Monday, 27 February 2017

Seize the moment, grasp those intangibles: this webinar discusses how

It has all been said before, but the message
must still 
be internalised and applied ...
Here's a reminder that Aistemos is running a webinar with the theme of "Grasping intangibles: IP can slip through your fingers". It's scheduled for Wednesday 8 March, starting at 1500 pm GMT. The substance of this webinar can be gleaned by reading a short, punchy piece by Aistemos CEO Nigel Swycher that you can read here. The topic is an important one: intangible rights don't last forever and are constantly challenged by third party activity and the passage of time. It's not enough to take action to marshal one's intangible resources. They must be assessed, appreciated and dealt with in good time -- and this is less likely to happen if intangibles are not accorded as key assets.

This webinar, which draws on research from the recent IP Strategy Survey, features Nigel Swycher with admirable support from guest speakers Scott Bell, Head of UK Investment Banking at Deutsche Bank, and David Kappos, Partner at Cravath, Swaine & Moore. This team will explore the following key issues:
* Steps toward greater corporate transparency of intangible assets;
* Approaches taken by major corporates to improve management of IP;
* Accessing the right data at the right time – the growth in IP business intelligence;
* Investor attitudes to IP value in public and private companies
Over the course of 30 highly-focused minutes registrants will hear how IP strategy is fast becoming an integrated part of mainstream business strategy -- and why this can’t happen soon enough.

Full details of the programme and how to register for it can be found by clicking here.

If you can’t make it for the webinar, register anyway and we’ll send you a recording.

Friday, 24 February 2017

Navigating the intangible landscape: in data we trust

Here's the very latest in our series of features built upon the survey conducted last year by Aistemos into IP strategy and attitudes found within the boardroom.
Navigating the intangible landscape: in data we trust 
The big data revolution has made its mark on many industries from agriculture to e-commerce. Information about almost anything is available at the touch of a smartphone screen, and data providers such as Thomson Reuters and Bloomberg have built vast businesses peddling instant facts and figures. Yet the intellectual property (IP) sector has remained stubbornly resistant to change.

This is due to one chief culprit: systemic data blindness across the IP industry. Information about different kinds of IP -- even patents and trade marks, which are ostensibly in the public eye -- is often difficult to access, or worse, can be incomplete or even inaccurate.

The perils of data blindness

Business leaders would never be content to accept inaccurate information about revenue and profit, or settle for half a competitor analysis, yet they have been forced to make do with half the story when it comes to IP. In a recent report, financial services giant EY claimed that big data analytics was one of the most disruptive forces to impact deal-making this year, but the forecast made no mention of IP as a sector facing change. Yet change it must. 

Sir Francis knew that good data
helps bring home the bacon ...
Sir Francis Bacon once said, "Ipsa scientia potestas est," knowledge is power, and this has never been more true than it is today. IP data is increasingly becoming a crucial component of corporate decision-making. Information about patents, trade marks, licensing revenue and other considerations can make or break deals and decide whether a new product is to be developed or a new service to be introduced. If up-to-date and correct IP data is not available, these strategic decisions are much harder to make. For example, even in the US Patent and Trademark Office data, the name ‘International Business Machines’ is spelled more than 800 different ways, which makes the patent database almost impossible to search effectively.

“Outside the major patent offices, there can be cases where filings are in a poor state, lost, or have other problems,” says Justin Watts, IP partner at global law firm Freshfields. “It’s hard to get one’s hands on the data, so you have to work with that uncertainty. That means lots of warranty clauses in deals and an assumption that there will be a good degree of post-closing work so that IP rights go in the right places.” This situation is far from ideal, he adds. “But we have to do deals in the context of the current system.”

The state of play

Aistemos’ recent survey of 80 high-level executives from some of the world’s most innovative companies, including BAE Systems, Siemens and Bayer, demonstrated a struggle to get hold of the right IP information within one’s own organisation, let alone access data regarding IP rights in a client or competitor corporation.

When asked, “Do you have access to the information you need relating to your organisation's IP?” the majority of respondents said they could “always” review data about registered IP, but the tally dropped significantly for IP licences and IP disputes, falling even further for IP valuation.

It is professional services and accountancy firms that are finding it toughest to get the information they need to advise adequately on deals. While registered IP, such as patents, were accessible most of the time for these respondents, data on licensing, disputes and valuation were only available “sometimes” for the majority.

The research shows that the advisory community knows that their clients have data, and they want to use that data to give better quality counsel, but they are being stymied by the current system. If this is the state of play within some of the world’s innovation giants, it suggests that data deprivation must be widespread in the mainstream.

Drowning in data

Last year, the Economist Intelligence Unit found that 60pc of executives were already using big data to generate more revenue within their organisations, while 83pc claimed that it was making their existing range of products or services more profitable. As companies produce more and more data, the insights derived from this information have the potential to be even more disruptive. In the world of IP, data is becoming more readily available, not only because of tools such as Cipher, but because of changes to how data is catalogued and displayed. The European Patent Office, for example, has opened up access to more than 90m patents through its free tool, Espacenet. Google has also moved into this space, providing indexed and searchable IP rights through Google Patents. But it’s almost impossible for a human being to analyse hundreds of thousands of relevant patents; that’s where machines come in.

