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

Intangitopia licenses content under Creative Commons

We at Intangitopia are strong believers in that you can create more by collaborating than by blocking others. That is why we have decided to license the content on this website under Creative Commons Attribution-Noncommercial 2.5 Sweden license.


We believe that by codifying the terms we provide our content under we can also encourage our readers to take a more active part in sharing and develop our thoughts as well as contribute with their own. Since most of the content on this website is ideas with which we encourage debate and collaborative thinking we also believe that this is to be shown in how we make the content accessible.

Jurisdiction
The license we have chosen is the Swedish version of the Creative Commons Attribution-Noncommercial license. The reason why we have chosen the Swedish version is the simplest one; we are currently based in Sweden. The difference from the original license is however small and no substantial parts differ. Here is a markup copy of the original license with explanations of the differences.

Attribution and noncommercial
We have decided upon the license which requires the licensee to attribute us as individual authors and where appropriate also refer back to Intangitopia. We have also decided to use the limitation that the licensed content only can be used for non-commercial purposes. But as always, we can also waive this at any time by request from the licensee.

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Please feel free to give any feedback to this choice of licensing model or if you have any requests for use of the material in any other way tan provided by this license.

Johan Örneblad

IAM/IPM - IP Ethics - Market Behavior

This is the third blog post in an ongoing investigation in how IAM/IPM capabilities apply to IP ethics.
In earlier posts I have looked into;

1. IPM/IAM - IP Ethics: Innovation Management

2. IPM/IAM - IP Ethics: Corporate Profile

This post will look more into IP in relation to market behavior. There are some market practices that almost anyone would consider unethical, such as litigation of academic institutions or effectively blocking societal benefits for personal (financial) gain. Then, there are the more uncertain cases such as gaining a control position by making technology incompatible with other technology providers, or solely focus on patent licensing without practicing the invention oneself. In the latter case, some may argue that this is not unethical when this is not the only revenue stream of a company (i.e. a mix of both patent licenses, and practicing of some inventions), whereas others may feel that it only becomes unethical when patents are acquired and used only for the purpose of litigating, whereas others may just perceive all of the above as innovative “new“ business models.

Access exclusivity: Ethical dimensions of patenting upstream technologies per se are often discussed in biotech (e.g. DNA patents, etc.). However, as most people would argue, the patent document protecting a biological invention is obviously not unethical in itself. The ethical considerations are (or should) rather determined based on how the intellectual property right is used. This brings the focus then to offer a value proposition with sustained control. Is it ethical to let only one entity have access to the invention as an exclusive license? What if the exclusivity is only geographical? Is it more ethical to offer non-exclusive access controlled by a pricing-mechanism? Of course, most people would argue that from a societal perspective the more open the access and lower the price is the better - but what if this means that return-of-investments for the technology are not reached? Time and money invested (could be external investments from public sources) is not returned, diminishing the value for the technology inventor, its shareholders, investors, potentially also affecting society.

Dependence vs loyalty: Many of today’s newer applications create utilities for its users (e.g. Facebook, MySpace, some mobile phone contracts) that will increase the more that join, which will make users persuade their friends to join as well. This is commonly known as the network effect. Common strategies to capture the value from this mechanism include lock-in strategies, which create a dependence to a certain provider due to substantial switching costs. While this may create lucrative revenue models, there could be a point for enabling technologies where the incompatibility between different technologies may create societal inefficiency problems. Participation in standardization (in particular open standards) efforts may therefore provide both an opportunity to design a future market but also a way to ensure that transactions costs for society are kept to a minimum.

