The role of Open Intellectual Property Platforms

Intangitopia has unfortunately remained dormant for quite a while now with all authors being busy with their jobs. This has certainly been true for myself too as I recently changed jobs to work in a startup within the medical device industry. But since I still do some research on the topic IP strategy within the Life Science industry I thought that I should write a blog post based on my latest article (co-published with Ulf Petrusson and Henrik Rosén at the Center for Intellectual Property, University of Gothenburg).

Global Technology Markets – the role of open intellectual property platforms

In the article we analyze the business phenomena where multiple stakeholders collaborate, package and transact upon technology in systems with ‘venture-market hybrid’ characteristics. We term these complex interactions, including the structures and stakeholders who build and participate in them, ‘open IP platforms’ in lack of a previous descriptive term. As many of our Intangitopia readers will recognize this concept captures much of the processes that are seen in open innovation, distributed innovation, open source, public-private partnerships and crowd-sourcing concepts. Activities on these platforms typically include collective gathering, creation and development of knowledge assets to which openness is regulated through the determined level of access, ownership and utilisation rights. We analyse how IPRs (Intellectual Property Rights) and contracts operate as a set of self-regulatory tools in the construction of platforms where technology is accessed openly but still is priced on what could be described as technology markets.

The impact of these platforms on new and developing technology intensive markets is evident and growing, though it is not yet fully clear what it is that drives the creation of such platforms, how the specific characteristics of the platforms should be understood, and what kind of markets arise as a result of these platform interactions, whether on the platform itself or in a market context where the platform participants can act as a single entity. If one wishes to understand the future of knowledge based business it will be necessary to understand and begin to answer these questions, as it is our strong belief that relating to open IP platforms, whether through participating or acting on the markets shaped by the platforms, will increasingly become a necessity. For this reason, the article presents a first attempt at answering some of these questions, by outlining the trends that have driven the emergence of the business phenomena we define as open IP platforms, and by presenting an initial concept for a framework model to understand and classify these platforms by their common characteristics.

A new collaborative logic - case study: GSM

A case study of the GSM (Global System for Mobile Communication) platform has been incorporated to illustrate a transition over time as a new logic for collaborative, market-based development coalesces. We describe a historic development that views patents as monopoly interventions in the free operation of the market. Something we argue to be a danger that need to be limited or surrendered if a common standard is to be developed. Our literature review shows a perspective on the patent as a tool through which actors can build a standard or platform for developing the standard as notably absent; at best, patents are seen as a necessary evil incentivizing innovative contribution. While it would be going much too far to say that there is not an inherent danger in the combination of strong individual IPR-based protection and the technology lock-in effects of standardization, it is our view of that it is possible and necessary to see patents as the building blocks enabling collaborative platforms such as GSM.

Framework

To further understand the underlying building blocks and enabling legal tools that provide the foundation for open IP platforms, we suggest a framework. The ambition to build platforms can only be approached by understanding the building blocks that create the platforms and design the platform characteristics. These building blocks can take the form of relationships or tacit connections, but our focus remains on the explicit legal instruments that build the platforms, and the role of IPR’s in the platform as constructive elements.

In the article we present frameworks for measuring the following parameters;

· Level of system/tool leverage

· Level of collaboration

· Level of public responsibility

· Level of platform governance

· Level of IPR claims

By applying the framework to the Innovative Medicines Initiative platform the tools that govern openness and stimulate creation of new knowledge markets are made visible based on the information in;

· IPR policies;

· Collaboration policies;

· Policies on exploitation of background and foreground;

· Membership fees and financing policies;

· Secrecy policies;

· Working guidelines and processes;

Application of the framework – Case study: Innovative Medicines Initiative

Our case study results shows that a novel creation of knowledge markets can be argued to occur whenever IP transactions – that provide access rights - take place between participants in IMI. By intellectually categorizing utilization of the generated project results in pre-competitive arenas (e.g. clinical trials and preclinical research) as IMI Research Use, an internal market is created where commercialization is not the end goal. The altruistic motives behind making tools available at little or no cost for the purpose of ensuring that pharmaceuticals are safe may be questioned by tool-supplying actors who do not normally perform clinical trials themselves. But the fact remain that an internal knowledge market with different conditions than standard commercially negotiated terms is the result. And by using the same research data with the intent to commercialize them (IMI Direct Exploitation) as therapeutic, diagnostic, screening, or recombinant tools - another knowledge market with completely different norms emerges.