“There is large amounts of patent and IP related data available,” says Michael Durst, chief executive and founder of Itonics, an analytics and software firm supporting R&D. “This means more data that has to be researched and analysed and evaluated. It’s coming from all over the world now, especially China and the US. But the big data revolution has not really arrived; it’s still in the making.” Yet many of the systems devised to help companies access and manage IP data have not kept pace with the clients they serve. “A lot of the existing software looks like it’s from the eighties,” Durst says. “Companies are still turning to external resource, such as specialist law firms, to fill the gaps. Companies like Aistemos are showing that it’s possible to cherry pick the relevant data and analyse huge pools of data, but it is early days.”

As the available data pool swells and machine learning becomes more sophisticated, it will become increasingly possible to crunch information in a way that is useful and effective. “There’s no doubt that the direction of travel is consistently towards more complete datasets and better access to data,” says Freshfields’ Watts. “But there’s still a long way to go.”

An incomplete picture: better than no picture at all

Customers shopping with the e-commerce giant Amazon have become accustomed to the use of big data to prompt suggestions regarding new purchases. Sometimes, the algorithm gets it right; other times the products listed miss the mark. Consumers and businesses alike accept that big data cannot always give a precise answer -- but that it may provide a helpful nudge in the right direction. This is true of IP data as well as internet shopping.

“You know you’re looking at an incomplete picture, but tools like Cipher give you enough information to ask the right questions,” says Watts. “Cipher’s reports were very useful in a recent transaction. I was able to rapidly get to grips with a company’s IP structure and identify two-dozen key questions about how the company operated its IP and the vulnerabilities that needed to be addressed. That ability to ask sensible questions was very important indeed. The alternative is to do nothing, which is worse. It is possible, given unlimited time and an unlimited budget, to dig out most of the IP cuinformation that is pertinent to deals, he adds, but that is rarely an option. “We work on very short timescales in M&A and clients are very cost sensitive.”

“Results aren’t always clear when reviewing available data,” admits Durst. “You must ask yourself if this really provides a clear view, or are we just looking at a specific segment? Can we compare this data to other data sets? But it’s better to look at incomplete data than look at nothing at all. Even a data set that is only 80pc complete gives you a solid idea of what’s going on in the market.”

Big corporations in established industries often know what their large rivals are working on but struggle to keep up with innovations at smaller firms or start-ups, which may be moving in new and unforeseen directions.

Both Watts and Durst see tools such as Cipher as being a tool for innovation more than a weapon for litigation. “Innovation isn’t about just having an idea and creating a product, it’s about finding where the opportunity lies,” Durst explains. “If you can see patents were filed in last three years in the markets you’re playing in, or are looking to move into, you can decide what to focus on.”

Working towards a more informed future

In recent years, new online databases have been launched, attempting to provide accessible resources for those outside the IP bubble. Aistemos’ own tool, Cipher, does exactly that: aggregate, analyse and, importantly, visualise IP data to support strategic decision-making.

IP experts all seem convinced that within the next decade, big data and the move towards further transparency in the IP sector will make it much easier for companies to find opportunities, innovate, and protect their know-how.

Aistemos CEO Nigel Swycher predicts the future in this way: 
“In a world where innovation is the life and soul of major companies, it is essential that there are reliable ways to measure and compare performance. There is no shortage of data, and advances in AI and machine learning now make analysis available to everyone. In 5 years, we will be faintly amused that it took so long to bring transparency and understanding to the world of IP.”
Trust will be more and more crucial as time goes on. It will not be enough to access the right IP information, but rather it must come from a trusted provider who can break down and analyse these vast swathes of facts and figures and present them in a format that is digestible by everyone at all levels, and not just by the IP experts.
Earlier posts in this series:




Thursday, 23 February 2017

Celebrate World IP Day with us at the IP Strategy Forum

Maybe ...
In an earlier blogpost we mentioned that the respected Managing Intellectual Property journal was launching its inaugural IP Strategy Forum this spring, in the historical and quite lovely surroundings of London's County Hall, on 26 April 2017.  It has since come to our notice that the World Intellectual Property Organization -- the UN agency responsible for promoting IP globally and administering its international filing systems -- is celebrating World Intellectual Property Day on exactly that date. The WIPO World IP Day website, here, has some background information about this year's event, which is on the theme of "Innovation -- Improving Lives".


Why not join us at the IP Strategy Forum on that date, so that we can celebrate the day together and spend a bit of time reflecting thoughtfully on the potential of the IP system to save lives and to enhance their quality, as well delivering benefits to those who create, develop and market them? We can tweet our ideas and comments using the pre-designated hashtag #worldipday.

For the record, the IP Strategy Forum is being held in conjunction with Aistemos.  Apart from the benefits of participating in the Forum itself, there's an additional bonus in that the results of last year's Aistemos IP Strategy in the Boardroom survey will be released in the form of the Aistemos IP Strategy Report. 

A strong panel of speakers and participants will be on hand, so you can test out your own views of IP strategy against people who have dedicated their professional lives to developing, shaping and modifying strategies of their own in an ever-changing world in which last year's IP best practice can so easily end up being shunted into next year's dead-end. 

Qualcomm, BAE, Philips, IBM, Nissan and Deutsche Bank are among the leading IP-sensitive businesses whose experiences and ideas will be up for discussion.  Do attend and join them in discussion if you can!

Further details of this programme can be obtained by clicking here.