Transparency: Knowledge-based business, unlike traditional industries where production and marketing of physical goods was in focus, that is run efficiently will have an inventory of valuable objects which do not show up on the financial statement. These objects, commonly known as intellectual assets (IA), may be what distinguishes one company from another but will still be difficult to know for anyone external to the company or for stakeholders such as shareholders. A US Supreme Court decision (1976) stated that under federal securities law and court decisions, a public company has an obligation to disclose a fact in its filings if "there is a substantial likelihood that a reasonable shareholder would consider it important". This may rightly be considered to be taken somewhat out of context (as the case is focused on negative effects), but the point that I am trying to make is that a lack of transparency is a matter that is likely to be taken seriously by the public, and should therefore be managed in a controlled manner. An efficient IA management system enables IA reporting where objects (R&D assets, processes, surprising research results, technology know-how, etc.) can be packaged and managed into a state where it can be controlled whether certain assets may be propertized into patents, plant variety rights, trademarks, copyrights, design protection or similar. This is important since the balance between what to disclose (and render non-patentable) to the public and what to keep secret obviously needs to be fully aligned with the IP strategy of the company (meaning that assets often most appropriately should be registered intellectual property rights first unless a defensive publication strategy is being pursued).

The latter is not a clear-cut ethics issue, but I think that it is still an interesting perspective to look from upon IAM, since the focus of IAM discussion is usually on how it can be used for tax savings, expanding the portfolio, etc. As I have mentioned in previous posts, this list should rather be viewed as some examples of cases I find interesting in relation to ethics rather than a holistic or comprehensive framework thereof.

Tobias Thornblad
(follow me on: Twitter)

IP and Ethics, in relation to IAM/IPM capabilities, will be discussed more in-depth during the CIP FORUM 2009 event (6-9 Sep), where myself and fellow Intangitopians will actively participate.

Stimulus Package IP: Health IT part 1 - the new standard wars?

In the ever debated and updated stimulus plan there is a fair chunk (or equivalent to 27 % of AIG quarterly loss) of 17 billion USD for Health-IT. Read a great summary of the Helth IT implications here and find more info from initiatives here and here. Health IT in a broad sense is using IT to provide better and cheaper healthcare. In this sense it is focused on electronic medical records (EMR), earmarking 17 million in payments for hospitals and practitioners who implement it and also 2 billion for infrastrucure, admin and standardization. Timeframe is also of the essence, standards shall be set by the end of this year and payments will start in 2011.

I intend this to be a series I come back to as I find it interesting for many reasons, here are a few:
1) In my mind it is a great initiative - just imagine having all that data and using algorithms to compare MD's thoughts
2) Interesting to see how governement handles standard setting in just 9 months.
3) There is a provision that an open source initiative must be investigated.
4) Two very interesting and in many ways opposite players, Google and Microsoft, have already started working on this
5) It is a hot topic as it is very much intertwined with ethics, data protection and privacy

Before starting of, I wish to say that I am no expert in EMRs so comments are very welcome and I look forward to learning from them AND updating the series with good thoughts / ideas. I honestly think this is one of the most intertwined tech/legal/business/ethics/IP/standards issues of today.

Part 1 - The new standard wars?
The first thing that brought my attention was the fact that standardization plays such a crucial role in this and also that the government is the one pulling the strings. As this is no new field there is lot of IP already out there and also lot of unconnected systems. This leave to rather large questions regarding standards: "what" and "how". At time of writing I have yet not heard of a czar or some concrete measures being done, but I see endless possibilities for how this can be solved - let me share som toughts on scenarios.

How to set the standard:
* Patent pool with free access
Governmental control of IP through acquisition of key patents related to largest / fastest / best system and then labellig that as the standard and through monetary incentives make it the prevailing one. Could (should) grant free access to the patents and also has funds to do so. Likely subject to heavy lobbying activity prior to choice and thus could suffer critique and in worst case low market penetration.
* Standards Organization
There is nothing ruling out the formation of an "ordinary" standards agency like in many other fields. Relying on market powers, corproate negotiations and wealth redistribution to settle the issues. Risks are of course royalty stacking and an immediate 17 bililion dollar mark-up on total revenues generated until end of stimulus package

What to standardize:
* The whole nine yards
Just choosing one EMR option and then once again using monetary incentives to make in prevail. In theory (as always) this is easy, but in practice some MDs want one kind, some the other, some want voice control, some touch screen interfaces etc. etc. This could be full of criticism as the penalties for not adopting the systems are likely not as high as the pain and frustration for practitioners to us a system they dislike.
*Software
Scalable and quick model, but with less IP possibilities. I would draw the analogy to having all EMR's report in one certain file type so that all data would be imported in one large database (n.b. I'm no computer scientist). I'm also assuming that with software only, there are many privacy issues to consider.
* Interface
Safe but expensive, time consuming and full of interoperability problems. In my mind, given a longer time frame, it could be a safe way to develop a new interface only for EMRs, but in todays wireless world and it's encumberances that could be a monumental task.