The third, and arguably most radically different, ownership and access norms result when the generated results fall within the IMI Sideground definition. The outcome in this case can be interpreted as separating the generated results from the platform altogether and join the other assets of the creator’s proprietary portfolio, which have not been brought onto the platform. This means that the owner of Sideground can commercialize the results without having any access right obligations specified in the IMI IP Policy.

Since the rules and norms that govern the scope of the three knowledge markets are determined, before accession to a project, when drafting the Project Agreement – drafting this plays a major role. Successfully negotiating terms favorable to one’s self-interests is thus likely to be seen as a key activity for each participant. Developing the ability to clearly objectify and define Background, before negotiations are started, as well as implementing an intellectual asset management system to capture valuable results are consequently imperative factors to create strong market positions in these internal knowledge markets.

Conclusions

We see a development where intellectual property is increasingly used to claim early research. If we are to have platforms that increasingly make title claims on academic results, those platforms must also be capable of managing a structured contribution to the public domain to ensure that it is not impoverished by shortsighted commercial approaches. Both the ICT and Life Science markets are increasingly characterized by complex transactions of IP and cross-licensing, and we therefore need to develop and strengthen mechanisms for openness such as FRAND. This will be the only way to support proportionality and limit destructive ransoming of these platforms.

Our presented IMI and GSM examples demonstrate these issues from different perspectives. The GSM history, which by any measure is a successful collaboration, shows how a lack of structural clarity and central responsibility in open IP platforms can lead to unilateral royalty demands and the rise of complexities when trying to navigate the patent landscapes. In the case of IMI we can identify how mechanisms for sophisticated claiming of early stage research result. But also how this creates higher demands on the capabilities of universities and academic research institutions to wield these mechanisms appropriately and safeguard the public interest of independent and uninfluenced research.

Our collective abilities to develop open IP platform will in many ways define which kind of businesses that will be created and which business climate we will generate. The specifics of how to constructively develop these platforms to generate an appropriate business climate; how to safeguard public interests, build up public domain, ensure open and functioning markets, manage complex knowledge transfer and technology interdependence, etc., is a future discussion that we believe is both inevitable and vital to the construction of a functioning knowledge economy

Tobias Thornblad

(Contact via Twitter)

For the article in its entirety, please see:

Ulf Petrusson, Henrik Rosén & Tobias Thornblad: Global Technology Markets - The Role of Open Intellectual Property Platforms: Review of Market Integration August/December 2010 vol. 2 no. 2-3 333-392

Book Review – Trading TV Formats

Trading TV Formats – The EBU Guide to the International Television Format Trade by Christoph Fey



The book is published by the European Broadcasting Union (EBU) in an attempt (I reckon) to somewhat formalize and establish best practices for a trade, which almost dates back as early as the first TV programs. But it is as vital as ever, with international format licenses on smash hits such as “Survivor” and “Who wants to be a millionaire?”. The international format business is worth some €2.4bn.

The book
It is outlined in three distinct parts with the aim to help licensors in packaging and pitching their ideas to producers or broadcasters. The parts cover how to package a format, how to protect the format, and an overview of several different court cases.

The part that deal with the package and how to strategically arrange for the license deal is quite hands on with straight on suggestions for clause constructions. It also discusses hoe to relate to the IP in the deal, both so you do not transfer more than you intended but also from a protective perspective.

The part on protection provides a good overview over issues to be thought of not to unintentionally let go of your potentially valuable asset.

Takeouts
The part of the book which I found most interesting is the one that discusses the rights of the buyer; what is it he is licensing? It all comes down to the issue of that TV formats as such is an unknown concept for copyright legislation. There have however been attempts to actually award the creator of a format some sort of protection for her work. Either if this is through copyright or through different types of unfair competition legislation.

To me the issue of TV format protection shows the sometimes inaccurate or at least inflexible way IP legislation can behave. Formats have been licensed for half a decade with, I guess, quite good rate of success. But the more valuable the formats become, both in themselves for TV production but also for external merchandizing, the greater efforts are taken to circumvent the established practices. One other factor might be that the TV broadcaster market have gone from almost only state owned public service companies to a greater breath in broadcasters today.

I think this is an interesting area and will get back to it here at Intangitopia in the future. Especially since it in such clear way shows many of the interesting characteristics of IP; intangible but defined by a tangible transactional object (compare the “Format Bible” to a patent for instance), value driven by transactions and transactional structures can be custom made in almost any way.

Johan Örneblad
Follow me on Twitter.