Wednesday, 22 February 2017

The International IP Index 2017

The US Chamber of Commerce (USCC) Global Intellectual Property Center released earlier this month its International IP Index for 2017. The function of the Index is clear. As it states:
Not only does it assess the state of the international IP environment [an exercise in which it is by no means alone: readers may wish to compare this Index with the 5th Taylor Wessing Global Intellectual Property Index, here], it also provides a clear roadmap for any economy that wishes to be competitive in the 21st century knowledge-based global economy. Large, small, developing, or developed-economies from across the world can use the insights about their own national IP environments as well as that of their neighbors and international competitors [45 countries are reviewed here, adding up to around 90% of world GDP, as against 43 jurisdictions in the Taylor Wessing Index] to improve their own performance and better compete at the highest levels for global investment, talent, and growth.
Does this exercise have any validity?  On one level it is certainly interesting and may assist an investor, for example, which has funds that might be invested in one of two innovative IP-based projects, where one is hosted in fertile soil for patent protection and exploitation while the other is not.  It may also be useful as a goad with which to prod governments in countries where IP protection is low and its administrative infrastructure is poor. However, it is hard to imagine jurisdictions such as Venezuela or Pakistan, which have many problems of a more pressing nature to address, caving in to demands for IP made by lobbyists waving copies of the USCC Index at them. 

The Taylor Wessing Index, in contrast, would appear to be aimed mainly at prospective litigants or licensees who want to know what they might experience on the battleground of a national marketplace, as well as at their respective legal representatives.

Naturally, an index is determined the criteria by which it is compiled will allow it to be, which is why there is a good deal of discrepancy between those of the USCC and Taylor Wessing.  The USCC table is headed by the United States, followed by the United Kingdom and Germany. Taylor Wessing has the Netherlands out ahead, trailed by Germany and the United Kingdom but with the United States plummeting to the lower reaches of its table.

From the point of view of IP analytics, indexes of this nature are always enjoyable to read and may provide both background context and relevant perspectives that enable market- or product-specific data to be better appreciated.  They cannot however serve as not a substitute for drilling down into the data bedrock and establishing who owns what, where, for how long and against whom.

You can read the Executive Summary of the USCC Index here and the full Index (148 pages) here.

Tuesday, 21 February 2017

How intellectual property became the strategist's darling

Strategists are finally
learning to love IP
Here's another in our series of features built upon the survey conducted last year by Aistemos into IP strategy and attitudes found within the boardroom.
How intellectual property became the strategist's darling

A decade ago, the majority of boards dismissed intellectual property (IP) as a cost centre. When it came to business strategy, IP wasn’t even on their radar. Today, things are changing, albeit slowly. Patents and trade marks, among other intangible assets, cost significant sums to acquire, yet their economic benefit is frequently ill-defined. Rather than view IP as a valuable asset, boards see it as a necessary evil, best left to legal departments or, at a push, the R&D or marketing team.

This has long been a worrying disconnect. Boards understand the need to protect competitive advantage, yet often fail to understand that very advantage is dependent on the existence and strength of the company’s IP. If boards do not make IP management and performance a priority, how can they know they are making the most of their innovations? That risk and value are being properly managed?

There are of course exceptions to the rule. Pharma, biotech, high tech and media (audio and visual) companies that rely heavily on IP for their livelihoods have typically been proactive in their management of intangibles such as patents, copyright and trade marks.

The wider business ecosystem is now playing catch up. New research by Aistemos, which surveyed a wide range of business leaders including BAE Systems, Siemens and Bayer, and founders of fast-growth start-ups, has unearthed some interesting shifts in attitude towards IP.

It found that, while approximately 30pc still view intellectual property as a cost centre, and almost the same number (28pc) see it as a risk, 7.7pc regarded IP to be a value driver. This figure remains disproportionately low, which proves there is still a long way to go. Only a quarter of companies have incorporated IP into their wider business strategy, the research revealed.

Why have boards neglected IP?

Intellectual property has yet to find its true place in the boardroom -- but where does the blame lie? According to Anders Arvidsson, founder of the intellectual property consulting firm Parallel North:
“There are a lot of boards not familiar with IP. They don’t know what to do with patents, or understand the risks. It is perhaps not their job; you can always blame the board of directors but it is also the responsibility of the rest of the managers to educate the board.”
The onus, therefore, lies on the Chief Executive to communicate the importance of IP to the board of directors, and ensure that stakeholders are aware of its relevance.

IP has long been a complex area, full of arcane rules. Many business leaders, when asked to detail the extent of the IP owned and managed by their company, have struggled to give a comprehensive overview.

Jennifer Wuamett, Deputy General Counsel for IP and Litigation at NXP Semiconductors, added her voice to the report:
“I think most business leaders know instinctively that there are many important reasons to invest in IP protection, but monetary return on the investment in terms of revenue generation often tends to be a focal point as other benefits are more difficult to measure and quantify."
The drivers of change

There have been several developments in recent years that have spurred boards to take more notice of IP. One of the most powerful has been the marked increase in litigation activity. This meant that boards have had to learn the hard way that failing to manage IP risk could leave their company exposed to expensive and distracting infringement actions.

According to patent risk solutions provider RPX, the number of patent litigation cases rose significantly last year in the US, rising by 28pc on 2014 levels. The emergence of patent trolls - companies that attempt to enforce patent rights for pure economic advantage (they typically have no other business as such) - have significantly contributed to this upward trend.

Litigation is not the only growth area; licensing is also increasingly seen as a smart way of releasing value from IP. And as businesses across the globe begin to generate serious revenues from so-called monetisation activities, IP rises inexorably up the corporate agenda.