Another interesting thought would be if whatever system is chosen then turns into a lawsuit (patent or copyright), which also needs some careful thought. Would the government be ready to tackle trolls or are they more keen on just developing an SOP and suddenly having the EMR market boom only to realize it is totally encumbered.
One final thought, with the blu-ray wars in mind, meaning that blu-ray community was so keen on winning just to make sure. their hardware would be in everyone's home with an ethernet port once we all start downloading movies. One could hope that whoever makes these decisions also thinks one step ahead and try to figure out what long term effects there are of digitising healthcare and having that data, not only focusing on choosing the short term solution best fitting the public opinion.

Marcus Malek
Follow me on twitter

CIP FORUM 2009

Intangitopia would like to inform all readers about one of the biggest happenings in the realm of innovation management this year: CIP FORUM 2009. The international conference takes place between the 6th - 9th September and gathers the world’s greatest thought leaders in IA/IP/IC management. Seminars and workshops are offered by experienced professionals and scholars to promote new developments and best practices in the developing fields of intellectual property and intellectual capital.

Four of the Intangitopia bloggers will each actively partake and have distinct responsibility areas during CIP FORUM 2009. These responsibility areas will be explored and covered more in-depth here at Intangitopia in the time leading up to the gathering. The responsibility areas are as follows;

Mathias Hellman (follow on: Twitter) - covering and contributing to Early Innovation
Marcus Malek (follow on: Twitter) covering and contributing to - Financial Institutions
Johan Örneblad (follow on: Twitter) - covering and contributing to Open Innovation
Tobias Thornblad (follow on: Twitter) - covering and contributing to - IAM/IPM Capabilities

We will all obviously also continue discussing the topics that we find interesting in relation to IA/IP/IC in a true Intangitopia spirit.

The previous CIP Forum FORUM was held in May 20th - May 23rd, 2007. Some of the participants in 2007 included; Ulf Petrusson (CIP), Beatrix de Russé (Thomson), Erik Noteboom (the European Commission), Kai Taubert (Procter & Gamble), Marshall Phelps (Microsoft), Ruth Keir (Pfizer), Ruud Peters (Philips), Takeshi Isayama (Nissan). among others. Read more about CIP Forum 2007: IP Review <>, Anaqua IAM Perspectives , and Valea.

Ethics in IA/IP management - the Corporate Profile

My exploration in IP and ethics today takes me to IPM strategies that may be associated to the corporate profile. In my last blog post, I touched upon some of the complexities in managing innovation in an ethical manner, which may be seen as layers that are much more focused on technology whereas today’s post will target brand management.

Brand Management Deconstructed
Firstly, it is important to recognize that branding encompasses so much more than trademarking a name / logotype, registering a slogan or claiming a certain design scheme / trade dress as proprietary. Branding is the whole communicative relationship between a company and 1) its customers, 2) its collaborators, 3) its employees, 4) its end-users (if separate from customers) 5) any entity or person that the venture will communicate with.
A “strong” brand is often quoted to;
* attract new customers / retain existing customers
* enable price premiums / drive sale volumes
* decrease sensitivity / volatility of revenue streams
* secure future revenue streams
* enable clear product differentiation and positioning
* reduce marketing costs
This is all true but in knowledge-based business (more?) important aspects are also how the brand is used to 1) block competitors, 2) control value propositions, 3) control relational networks / technology platforms, standardization efforts and markets, 4) control the creation of a strong IA/IP portfolio, 5) establish incentive structures and control human resources, 6) controlling the identity and perception of the venture, 6) extract value (monetary or non-monetary).