Book Review - The Invisible Edge

I thought that it would be nice to provide some variation to Intangitopia by recommending a book that I read recently. The recently published book is called The Invisible Edge- taking your strategy to the next level using intellectual property.

Background
Intellectual assets and IP are traditionally not discussed in the boardroom as the core to business strategies in the way it really ought to be discussed. This is true both for many industries/companies as well as for many of the US top business schools. Too often, business managers think of IP as a problem for the patent lawyer to deal with, or that it only applies to particular industries such as entertainment, software and pharmaceuticals. The authors argue that IP instead should become your number one priority and be the core of your strategy (which may be compared to one of the older posts here at Intangitopia).

Zooming as a Concept
The book introduces the concept of “zooming” where the analogy of using different “lenses” allows you to see different dimensions of your strategy. Using this concept allows you to look at specific cases from several perspectives, and is also something that we recently utilized at Intangitopia in a post to visualize value extraction in Agribusiness. The IBM PC is used as one of the examples in the book. IBM’s strategy is argued to be perceived as an innovation success on a high-level (“architecture level”), whereas it is obvious that a zoomed-in picture (“component level”) reveals details that show a platform where control (and market share) is gradually lost to become cloned and flooded by competitors making implementation on a detailed level less successful.
The book provides some really interesting examples of “zooming” where one starts at the level of competition between nations only to gradually zoom in to company competition, networks of inventions/developers, technology inter-dependency, patent rights and claims thereof.

Control - Collaborate - Simplify
Another simple, but yet elegant, concept that the book presents is: control-collaborate-simplify. This is more of a holistic framework of the dimensions of IP rather than a readily applicable tool. The model describes the exclusionary role (control) of IP that still is the focus of many firms versus the newer phenomena of openness and co-creation (collaborate), and how these concepts can be packaged and shaped (simplify) using ingenious designs, setting standards and architectural thinking into logical/intuitive models that will be the factor that “wins over the market”.

Case Studies
The book presents a wealth of studies ranging from the steam engine to golfballs, razors, computers, patent trolls, as well as IP strategies for Lenovo, Qualcomm, Xerox, Toyota and Boeing among others.

About the Authors
Mark Blaxill and Ralph Eckhardt are managing partners of 3LP Advisors. Blaxill is a former senior vice president of The Boston Consulting Group (BCG) and was head of its Strategy Practice Initiative. Eckhardt is the former head of BCG’s intellectual property strategy practice. More about the authors here.

Conclusions
The book is very inspiring and is an exceptional read for anyone who is new to the IP world and would like to understand its importance in relation to business strategy and the new economy. Personally, I enjoy case studies and therefore find the book to be really useful to see what strategies that have worked or failed in the past. One of the best things about the book is that it is written in a way that is easy to communicate to non-lawyers, meaning that it provides a good tool when looking for examples to describe why a client should worry about their IP strategy or why patenting should be a boardroom decision. The only negative aspect that I found about the book is that I would like to have seen more detailed frameworks, models and checklists for successful implementation of IP strategy, and I really hope that there will be a more advanced second book in the future where more hands-on advice is provided. I do realize however that the contextual nature of IP makes drafting of general widely applicable frameworks extremely difficult. Nonetheless, I enoyed the book and I recommend reading it.

Tobias Thornblad
(Follow me on Twitter)

Get the book here

More information:
Forbes: IP Is Now Job One For Every Senior Executive
IP Think Tank Podcast: interview with the authors here
IP Finance: Anther book review here

IAM/IPM system in Agribusiness visualized

In my previous blog post, I conclude with “IAM/IPM capabilities will need to become key to business strategy for every organization that wishes to be a player in a knowledge-based economy”. This will require companies to form, and transform into, elaborate IPM/IAM systems where internal assets are consciously controlled to create maximal value. Teece D.J. states in his 1992 (Competition, Cooperation and Innovation) article “the boundaries of the firm are getting fuzzy”; and it is therefore, in my opinion, even more important to manage all types of assets in the development network of a firm, since value creation will be more and more dependent on collective participation in open technology platforms. However, this is to think in practice but rather complex to implement in practice. I therefore thought it would be interesting to visualize a small case study of a real life example where an intellectual asset strategy has been successfully implemented. The problem, as always, is that there is never enough public information available (for obvious reasons) to do an in-depth study, so bear with me as I briefly try to deconstruct one of the more successful commercialization strategies in Agbio; Monsanto’s commercialization of its INGARD technology in Australia.