The start, in 2008, of the longest recession of living memory prompted many boards to change their approach, claims Michael Lin, partner at global IP firm Marks & Clerk: 
“Because the economy isn’t doing as well as before, boards are looking at risk differently and are asking more questions and becoming more cautious.”
The world is currently in the midst of a new industrial revolution: an age of technology. Increased innovation means more IP. And IP can no longer be seen as a standalone asset: it touches every aspect of corporate value. As more sectors become impacted by technology, the challenge will be for the value of IP to be understood by management and the board.

Dr Bobby Mukherjee, Chief Counsel for Group Intellectual Property for multinational defence, security and aerospace firm, BAE Systems, told Aistemos researchers:
“There has been a significant change over the last 10 years. With over 50pc of corporate value being intangibles, it is now increasingly understood as a main board issue.”
Not long ago, bust-ups between boards and investors over patent monetisation would have been unthinkable - now, insiders claim they are happening more and more frequently. Recent years have also seen a rise in activist hedge funds attempting to invalidate patents to devalue stock in order to take over whole companies. This is how fundamental IP has become: it has the potential to make or break a company.

Legislative changes are also affecting the wider IP landscape. Talk of a “post-Alice” environment (referring to a recent US Supreme Court decision) has resulted in much tighter standards over the kinds of software and business method patents that courts will enforce. Seismic shifts such as this are receiving widespread industry attention - and well beyond the specialist confines of IP attorneys.

Globalisation continues apace and more companies are operating across borders. According to Janhavi Dadarkar, training course leader for “Role of the Director and the Board” at the Institute of Directors (IoD), this has prompted business leaders to look more seriously at their IP:
“Companies looking to move into new countries acknowledge they need to manage their IP better. When crossing borders, even boards recognise that IP must be a big part of business strategy. They talk more about management and commercialisation but also remain focused on mitigating the risk of IP value loss.”
The data revolution is also making it much easier for business leaders to understand what IP is held -not just by their own organisations but also by peers and rivals. Having access to trusted sources of IP data will make it easier to incorporate IP into business strategy.

As Nigel Swycher, CEO of Aistemos puts it: 
“Data and analysis relating to IP needs to be just as accessible as financial data, and not require a PhD or a law degree to understand it. That’s why we developed Cipher - if you put the right information into the hands of senior management at the right time, they will make better decisions. It’s that simple”.
The movement towards transparency will bolster this trend. Initiatives such as the Open Register of Patent Ownership (oropo.net) will help. In order for IP data to be trusted it needs to be accurate.

"We should expect very significant improvements in the quality, accessibility and effective use of IP data in the next few years, with much clearer linkages to value - otherwise the world's growth engine will stall" says Tony Clayton, board member of ORoPO and former chief economist at the UK IPO.

The future of IP in the boardroom

“Boards tend to focus on two areas: conformance and performance,” said the IoD’s Dadarkar, adding 
“There needs to be a balance of the two: not just conforming, in terms of corporate governance, but looking at future performance too. Boards should not just be looking to mitigate IP breaches; those processes should already be in place. Boards are just getting involved in the ‘performance’ side of IP.” 
According to Dadarkar, boards must evolve further if they are to leverage their innovation. “Risk and opportunity go hand in hand,” she said. “If your IP is one of your biggest assets - and for many companies it is their lifeblood, of more value than the product itself - then it has to be part of ongoing future strategy.”

To understand how boards might view IP in future, we can look at the behaviour of IP-rich companies today. Philips, the technology giant, is the largest patent applicant at the European Patent Office. It filed its first patent - to extend the burning time of a lightbulb - in 1905, and the corporation now owns 76,000 patents, 47,000 trademarks and 91,000 design rights.

“IP strategy is developed and implemented by my organisation across each of the Philips business groups,” says Brian Hinman, Chief Intellectual Property Officer (CIPO) at Philips.  He adds:
“The IP strategy is an integral component of the overall strategic plan on record for each of these businesses, and we always ensure an effective, integrated intellectual asset management (IIAM) approach in implementing these IP strategies.
This IIAM is a holistic approach whereby my organisation carefully analyses the needs of each business group and secures the optimum blend of each type of IP in order to maximise IP protection for the business. Intellectual Property & Standards employs a centralised organisational structure led by me to ensure speed of decision making and IP strategy execution."
One of the changes that has helped is the appointment of a new breed of CIPOs that report directly to the board. Some observers say that this does not go far enough and that C-suite status means that board representation is essential. Whatever the right answer to this question, what defines this new role is the ability to integrate IP into a business context - and this requires clear communication supported by verifiable data.

Nigel Swycher, who organised the Aistemos survey, does not see the need for such strict delineation: 
“Anything that goes to the heart of corporate value should be managed by the board. This means that tangible and intangible assets should receive equal scrutiny and attention."
Earlier posts in this series:



Monday, 20 February 2017

"The Benefits of Transparency in Patent Ownership" now accessible online

This is what ORoPO
is all about
On Friday 3 February, in "Transparent patent records: it's time to toast an ORoPO webinar", this weblog publicised a forthcoming CPA Global webinar on the need for more accurate and transparent patent ownership records, and on the role that can be played by the non-profit ORoPO -- the Open Register of Patent Ownership -- in achieving this end. This webinar was entitled "The Benefits of Transparency in Patent Ownership".

Now that this webinar has taken place, CPA Global has kindly made a recording of it available for download, here. The presentation slides, 17 in all, can be accessed here.