Branding and Ethics
It is quite clear from the brand elements above that the “control” that branding enables, there is more than one path to go where there will be more than one opinion about what “the right thing to do” is. Using semantics to describe the identity of the venture or the utilities of a product can create the perception of something that is of far more value than the original object. Below follows some examples where IP and ethics can be tricky;

Functional utility: The debate whether diagnostic tests are ethical is an interesting example of branding where descriptive terms could be used as a way to inform the patient about the uncertainty of the test or unethically to provide a false comfort. A genetic test may confirm a clinical diagnosis only if the disease is a known, described, monogenic or chromosomal disorder with evidence-based association to a disease causing mutation. Conversely, genetic tests for polygenic complex disorders only assess an individual’s risk of susceptibility slight-moderate-strong to certain diseases, providing for more room for interpretation (and external influence).

Another example of a balancing act in what utilities that are rightly or wrongly claimed is in relation to the placebo effect. If you go to the doctor to cure an ailment, he prescribes a medicine, and you feel better afterwards - you are cured. Would you feel the same in case if it later turns out that the pill he gave you was Cebocap (a known sugar pill) - or would you rather be inclined to sue him for malpractice? I guess the answer he will always be “it depends”, but this is also why it is important as a company to control the communicative relationship.
Product identity: It is often easier to argue that something is unethical when it involves human health, but a similar discussion can be had for consumer goods as well. One of Procter & Gamble’s washing-up liquids (known as Yes, or, Fairy) is rumored to have gotten a boost in sales after the introduction of a minimal addition of eucalyptus, much owing to the success of branding the liquid using the ‘natural’ ingredient.

Corporate identity: We can all relate to how we perceive company brands as having distinct personalities (traditional examples include: Volvo - safety, Apple - design, etc.). Conscious IA/IP strategies have the ability to create these identities. There are many large corporations that have their scientists writing periodical reviews about markets, current technology and future predictions. Product placements in these could be part of the branding strategy to create a demand which may justified in some cases and could be destructive to society in some cases (e.g. tobacco industry denying lung cancer).

Co-branding: A value creating strategy that may both be used for the better or for the worse. Few customers reflect over the moral values in Ferrari lending their logotypes to Acer computers, but what if Walt Disney was to co-brand with Marlboro? In this bizarre example, many would think that it would be easy to point to whom would be the ‘winner’ and to whom that would diminish their brand, but there are examples where the boundaries are more fuzzy.

Claiming ethics to create an advantage: This may not be one of the most common strategies, but I thought that it was an interesting case. In the March issue of Nature Biotech the article “a balancing act” discusses Genentech’s petition for the FDA to immediately pull many of the in vitro diagnostic “home-brew tests” from the market. Genentech’s claim is that there is not adequate “scientific evidence of their validity” and that they pose “potential risk to patient safety”. This is seemingly an altruistic move, but the Nature article states what Genentech would like for the FDA to examine closely are home brew tests to assess patient suitability for Herceptin treatment. Uses, not mentioned in the petition, that erode Genentech’s royalties from sales of ‘official’ companion diagnostic kits, not to mention potential lost sales in the future from Rituxan, Avastin and Tarceva. This could obviously be argued to be immoral, while it could also be considered a win-win situation (tougher regulation of diagnostics + more sales for Genentech) depending on who is the judge.

My exploration in ethics and IP will continue in later posts where I will investigate market considerations, and value extraction among other things.

Tobias Thornblad

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

The Guardian opens up

The newspaper industry has for quite some time been struggling with declining sales and uncertainty in how to get paid for content proved on their websites. For most part the content has been proved for free and revenue has come from advertising.

It has proved hard to get a viable business model based on this and also to utilize the full potential of the material created by the journalists. Just imagine what amount of interesting articles there are published every day and potentially could be used over and over again in different forms and different media.

From my point what has been lacking is both the willingness to spread the material created, far from all newspapers have all their material available on the web. But also the means of actually making it available has been lacking. That is why I look at the British newspaper the Guardian’s new attempt to make money out of their huge catalog of content as a really good sign of that there might be a change.