Case Background
Cotton containing the Bt gene – known as ‘Bt cotton’ - was among the first genetically modified crops in widespread commercial production. Bt cotton has been commercialised in Australia, by Monsanto, under the trade mark INGARD® and in many other countries under the trade mark BOLLGARD®. INGARD cotton has been modified by the insertion of the Bt gene derived from Bacillus thuringiensis together with a promoter region into the cotton DNA. The genetically modified cotton plant expresses the Bt toxin targeting pests such as the cotton bollworm and the native budworm.
The key players involved in the commercial development of INGARD cotton technology in Australia are;
• Monsanto: the owners of the Bt patent and the INGARD® trade mark
• CSIRO: the public sector research institution which owns variety rights on cotton germplasm
• Cotton Seed Distributors and Delta Pine: two commercial seed firms.
Read more about the case here.

The INGARD Value Chain
A simple overview of the value chain that shows a high-level of a selection of the transactions that enable the commercialization strategy is shown below.

Knowledge Management: At the top of the value chain is the knowledge management level. Here all the basic discoveries and enabling technologies can be found that provide a foundation of information and knowledge that may ultimately lead to societal utilities through bundling, innovation refinement or other usage. In this case we find scientific discoveries that ultimately lead to the identification and characterization of the Bt-gene and promoter. The arrows between Monsanto and these discoveries are dashed as I have not been able to find any information regarding the transactions between these two levels.
Genetic Management: At this level we find Monsanto and its Bt-gene capabilities and assets, in this specific value chain.
Genomic Management: Despite Monsanto’s many years’ of R&D in the Bt-gene and its expression in plant systems it did not (at the time) have access to suitable germplasm necessary for developing new varieties of cotton bearing the gene for production in Australia. CSIRO did both have the germplasm and a commercial partner (Cotton Seed Distributors) with the capabilities to distribute the finished product.
End-user Level: The finished product (commercial Bt-cotton) is delivered to growers at this end-user level. Much of the success of Monsanto’s commercialization strategy was owing to the technology user agreement that enabled additional value extraction and direct royalties from end-user to technology provider.

IA/IP Management Level
It is quite simple to stop the analysis at the “value chain level“ and conclude that licensing is important in a knowledge-based economy. This is too simple, in my opinion, and fails to unveil where the real value is created and captured. To understand this on a more detailed level we need to zoom in to see ”Monsanto as a value generating IAM/IPM system“. Since I was able to find Monsanto’s technology user agreement for INGARD cotton (1999/2000) I was able to map out at least some of the value creating processes on a more detailed level, although there is still a lot left to understand for a full picture;

Since most of the assets shown in the picture are of intangible character, it is simple to conclude that clever governance will allow for value extraction of one assets in simultaneous markets (e.g. Bt-gene in cotton, corn, soybean, etc.). Moreover, some assets will increase in value by feedback-loop mechanisms where the technology and market database is an interesting example. According to the user agreement, growers are obligated to disclose scaled map of their farm units as well as information about what they are growing and how. This valuable information becomes proprietary to Monsanto which is allowed to use it as value propositions towards CSD ”to anticipate INGARD Cotton Seed demand“, according to §6.1 (c) of the technology user agreement, meaning that the value of this database further increases as more customers uses the technology. Then considering that growers are obligated to grant-back improvements and developments in relation to the technology to Monsanto ”to use, license or assign, without charge or restriction” (§4.3) it is quite simple to conclude that this is a valuable strategy for the company.

More about IAM/IPM capabilities in upcoming posts.

Tobias Thornblad
(Follow me on Twitter)

IAM/IPM capabilities will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden.

For some interesting examples of the norms that create these types of transactions see: http://intangitopia.blogspot.com/2009/05/transactional-norms-in-agricultural.html

Information capture and repackaging as core business

Some time ago, I blogged about the company 23andMe that specializes in personal genetics by offering DNA testing kits and web-based interactive tools that allows individuals to understand their personal genetic information. The company was founded by Linda Avey and Anne Wojcicki, in 2006, and its investors include Genentech Inc., Google Inc., and New Enterprise Associates. The company recently announced that they have launched a Parkinson’s Disease (PD) initiative in collaboration with the Parkinson’s Institute and Clinical Center and the Michael J. Fox Foundation.