If you are still a non-believer, learn why CPA Global joined forces with ORoPO here.

Blockchain patents: where is control of the new technology heading?

It's nearly a year since our blog team asked what blockchain actually was, and offered some helpful explanation [see "Blockchain, data and intellectual property: the shape of things to come", here].  In short, a blockchain is an "open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". This ledger "can also be programmed to trigger transactions automatically". Now that we are all getting a better idea of what blockchain is and what it's supposed to do, the time has come to ask who actually owns or controls the technology that drives it. 

First, with the aid of Cipher we can take a look at the broad geographical distribution of blockchain-related patents. 


Blockchain technology by country

This chart shows that by far the largest number of patent families cover China, with Japan, South Korea and the United States leading the pack of distant pursuers. Most of the Chinese patents have a highly parochial flavour to them, in that only 8% of blockchain patents covering China are also granted in other territories. In comparison with the Asia-Pacific area, the rest of the world shows a generally low level of blockchain patenting activity.

Blockchain technology is of substantial interest to the banking sector, so it's worth noting that, according to Investopedia, the main banking nations in the world in 2015 were China, the United Kingdom, France and the United States.  Of these four nations, just two (China and the United States) show substantial patent coverage, with the United Kingdom and France being replaced by Japan and South Korea. The leading European jurisdiction here is Germany.

The next chart reviews active blockchain patent families over time, from 2000 to 2016. 


Active blockchain patent families over time

Historically speaking, the first work on cryptographically secured block chains was published as long ago as 1991, but the first patents in regard to the technology saw the light only in the early 2000s. We can see that the rate of acceleration in the growth of active patent families has been increasing, with the number of patents doubling over the past two years (2014-2016).

Putting China aside, who are the biggest patenting actors?


Biggest patenting actors outside China

In the figure above, the size of the box represents the number of blockchain patents owned by the company in relation to the whole technology field in 2017, while the colour represents the positive/negative change in proportion/share between 2014-2017. From this figure we can see that a large proportion of patents in the blockchain space are held by private owners/inventors, and that the major players are a mix of tech, financial services and blockchain/cryptocurrency companies.

Excluding private owners, the data reflected in the previous figure looks like this:



There is of course much more to the way IP analytics and visualisations can describe and depict the spread of blockchain patents. Do feel free to comment below, or to contact Aistemos for further information.   

Sunday, 19 February 2017

IP Strategy Forum 2017: an invitation

Your IP strategy: matchless
-- or can it be improved...?
Managing Intellectual Property (MIP) is launching its inaugural IP Strategy Forum this spring, in the imposing surroundings of London's County Hall, on 26 April 2017.  This event is being held in conjunction with Aistemos.  Apart from the benefits of participating in the Forum itself, there's an additional bonus in that the results of last year's Aistemos IP Strategy in the Boardroom survey will be released in the form of the Aistemos IP Strategy Report. 

A strong panel of speakers and participants will be on hand, so you can test out your own views of IP strategy against people who have dedicated their professional lives to developing, shaping and modifying strategies of their own in an ever-changing world in which last year's IP best practice can so easily end up being shunted into next year's dead-end. 

Qualcomm, BAE, Philips, IBM, Nissan and Deutsche Bank are among the leading IP-sensitive businesses whose experiences and ideas will be up for discussion.  Do attend and join them in discussion if you can!

Further details of this programme can be obtained by clicking here.

Friday, 17 February 2017

The currency of ideas: IP can make or break a business

This is the latest in a series of blogposts that originate from the IP in the Boardroom survey conducted by Aistemos last year.
The currency of ideas: IP can make or break a business

Innovation, and the research and development that delivers it, is crucial to a company’s survival. Whether this involves developing new products or services, enhancing existing product lines, or making operations leaner and more efficient, R&D is the fuel in the tank, which propels ventures forward.

In a previous post, we discussed the need for boards to engage with intellectual property (IP), and understand its role as a value driver. But ensuring that the rest of the organisation is aware of the issues around protecting new ideas is equally challenging. Those developing new IP, teams focused on mergers and acquisitions, and staff who work collaboratively on innovation projects, may not appreciate what’s at stake.

Without vigilance, protection for new ideas can evaporate or drag the organisation into a protracted dispute with a rival company. Furthermore, R&D is hugely expensive, so business leaders are increasingly looking for certainty that revenue can be derived from these activities, and that the IP offers the necessary protection.

Yet research by Aistemos, a specialist in IP analytics and strategy which surveyed a wide range of business leaders, suggests that many organisations simply do not have the right data at the right time to support key business decisions.

The Aistemos survey found that just 11pc of respondents believe that R&D decisions are always made with sufficient understanding of the IP issues at play. Alarmingly, more than half stated that IP was only “sometimes” taken into account.

One of the well known IP risks is so called “Freedom to Operate" (FTO). This is the ability to sell a product without infringing the IP rights owned by a third party. The converse is just as important. Why invest in R&D if there is no IP protection and others can copy with impunity? This is why it is so important to access valid and up-to-date information about who owns which IP, and to integrate this information into the decision-making process. However, in a world of 80 million patents, this is not easy. Sifting through incomplete databases or innovating on a wing and a prayer are no longer viable options

According to Dr Bobby Mukherjee, Chief Counsel in Group Intellectual Property for global defence firm BAE Systems, it is not enough to simply educate management about the true impact of IP on business strategy -- this must be communicated to the whole organisation: 
“There is always more work to do at grass roots level. The key is to integrate IP into routines and processes, such as inductions and exit interviews. Education is an important part of the process.”
Profiting from innovation

There are other ways companies exploit their IP: licensing and litigation. In recent times these activities have become quite closely related. What routinely starts as an offer to licence (the “carrot”) can turn quickly into litigation (the “stick”). Either way, the opportunities are core to business strategy. In some situations, the licensing revenue is very significant, in other cases the IP is the way competitors are kept out of the market. This makes the case for IP to move up the chain of priorities within an organisation.