“The Guardian today launched Open Platform, a service that will allow partners to reuse guardian.co.uk content and data for free and weave it "into the fabric of the internet".

Open Platform launched with two separate content-sharing services, which will allow users to build their own applications in return for carrying Guardian advertising.”

“The Cass Sculpture Foundation is using the service to add Guardian articles about British artists to its site.

Other partners for the launch of the service include web design firm Stamen and OpenStreetMap, a free, open alternative to commercial map data services. Stamen and OpenStreetMap developed a service that they hope will encourage Guardian readers to "geo-tag" the newspaper's content, positioning every article, video and picture on a map so users can find news, commentary, video and other content related to their area.”

I think that one of the keys to success as a newspaper in this era is to see that you actually have a huge content database which is not only usable as part of the day-to-day reporting but also as something much more. In the Long tail model, which I think is applicable in this area, one of the key issues is to have a good search engine/model. Not just to provide the content but also to make the users understand that it is there and make them understand that they want it.

Spreading the content through the help of other actors is probably one of better ways to get your content out. That is also why I am so interested to see how Guardian’s Beta testing turns out. There might just be a working model, there might just…

Johan Örneblad

Found through Open... .

Biological standardization of functional modules

My exploration into genetic engineering for my M.Sc. thesis has led me to an interesting path of new exciting research in gene synthesis. For those of you that have not been in contact with this topic before, it can simply be described as the synthesis of gene-length DNA from chemically derived oligonucleotides, which in turn are short Feb 23 posting in McKinsey&Company: What matters: ”Over the past few decades, most new jobs, wealth, and growth were created in the knowledge and digital realm. And while venture capital represented only about 0.2 percent of US GDP, the companies it created generated about 17 percent of economic activity. The Internet changed virtually every industry. Yet as far-reaching as the digital revolution was, the ability to code life will likely reach even further.“.

BioBrick Standardization Process
DNA cannot currently be fabricated purely using an in vitro process (it still requires an intermediate step using a host organism, e.g. yeast or E.Coli). Nevertheless, a transition period has certainly begun. An interesting model in regards to this is the BioBrick Foundation that was introduced (according to Wikipedia) by Tom Knight (MIT), Drew Endy (Stanford) and Christopher Voigt (UCSF). The trademarked words BioBrick and BioBricks refer to a specific brand of open source genetic parts, defined via an open technical standards setting process;
1. You develop some scheme for standardizing some aspect of synthetic biology work.
2. You convince at least one other person, at a different location from you, that the scheme would help them with something that they care about.
3. You each demonstrate that the proposed standard works for each of you (i.e., the standard must work and be good for something).
4. You document your scheme in writing.
5. You request a BBF RFC number by asking for one (email the list)
6. The BBF technical standards group (i.e., the folks on this list) comment on the standard, try it out, propose revisions.
7. You revise the standard if necessary.
8. The standard is formally accepted as part of the definition for BioBrick parts. Congratulations, you win (publishers are standing by), the BioBricks technical standards suite is updated.
9. New, possible standards tremble before you! Goto 1.

Productification of Functional Modules
BioBrick parts are DNA sequences held in circular plasmids with precisely defined up- and downstream sequences (both of which are not considered part of the actual BioBrick part). Larger BioBrick parts are simple to create as the up- and downstream sequences contain six restriction sites for specific restriction enzymes allowing for ”chaining together“ of smaller ones. According to the Guardian, there are 3 levels of BioBrick parts;
1) Parts: encode basic biological functions
2) Devices: made from a collection of parts and encode some human-defined functions (such as logic gates in electronic circuits)
3) Systems: perform tasks (such as counting)

Openness
I have not been able to find any IPR policies or ownership governance, but according to an article in Nature Biotech it seems as the objective is to create openness and accessibility: ”Quantitative descriptions of devices in the form of standardized, comprehensive datasheets are widely used in the electrical10, mechanical, structural and other engineering disciplines. [...] We propose to adopt a similar framework for describing engineered biological devices. [...] Finally, because the receiver can be used in many systems and because we hope to promote the collaborative development and unfettered use of open libraries of standard biological parts and devices, all of the information describing the receiver is freely available through the Registry of Standard Biological Parts”