Community-based research
The PD initiative is planning to use an open platform approach where the two clinical institutions above will reach out to their networks and encourage PD patients to enroll. The press release states that “the first-of-its-kind program will focus on enrolling 10,000 individuals with Parkinson's disease” meaning that a valuable database is likely to be built from the genetic information. One of the major advantages for participating PD patients, at the same time, is that they will have access to an online community where they may meet others in the same situation as themselves. Commercial tests are usually $399 each, but Google co-founder Sergey Brin has made a personal contribution to lower the price to $25 each for participants for the benefit of PD research. The value of the contribution is not explicitly disclosed but simple mathematics of a cost decrease of $374 per test for a total of 10,000 participants adds up to an indicating value. Current customers of 23andMe, who are not PD patients, that already have their genotypes uploaded into the 23andMe databases, can also contribute to the initiative by participating as “healthy controls”.

Intangibles as value-drivers in knowledge-based business
Knowledge-based industries, such as biotechnology, enable interesting novel structures due to the nature of intangibles. The PD initiative provides an optimal example of a structure where information is the most important underlying object of transfer. Although it is repackaged into many forms: First the genetic information is inaccessible (physically present in the nucleus of cells) and hence without direct value to the PD patient. By enrolling in the initiative, that very same patient transfers (by physical means: DNA kit + post office as distribution channel) his genetic information (physically present as saliva) to a cost of $25 to the company’s database where the information is presented back (by virtual means: analyzed data and predictions in a web-browser) to the PD patient. The patient may now choose whether he would like to share or compare his data or parts of it to peers (by virtual means: presented as personal data) within a community of others in the same situation. At the same time, data supplied by the PD patient contributes to a database that will increase in value for the company (by virtual means: analyzed data becomes building blocks for bioinformatic/computational tools to make discoveries) and participating institutions* (by virtual means: genomic associations that may lead to clinical studies - which may in turn provide further data that can build the database even more).

Maybe even more interesting, at least from an IAM/IPM perspective, is that due to the scalability of the current model: 23andMe is planning to launch several new communities for other diseases - extracting tremendous value from their current assets and capabilities by segmenting parts of their existing business model (TBMDB).
* I have assumed that the institutions have access to the data for the sake of argument.

Intangible assets and property
The scalability of the model makes it very attractive, but what are the underlying assets, capabilities and activities that are needed to create it? The list of assets can be made long, but on a high-level some key assets include a proprietary database of both understood and non-understood data, tools to sequence and analyze genetic information, (probably) cost-efficient out-sourced distribution channels for sending out and collecting information, an external relational capital of information-suppliers / high-end investors / renowned advisors, internal human capital, customer user base, trademarks claimed through (™), and software to manage, analyze and ”present data back“ to the customer. Not to mention policies, agreements, strategies, competitor intelligence, technical know-how etc that would require a more in-depth investigating to be identified and described.

IAM/IPM capabilities to control and extract
Some quick searches in Google Patents and Patentlens for 23andMe as assignee did not yield any results. So how does the company maintain in control over their value creation and extraction? A number of capabilities, and IA/IP strategies probably exist for each of the assets. But if we look at the proprietary database as an example, some strategies possibly include;
• property-based copyright protection associated with the totality of organized data
• technical control by providing proprietary softwares which (only?) displays data from 23andMe
• market power through a large user-base where the network effects of online communities create higher barriers to entry for other players
• contractual control to ensure that rights to use the information within are maintained (see example below)

Example of contractual control between the customer and the company: (17.) 23andMe’s Proprietary Rights: ”[...] Your saliva, once submitted to and analyzed by us, becomes our property. Any genetic information derived from your saliva remains your information. We retain the rights set forth in the consent form and any additional terms of service.“.
”You retain copyright and any other rights you already hold in information and content you create and which you submit, post, or display on or through, the Services. By submitting, posting, or displaying the information and/or content, you give 23andMe a perpetual, irrevocable, worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display, and distribute any content which you submit, post, or display on or through the Services.“
”You agree that this license includes a right for 23andMe to make such content available to other companies, organizations, or individuals with whom 23andMe has relationships, and to use such content in connection with the provision of those services. [...]“

At the same time, it is interesting to think that a number of IA/IP strategies probably exist to extract even more value from the database, including;
• value capturing strategies to repackage data in the database into new value propositions (e.g. genetic associations to be used in studies, new genetic tools, new communities, database access for external parties, publication opportunities, intellectual objects for transactions or to form new ventures/entities, and so on)
• strategic alliance strategies to both evaluate existing data, and to collect new data for other diseases

Final thoughts
In my previous blog post, I discuss the changing role of patents in a knowledge economy and how companies must incorporate IP strategy to their cores. I think that 23andMe provides an interesting example for how both control and value can be maintained efficiently, while managing several simultaneous value recipient, by detailed IA/IP strategies (although, I have in this case interpreted the strategies as a case study based on their public information). I think that many organizations can learn from this model. IAM/IPM capabilities will need to become key to business strategy for every organization that wishes to be a player in a knowledge-based economy.