Technology giant IBM received 7,355 patents in 2015, more than any other single organisation. Speaking to World IP Review recently, Manny Schecter, Chief Patent Counsel said of IBM’s litigation strategy: 
“Billions and billions of dollars has been spent on research and development to maintain that innovation edge. We do bring litigation against others that take our IP and refuse to compensate us.”
But litigation is a high-risk game with more losers than winners. While the majority of IP cases rarely go to trial, when they do the outcome is expensive and uncertain (and often fails to deliver an outcome perfect for either party). It's little wonder then that management would rather settle out of court: think of a back-room brawl over a boxing match in Madison Square Garden.

While patent litigation has been broadly on the rise in recent times (largely due to “patent trolls”), licensing trends perhaps provide a more accurate gauge of organisations’ willingness to commercialise their IP. There are many indicators that activities of this sort are also on the rise. According to the International Monetary Fund (IMF), charges for the use of IP increased from US$ 285.5 billion in 2012 to US$ 328.5 billion in 2014.

But more could be done to encourage innovators to licence out their IP. “While litigation is as transparent as it needs to be, licensing isn’t, and it’s a problem,” said David Kappos, partner at the law firm Cravath, Swaine & Moore, and former director of the United States Patent and Trademark Office (USPTO).
“As innovation has increased, the whole marketplace for IP licensing has had to transact in the dark without comparables. This is no way to value IP. A government solution is needed, perhaps using blockchain technology to create transparency.”
In the wake of macroeconomic shocks, such as the UK’s decision to leave the European Union and talk of a protectionist stance in the US by its new president Donald Trump, licensing could become a crucial way to keep the currency of ideas flowing across borders.

Mergers and acquisitions

In yesterday’s business environment, mergers and acquisitions were used to move into new territories, generate cost savings, eradicate a rival or simply grow at pace. Now, a large driver of M&A is enabling “adjacencies”, allowing companies to move into new technology areas. Yet IP due diligence has failed to keep pace with the needs of the dealmakers.

Aistemos CEO Nigel Swycher, formerly an IP partner in law firm Slaughter and May, explains the issue this way: 
“The challenge is to understand complex technology landscapes, involving thousands of patents, within a finite deal window and budget. Conventional due diligence tends to deal with counting patents and renewals. With the advent of analytics, you are now able to understand both the assets and overall environment”.
The consequences of not assessing the intangible assets with the same degree of scrutiny as the financials can be disastrous. There are plenty of war stories of buyers assuming that they had all the IP they needed, only to be caught out late in the day, or worse still post-closing. 
“Today’s reality is that IP issues are now often at the heart of the deal. The issues need to be surfaced early if they are to be adequately dealt with".
Ownership and risk-sharing

One of the greatest challenges faced by innovative companies today is understanding who owns what. “Analysing a company’s patent portfolio is so fraught with difficulty as you can’t really trust the public data,” said Tony Clayton, Director of the Open Register of Patent Ownership (ORoPO) and former Chief Economist at the UK IPO. 
“If there was better quality information about who owns what IP, this would provide a welcome boost to licensing and a corresponding reduction in litigation. The 2015 ORoPO Report estimated this benefit at $300bn”.
When business leaders were asked by Aistemos researchers whether they have adequate access to the competitive intelligence they need about what IP is owned by others, over half responded to indicate that they did not. This is a shocking indictment of the current levels of transparency in othe world of IP.

As the age of technology moves on apace, collaboration is going to become more and more commonplace. Innovators must work together if they want to solve tomorrow’s challenges. The Internet of Things may be the tipping point for greater collaboration. “In a world where all devices are connected, there will need to be greater collaboration” comments Nigel Swycher.

According to Hywel Ball, a Managing Partner at EY: 
“We have to find to a new form of collaboration to reach a better answer for business. We need to accelerate the way that companies talk about long-term value. It’s essential because the public is losing trust in business and collaboration is a way that we can regain that trust.”
Dan McCurdy, Senior Vice President at RPX, warns that the IP must evolve if it is to become an enabler of change, rather than a barrier. “Much of the recent focus has been on patent battles, not using patents and other IP to maximise financial performance,” he noted, adding: 
“Yet as we know from examples such as ARM, Qualcomm, and Dolby, tremendous value can be extracted from IP. The issue is that most IP staff are engaged in harvesting and protecting IP on the one hand, and defending against attacks from adversarial IP owners on the other.”
Open innovation may sound like a pipe dream, but innovators across the world accept that collaboration will be critical to their future success. In a world of open-source, cloud computing, and big data, R&D is no longer something that has to take place in isolation. This means that corporations need to understand their IP as never before. This will reduce risk and open up a world of opportunity.
Earlier posts in this series are as follows:

*
Grasping intangibles: IP can slip through your fingers

Why is IP being left behind in the boardroom?

