-value IP sectors; however, the medical device and surgery area is characterised by intense activity and litigation, and has seen some of the largest settlements in history. Organisations in this area are not typically the subject of non-practising entity litigation; instead, there are (expensive and strategically important) head-to-head battles between competitors (see Table 1). This is another reason for smaller companies needing intellectual property to defend themselves, and as they grow the hunted may indeed become the hunter (a Cipher snapshot looking at litigation activities of billion-dollar start-ups (so-called 'unicorns') shows that as they grow, they start litigating against their peers).
Table 1 – Patent litigation within prosthetics
Start date
End date
Thermo-Ply, Inc
Ohio Willow Wood
DJ Orthopedics LLC
Generation II
Molnlycke Health Care
Medline Industries, Inc
Steven Maynard
Hanger P&O
ALPS South
Ohio Willow Wood
ALPS South
Ohio Willow Wood
ALPS South
Ohio Willow Wood
Bulldog Tools, Inc
Prosthetic Design
ALPS South
Ohio Willow Wood
iWalk /MIT
iWalk, Incl v Ossur HF
iWalk Inc
Otto Bock
Otto Bock
Thermo-Ply, Inc
Ohio Willow Wood
Freedom Innovations
Freedom Innovations



Source: Cipher
Figure 2 drills down further into the field of prosthetics, examining some of the most well-known players and uncovering what is driving this surge. A couple of companies have exhibited tremendous growth in recent years, most of which primarily focus on exoskeletons (eg, wearable suits or walking assists). The largest portfolios are held by bionics companies (eg, prosthetics with microprocessors, also known as robotic prostheses) and the big incumbent orthopaedics/joint companies (eg, knee and hip replacements). There is also a clear difference in growth between incumbents in orthopaedics/joints and bionics, with bionics still exhibiting double-digit growth.
Source: Cipher and Thomson Reuters
As the area of fastest growth, is the exoskeleton sector full of small companies working on innovative new solutions? Figure 3 plots the largest patent owners and the most active companies. This field has attracted activity from universities and Honda is the leader in the field (the legacy from its Asimo project). However, other companies and universities/research institutes are the leaders in terms of growth.
Source: Cipher and Thomson Reuters
With universities and companies spread around the world, it might be imagined that they have broad geographical profiles. However, most protection is sought in the United States, as seen in Figure 4.
Source: Cipher
So what are the predictions? It appears that advances in electronics and robotics will lead to further innovations and advances in prosthetics and bionics – it could be argued that they already have. So in this area too, there is no immunity from IP wars. The market is currently valued at $20 billion and the potential for man and machine has never been greater.