Tobias Thornblad
(Follow me on Twitter)

IAM/IPM capability and open innovation will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden.

(Link to 23andMe’s blog: the Spitoon)

A thought-experiment to test IAM/IPM capabilities in the business arena

Patent examination is discussed in an interview with Bo Heiden (deputy director of CIP) in a recent blog post in IAM magazine by Joff Wild. The topic of the discussion is on how to handle the current backlog in patent offices around the world. “Beginning in the 1990s the number of applications [at the USPTO] boomed, with a record 495,095 submissions during 2008. The backlog of unresolved applications has grown apace, increasing by nearly 73 percent between fiscal years 2002 and 2007 to about 730,000.”, at least according to Public Integrity. This backlog means that companies are forced to do business with non-granted patent applications. Heiden argues that this makes the status quo into something similar to a de facto automatic issuance system and therefore raises a provocative thought-experiment of a patent system without patent examination by the patent office. The patent offices would then, in the words of Mr Heiden, be “rubber-stamping authorities which merely certify that all the legalities associated with an application have been complied with”. This provocative stance certainly started some debate both in the blog comments and in other blogs where it was also discussed whether this was the same point that Lemley is making in Rational Ignorance at the Patent Office.

Switching the Onus of IP Awareness to the Business Arena
However, my personal interpretation of the discussion was that the whole point of the thought-experiment was to emphasize that companies are currently not accepting their full responsibility when it comes to IP. The status quo of patent prosecution seems to some extent be a closed procedure between administrative bodies and patent departments rather than an integrated core function to govern corporate strategy. Hence, the an interesting question generated by the thought-experiment is; if the onus was on the business arena to assess inventiveness, industrial applicability and novelty, would the right holders feel more of an obligation to only bring to the market patents for those inventions that would truly be determined as “strong” and “valid” patents? Moreover, as Joff describes in the blog post, if there were severe penalties in place for those bringing suits based on non-inventive patents - people would remain wary of litigating unless they felt that they had a very strong case.

Patents in a Knowledge Economy
The traditional view of patents as means to block as only function is somewhat being replaced in the emerging knowledge economy as structural building blocks instead. This is especially evident in knowledge intensive industries such as IT or biotech, where the role of patents serve as an important vehicle to package information into value propositions for transfer. In my perspective, it is important to realize that ownership of information does not automatically increase in value the more that others are being excluded. On the contrary, due to the compatibility that often exists between claimed information and others’ claimed information - collectivization may often increase the total value, although separate building blocks of information may (or rather: often need to) be proprietary. Investments in, and governance of, intellectual asset and properties therefore have the potential to drive wealth and growth in a creative transformation of R&D into products, ventures, commercial transactions and new markets. Examples of this creative transformation includes;
• early-stage and venture incubators,
• technology transfer offices (TTOs),
• spin-out companies,
• standardization platforms
• open innovation

Moral Obligation to Establishing IAM/IPM Capabilities
Building, rather than blocking, needs to be recognized as the core function of patents in the knowledge economy to generate wealth and drive growth. This means that IP strategy needs to be fully aligned with corporate strategy (or the other way around) to achieve envisioned business goals. Obviously non-core IP is likely to emerge along the way providing opportunities for further value generation, such as new markets, spin-offs, licenses, etc. As Mr Heiden rightly argues in one of his comments in the blog discussion: “the real challenge for us IP professionals - to be relevant to business not the PTO.”

Furthermore, my prediction is that the required IP awareness in this new economy will generate norms that interpret not-invented-here mentality as immoral (due to the costs of developing something yourself as opposed to license-in the technology).

These are certainly interesting times to follow the norm development within the IAM/IPM sphere in many industries.

Tobias Thornblad
(Follow me on Twitter)

Patent Examination in the Knowledge Economy, and other IAM/IPM capability topics, will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden.