Value Extraction
It will be interesting to see what type of interesting value extraction models that may arise from this open standard. Some early models related to education include;
* The International Genetic Engineered Machine (iGEM) competition
* The Build-A-Genome (BAG) class at John Hopkins University

To paraphrase Barry Schuler in his TED talk Genomics 101, about the fact that it is a fine line between playing god and learning the laws of nature. We are not creating anything artificial we are only changing around the already existing building blocks in nature to understand what the rules of the game are.

Tobias Thornblad

More state-of-the-art gene synthesis:
http://www.cell.com/trends/biotechnology/abstract/S0167-7799(08)00285-0

Genetic Engineering: Innovation and legislative landscape

As I mentioned in the first blog post this year, I am currently writing my master’s thesis together with my colleague Sina Keshavarzi in Indianapolis, USA. We are exploring the biotech sub-market of biofuels where genetic engineering of organisms provides tremendous potential for leverage. As a part of this study, I have today mapped out the innovation and legislative landscape for genetic engineering in a diagram that I thought that I would post here hoping for some feedback on what else to include. Click on it for better resolution. Please let me know what you think!

Tobias Thornblad

The diagram in this blog post is distributed under a Creative Commons (CC) license. This doesn't replace copyright – which remains undivided with Tobias Thornblad – but it makes the terms more flexible. Anyone is free to download the the diagram; share it with friends; republish or embed it on their website or blog. But this use must be made within the terms of the CC license "Attribution – NonCommercial – NonDerivative."

This Creative Commons license allows you to reproduce, distribute, display or perform publicly the diagram as long as you follow these guidelines:
Attribution: you reference explicitly Tobias Thornblad (Intangitopia) as the original source of the material.
NonCommercial: You can't use the diagram (or any parts of it) for commercial purposes.
NonDerivative: You cannot alter the diagram in any way (edit, cut, etc). These conditions can be modified only by explicit permission of the copyright holder (Tobias Thornblad). The complete text of the license can be seen here.

IDsoftware is reinventing virtual products: Quake Live

IDsoftware has with its latest product surely taken the way of how gamers are able to play a full-scale 3D game to the next level. The provided Quake live platform enables players to play their favorite game directly through the web browser. Once the game is set to full-screen mode, the player will not be able to distinguish the online game from the original game Quake 3 which Quake-live is built upon. More information for the less informed reader could be found here, here and here.

Revenue stream
This brings us to the key question of how a company can keep a game alive and have a revenue stream when players do not follow the conventional pattern of buying new games in order to satisfy their hunger for challenges. Game companies have since long realized how important it is to keep the customer base once they have released a blockbuster game. The enormous online society of World of War Craft is probably the best example in how to keep customers close. The difference between WOW and Quake3 is extensive, not only are these completely different games but that WOW players still expect new features and updates whereas the Q3 players do not.

Shifting focus from hardware to bandwidth?
IDsoftware seems to have a good approach to the solution which is a quite remarkable one. As of today, they are still looking for beta-players to test the game and the potential of the site. More than 1.200 players are already testing the game which only requires a small client-program. It should be highlighted that the game in question, is a full scale 3D-shooter game looking just like Quake 3 which back in 2001 required the best hardware available. I dare to say that this is truly revolutionary if they succeed to accomplish to provide a service where the game floats without delays, which is the most crucial performance parameter within this game genre. As of today, there are no indications of such drawbacks. This unique platform will enable players to compete against others, participate in tournaments and track their game statistics.

What will the business model look like?
The concept is clever in many ways from a business point of view. The company will be able to establish technical control since the players will only have access to the game through their site and since the game is run completely on the server provider’s side, the possibility to cheat are close to zero and facilitates updates. For industry actors, e.g. hardware manufacturers, the site will provide great opportunities to sponsor tournaments and brand themselves among players. The possible opportunities remind of sponsored tournaments on internet-poker sites where the sponsoring party is providing a tournament with a variable price sum. With the strong brand name Quake the future opportunities for the Quake-live platform look promising. Let’s hope that advertising will not be their only revenue strategy.