Tuesday, 14 February 2017

IP planning: a playbook for entrepreneurs

The Entrepreneur's IP Planning Playbook, subtitled "A Strategy Guide To Help Solopreneurs, Startup Founders, And Entrepreneurs Harness Their Intellectual Capital", is a short (81 page) and highly focused little book, the purpose of which is clearly flagged in its title. The author is Robert Klinck, manager of a Washington DC-based legal boutique practice that addresses the IP concerns of entrepreneurial business that relate to planning, management and innovation. Klinck is also author of the 2015 Patent Litigation Primer: A Guide For Inventors And Business Owners, details of which can be accessed here.

This is not a book for those who are possessed of a cavalier degree of optimism: its tone is principally one of caution, prudence and risk minimisation. It reminds the reader not only of the need for due diligence and clearance procedures, but of the reality that, however well a search is conducted, the fact that no earlier conflicting rights are found does not mean that no such right exists.  The risk faced by encountering hostile IP rights can, by good searching, be reduced -- but not necessarily eliminated.

Another encouraging aspect of this book is its emphasis on the need for the entrepreneurial reader to function within the context of a team, rather than try to do everything by himself. Plans, teams and the relationship between them are at the core of this text.

Despite its brevity, this book does not fall into the temptation to start with a subject called intellectual property and then snub all IP rights other than patents.  

The intended reader of this book is the United States-based entrepreneur. This means that specific consideration is not given to international or foreign matters.  In a short guide of this nature, it may be thought that issues such as international filing or licensing strategy are a bridge too far, or simply a subject that is raised with the entrepreneur at his first meeting with a professional adviser. But while in many instances this does not matter, the reader should at least be warned that the United States' position on the one-year grace period within which disclosure of an invention is not fatal to its patentability is not a general rule. Australia, Canada and Japan are grace period countries, for example, but it is not found in European patent law. 

All in all, this is an easy book to read and an easy one to digest. In the hands of the target reader, it can provide very useful information and food for thought ahead of those crucial first meetings with those who will furnish legal, financial and strategic assistance.

You can buy this book on Amazon, in paperback or Kindle formats, here.

Monday, 13 February 2017

Steps can you take to ensure IP is taken seriously: a webinar

Big strides are being made
in alerting businesses to the
need for better IP strategy
Last week we posted a piece by Aistemos CEO Nigel Swycher on the risk of failing to recognise the importance and value of rights in intangible assets, and in particular intellectual property rights ["Grasping intangibles: IP can slip through your fingers", here].

Now, as if by magic, Aistemos has conjured up a follow-up webinar on exactly the same topic. "Grasping intangibles: IP can slip through your fingers" is coming to a computer screen near you on Wednesday 8 March, starting at 1500 pm GMT.

This webinar, which draws on research from the recent IP Strategy Survey, features Nigel Swycher with admirable support from guest speakers Scott Bell, Head of UK Investment Banking at Deutsche Bank, and David Kappos, Partner at Cravath, Swaine & Moore. This team will explore the following key issues:
* Steps toward greater corporate transparency of intangible assets
* Approaches taken by major corporates to improve management of IP
* Accessing the right data at the right time – the growth in IP business intelligence
* Investor attitudes to IP value in public and private companies
Over the course of 30 highly-ficused minutes registrants will hear how IP strategy is fast becoming an integrated part of mainstream business strategy -- and why this can’t happen soon enough.

Full details of the programme and how to register for it can be found by clicking here.

If you can’t make it for the webinar, register anyway and we’ll send you a recording.

Friday, 10 February 2017

Grasping intangibles: IP can slip through your fingers

Last year Aistemos ran its IP Strategy in the Board Room project, which sought to gauge current levels of awareness of significant intellectual property issues and to raise the level of awareness among the top echelons of IP-sensitive businesses. The following piece, by Aistemos CEO Nigel Swycher, is the latest in a series of chapters that address this task. Nigel writes:

Grasping intangibles: IP can slip through your fingers  
Intellectual property may be rising up the corporate agenda but, among many organisations, it remains an esoteric issue. It is understandably difficult for many corporations to grasp something that is by its very nature “intangible”, with apparently only superficial connection to fundamental business operations. Thus the question remains: what active steps can business leaders take to ensure that IP is taken seriously? 
The Aistemos IP Strategy Survey sought to solve this quandary. It asked senior executives from the world’s most innovative businesses how they have solved, or plan to solve the problem. Almost 80pc of respondents said that the most effective way to enhance the management of IP was to improve communication between IP and commercial teams. Some 65pc said that more organisations should appoint a high-level executive tasked exclusively with IP management: a chief intellectual property officer (CIPO). A similar number claimed that establishing an IP strategy team to report to the board would help IP become a mainstream issue. More than half of the respondents also recommended including IP issues on the corporate risk register.  
The challenge of making IP a mainstream business issue  
Many business leaders continue to underestimate the value of IP. Its impact on a company’s success goes way beyond licensing and litigation. For many it encompasses innovation, brand and people, and it lies at the heart of its ecosystem and supply chain. IP can also help organisations secure new business deals and seal lucrative partnerships. Yet, as demonstrated by the Aistemos survey, communication remains a significant challenge, as the language of IP and the language of business can be very different. The former is rife with jargon and complexity, the latter requires data and certainty. The challenge for both sides is to find a common language [on the challenges of jargon and responsibility for bridging the communication gap see our earlier post here].  
IP analytics and tools like Aistemos’ Cipher [home page here; summary of sample Cipher analytics to August 2016 here], provide necessary help with business intelligence, but this is not sufficient. Without effectively communicating the value of IP and the related risks to the board, the integration of IP strategy into mainstream business strategy will continue to be beyond the reach of many. This is why David Kappos, former director of the USPTO and partner in Cravath, recommends that a combination of all four measures - better communication, a CIPO, an IP strategy team, and inclusion on the risk register - would embed IP into corporate culture and raise the prominence of IP. “IP is too important to leave to the lawyers,” he said. “It’s a business asset and should be treated that way. Establishing a business role within a company that regards IP as property and treated with the same rigour would be a step forward.”  
Understanding the role of the CIPO  
Many IP-rich companies including Apple, HP, Philips, Ericsson and Siemens, have created a CIPO role and appear to be reaping the benefits. The role is cross-departmental, to reflect the fact that IP touches every facet of business. It can help facilitate and enrich the role of other high-level executives, such as the general counsel, chief legal officer or chief technology officer, who deal with IP from time to time but who will usually have a broad spectrum of responsibilities and may be unable to make IP a priority. Of course, the other side of the coin is that these individuals may resent the CIPO encroaching on what they perceive to be their domain. And, while larger companies may find it useful to have this focus, it's not the first appointment for most SMEs.  
Crucially, the CIPO goes a step beyond appointing a simple “head of IP”. The CIPO becomes a prominent individual within the corporate structure, putting them on the same footing as the chief operating officer, chief marketing officer and the chief financial officer, showing the entire organisation that IP is as vital to its survival as revenue, customers, and brand. The CIPO will be able to take a holistic overview of IP, rather than a focus on just patents or trade marks, and automatically involve IP in corporate decision-making and strategy.  
According to Brian Hinman, CIPO at Philips, an effective, global IP strategy, when well executed, can lead to real cultural change within a company. “One issue is that few companies have the proper IP organisational structure, IP strategy or cultural mindset to be properly involved with IP issues,” he told Aistemos’ researchers. “The CEO and the entire C-suite have to understand why IP is important, how it enables innovation, and the value that it brings to the shareholders. IP leaders need to understand and articulate this vision with these executives. At Philips, the CIPO has a lot of autonomy, and makes all IP related decisions, in close alignment with the Executive Committee of the company. There is full transparency to the board of directors about how the IP strategy translates into value for Philips.”  
Nestlé’s Valerio Nannini, Head of Strategies and Performance, sees the challenge in the same way: “IP needs to be valued by organisations. What is necessary is to move from a reactive to a proactive approach. Businesses must have IP embedded into all areas of the organisation. It needs the legal structures in place to defend its IP, and to build a fortress around what it does. But IP also needs to be represented at the very highest levels."  
Does IP belong on the risk register?   
The Aistemos research suggests that business leaders are split down the middle on whether IP should be included on the corporate risk register. Increased visibility would be a significant benefit; risk registers are at the heart of corporate governance. Executives can manage IP risk if they are aware of threats and problems that can arise from its mismanagement, especially when they disrupt business as usual. But there can be negative consequences of such a limited view: IP generates value, as well as posing risk. Labelling IP as “risk” can inject unnecessary fear and delay into IP-related plans. This would be a retrograde step, as research by Massachusetts Institute of Technology into start-ups found that young companies that focused on IP were 35 times more likely to be successful.  
Incorporating IP into other roles  
One of the findings from the Aistemos survey suggests creating a dedicated IP team. The principal barrier to building in-house IP teams tends to be cost. Buying in new skills or training existing staff in IP are not cheap solutions. In order to be effective, the IP team needs to have sufficient budget and resources behind it. Building an IP team or appointing a CIPO represents significant progress for many firms. But experience shows us that it can be unhelpful to create silos within businesses. By analogy, when diversity first rose to the fore as a corporate issue, many businesses appointed small teams tasked solely with improving the balance of genders, races and sexual orientations. This resulted in some progress, but it was only when every department, from HR to commercial, R&D to marketing, took it upon themselves to focus on diversity that real equality became an achievable goal.  
“A firm that’s made up of 80pc intangible assets wouldn’t have a market value at all if these assets weren’t being managed at least implicitly,” said Bowman Heiden, deputy director of the internationally renowned Centre of Intellectual Property. “As with the quality movement that grew from a quality department to quality as a job for everyone, firms that are becoming more knowledge intensive will need to not only have an IP department but a more ubiquitous understanding of IP across the organisation.”  
This challenge harks back to the recurrent theme of communication: it is essential that IP experts improve their methods of communication if their views are to be invited, welcomed, understood and integrated into wider corporate thinking. In a recent paper, Deloitte found that while technology companies are adept at cross-department IP management, it is time for other sectors to play catch up. The report, CFO Insights: Reassessing IP Strategies in a Disruptive Age [here], stated: 
“The twin currents of patent-law change and accelerating technological transformation and disruption have made it essential for business leaders to master the dimensions of IP management through a contemporary lens. While the experience and perhaps the edge in this case may lie with companies that have been steeped in technology for years, it is increasingly clear that these tides are affecting sectors that will find IP to be a completely new challenge.”
Nigel Swycher, CEO of Aistemos, thinks that there is a common thread between all responses to its survey on IP Strategy: “The impact of technology and innovation across business of all types, from pet food to autonomous vehicles, means that there is no business large or small that can afford not to consider the implications of intellectual across the entirety of the business. Anything less is just asking for trouble.”   
The consensus is clear: IP is for everyone, not just for specialists.