Recent article about another way to solve the patent backlog: Crowd-sourcing

IPRs and Open Source Licenses - The Increasing importance of IPR Management for Core Business Strategy

An increasing amount of talks and articles refer to new unorthodox forms of value creation beyond the hierarchical boundaries of a firm (some of the more popular books are “Here Comes Everybody” and Wikinomics). As is custom with new phenomena, there is no distinct and standardized definition for these trend(s). Some of the common and at times overlapping names are “Peer Production”, “Crowdsourcing”, “Open Innovation”, “Open Source” and etc. Articles in the area are ripe with the potential benefits and increasing impact of peer or open value creation. Few, however, discuss the importance of IPRs and IPR management.

Control
IPR management has a lot to do with control, but the word “control” has bad or at least one-sided connotations to it. For most people “control” in the context of IPRs signify blocking others, which is the precise opposite of what is required in peer production. In the world of the hierarchical firm, the production, ownership and utilization rights to IPRs are well established. Within a firm, rights to IPRs over its employees is often clear with standardized employer/employee agreements. Within the boundaries of the firm, represented by a nexus of employer/employee agreements, the creators of intellectual properties accept that full ownership lies with the employer.

Impact on business model
For a company that wishes to tap into the benefits of peer production by issuing a new OS license or using an existing one, the situation becomes very different. Here the control of value creation lies outside the hierarchical boundaries of a firm. Value is added to a project both by internal employees (controllable with standard employer(employee agreements) and well as by external participants, with whom the only relation often is the one dictated by the OS license. With OS type of licenses, no one entity typically owns the total value created, but everyone shares the same utilization rights. This is a major difference compared to the when the company has full ownership over the value created. With full ownership, an actor can do whatever it wishes. With shared ownership, however, different actors all have the same utilization rights as stated by the license. These utilization rights will in turn affect the range of possible business models at hand for a firm since business models are affected by which utilization rights you have to the object offered to customers. Furthermore, since software copyright is shared among many actors outside of the hierarchy of the firm, changing the license terms becomes difficult. The latter signifies that not only is the range of business models at hand limited today, but that they will most likely remain that way even in the future, i.e. a question of business sustainability (this paper studies successful method to achieve long-term sustainability with respect to business models on open source). Although this is a software example, the analogies are still valid for most collaborations where there are many different actors involved in the value creation. Special care must therefore be taken whenever a firm wishes to issue or start using open source type of licenses.

Dual Licensing
There are companies that try to circumvent some of the shortcomings of OS licenses by starting a project, releasing it as open source but also add proprietary layers to the OS code (with possibilities to use the OS code with proprietary code without the proprietary code falling under the OS terms) and thus regain the benefits of proprietary code. This is called a dual licensing, split licensing or open core (there might be small differences in their exact definitions). In order to increase the level of ownership and utilization rights, these companies require that individual peer producers’ copyrights be handed over to them in order for the contributed code to be part of the next major software update. If individual peer producers do not agree, their contribution will not be included to the next software update and since they individually cannot compete with the development efforts of a company, they agree and are happy with the level of utilization rights granted to them by the OS license (or they will effectively have forked the development and over time will have to maintain it themselves).

Although dual licensing/ open core does provide additional levels of utilization rights (and therefore additional types of business models possible), experience shows that dual licensors’ flexibility in modifying their OS license is also more static than one would think. Many times the wishes of the dual licensor, the orchestrator of a peer producing community, to change the terms of the community license is not welcomed. Many times when the dual licensor has gone ahead anyway and changed the terms of the license, the community has forked the project and effectively made the project come under a single OS license over time (i.e. the updates developed by the community often are much more frequent and stable than what is possible for a company to compete with). Such examples include the popular Joomla (previously Mambo), NeoOffice (previously OpenOffice) and there are even discussions regarding the possibilities of Sun’s MySQL to meet the same fate with the development of Drizzle (e.g. here and here)

To conclude, as collaboration involving multiple actors increases (i.e. peep production / open innovation), strategic management of IPRs becomes increasingly important and should be an integrated part of core company strategy. In addition, since by nature changing licenses involving multiple and often disparate actors is hard, the strategic importance of IPR management becomes even more important as it not only impacts current but also future business options.

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The author of this blog article is Sina Keshavarzi. Sina is currently finalizing a master within Intellectual Capital Management (ICM) at Chalmers University of Technology: CIP as well as working with IC matters in the agricultural biotech industry.

Other IAM/IPM capability topics will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden

Ethics in Intellectual Asset/Property Management

I will commence an exploration into ethics and IP, which I have found to be a reoccurring topic in many (incl. Intangitopia) IP blogs where NPEs, exploitation of control positions and overly proprietary models often are discussed. This topic, however, obviously has many aspects and is way too broad to cover in a single blog post, or comprehensively, so this should be seen as an ongoing exploration. My focus will, as usual, be inclined towards biotech as this is the market I find the most interesting, but my intention is for the discussion to have a wider applicability. In this post, I will look at how innovation- and IA management strategies can relate to ethics (in the perspective of society).

Innovation Management: Legal Considerations
Many of the issues that most people bring up when it comes to unethical practices is the actual technology (or in some cases product) at hand. Morality and ordre public clauses have been designed to legally prevent many immoral practices such as various forms of commercialization of the human body. My aim is to keep this post about ethics in legal practices on a more holistic level than the if genes, stem cells, diagnostic tools, should be patentable.
Lack of IP policy: This can be interpreted as somewhat counter intuitive, but the fact is that by not claiming assets as property much value could be lost. Not patenting important inventions, and instead keeping them as trade secret, keeps society in the dark regarding valuable information rather than teaching in return for ‘the right to exclude others’. Another aspect that should be considered is whether the full potential of a proprietary database is unleashed by not allowing any external access, or whether it could benefit all parties by allowing access, e.g. possibly in exchange for a subscription fee.
Too defensive IP policy: The opposite of the section above. Claiming stakes so broadly in the ground that many of the patent applications are far from reduced to practice, and is only used to scare of the competition. The obvious risk of this is that also universities and non-competitors are ‘scared off’ effectively inhibiting research in certain areas.
Keeping non-value generating patents: A portfolio having a large number of patents that are not utilized is not only costly, but may be blocking others from exploring the territory and the ethical thing may just be to transfer, donate, sell or just be abandoned.
Unrealistic expansion of the legal scope: Patent claims are most often defined broadly to expand the legal scope. This is obviously a fine line between making good strategic sense and weakening your patent, so it may be argued to be somewhat self-regulating. Licensing out the patent using unrealistically broad reach-through claims, however, may stifle research by discouraging actors from licensing in such technology. The broader the claim the more the patent holder can exclude others from using the technology.

Innovation Management: Technical Considerations
A related discussion to the one above, that is at least as important as those considerations, is how in a technical sense ethical considerations can be built into an IPM strategy. One of the factors that should be considered from a technical viewpoint is how openness is taken into account when shaping the innovation. Ethical boards, informed consent requirements and regulation are often established to scrutinize at least some of the related research practices for ethical concerns, but what I am referring to is more early-stage.
Technical barriers: When designing an invention-of-interest, it is obviously desirable to technically prevent competitors from being able to easily replicate the technical function to the greatest extent possible. Nothing wrong with this very logical strategy in regards to ethical concerns from a market competition perspective. However, considering that the way we learn is simply by imitating, experimenting and trying out alternative paths, a technical restriction that fully prevents reverse engineering (or legal documents that prevent experimental use) may not be perceived as ethical from a societal perspective.
Incompatibility: Another aspect is how closed the innovation design is in regards to what is currently being used in the market. Incompatibility with existing technology could be the basis for business models aiming to implement new market standards (e.g. Microsoft), and therefore makes perfect sense internally. Conversely, the external environment may have a different view which can be seen in the many open source initiatives that have sprung up lately. Some actors may claim that their technology is disruptive and therefore need to replace obsolete technologies to drive innovation, but high switching-costs, on the other hand, need to be paid by someone. An argument may rightly be that if the technology is truly disruptive the benefits should outweigh the societal costs in the long term. This may be compared to the concept of ‘creative destruction’ where something new replaces an old industry driving many businesses to bankruptcy only to develop society further.
Not productifying assets: This may be somewhat specific to so-called research tools in biotechnology. Valuable upstream technologies, e.g. biomolecules, that are used only internally as a step in a process (which cannot be found by reverse engineering), for instance as a tool to perform a service can provide an immense competitive advantage as trade secret. But looking at how well that specific technology benefits society will in this case only be reliant upon how many customers the company can serve. Whereas making a product that can be offered from the technology will both allow third parties to perform as much research as wanted using the tool, while teaching society how it is structurally built (through patenting).
Not killing projects: This last aspect is something which may be difficult as a company to do, as substantial time- and monetary investments may have already been made. However, the alternative cost of investing a never-ending stream of resources in a project usually means that resources are halted somewhere else where value may be extracted quicker. A benefit analysis may be in place before continuation.

This list is by no means comprehensive, and is as I mentioned the start of a series of posts. The upcoming blog posts will look into how this translates into broader and higher strategy levels both externally and internally, at company and market levels.

Tobias Thornblad