Whether Quake-live will be a success or not is difficult to say but it is still a happening worth mentioning due to the innovative nature of the concept in an already innovative industry in today’s knowledge-based economy. To re-release an old game, packaged in a new concept and technology and make it financially profitable is surely not an easy task. However, the concept opens the door for a new paradigm for how games are distributed to customers and to strengthen IPR control technically. It is really taking virtual products to its limit and further diminishes the importance of operating systems towards an increasing focus of online applications which can be observed by looking of how Google continuously works its way to move office applications into the online applications domain.



Nicolas Preisig is the second guest blogger invited to post his thoughts here at Intangitopia. He is a part of the new generation of highly talented engineers, lawyers, and business managers pursuing modern skills and tools necessary to create value for industry, universities, and society in the emerging knowledge-based economic paradigm. The ideal education to acquire this skills and tools is the School of Intellectual Capital Management at Chalmers University in Gothenburg, Sweden.

A tax we want? - the success of trolls, trolls 2.0 and why we perhaps want to keep it this way.

Recently Fred Wilson twittered and blogged, at his always interesting VC blog, about his opinion on patent trolls. He said: "Just in case you didn't know how I feel: patent trolls are a tax on innovation and are evil of the highest order"

After that there was a wonderful set of comments on the same blogpost (I encourage to read them) and two linked post found here, and here. The latter by the CEO of the Fred's portfolio companies that were infringed. Fred's expression, comments on his blog/twitterfeed among other things inspired me to write this post (which in hinsight is quite lenghty). I think that looking at NPE litigation as a tax could be a proper and viable way and actually one we should embrace. However there are many open ended issues to such a statement, so I'll try to elaborate on some of them and encourage people to contribute their view on this subject which has so many approaches and, as far as I know, no one correct answer.

A game in three arenas
In order to clearly describe what I think about this I want to look at the innovation processes as part of three arenas. The first being technology, which is all about research and free from patents and money (other than funding the research) and focuses on delivering new inventions, with a die hard race to be claimed as the first inventor. Then there is the second arena, which is the legal arena. In this arena inventors or corporations choose if and how to protect the invention, which is much more complex then binary patent/no patent. Think in terms of patent type, claim type, portfolio strategy, geography, aim of patent (e.g. standard, x-license, ensure free use) and this arena becomes just as complex as thinking of 100 researchers sequencing genes. Thirdly there is the commercialization arena, where corporations exploit these innovations and/or patents for profit through means of products, licensing schemes, services, litigation etc.

It's only business !?
NPE litigation is, in my mind, mainly in the commercial arena, which is also why it attracts so much attention and critique from people. I believe companies/managers get more upset that they might lose money (i.e. make less) rather than actually not being the rightful inventors of a technology. Along those lines I could see NPE litigation as a tax on commercialization, but not on innovation.

My maths would say that if there was a player that would purchase all garage inventors and "few-man" companies' patents - they would churn out much more patents. As this is, in small scale, what some NPE's are doing - one could argue they are creating more innovation (which is also often IV's main claim when interviewed). Naturally this logic has its' flaws as it equals more patents with more innovation and takes no consideration of innovative leap etc. One could also see companies responding and saying that the money spent on litigation would in fact be reinvested in R&D, which is really hard to judge.

My personal opinion is that for large corporations this is much more determined by other factors, in smaller companies (e.g. like Fred's example which spent 10% of VC round on litigation) it could actually be the case. However, statistics show that almost 40% of all NPE litigation 2004-2008 was with only 20 companies (accounting for 534 cases). Without double-checking I would bet a lot on all of them being Fortune 100 companies. The point I want to make is that the first and foremost targets are non-surprisingly large corporations.

Then how about innovation and all the effort put in there?
I am pro innovation in all forms and want nothing more than for new and exciting start-ups to grow and change the way we see the world. But I think we must draw the line between innovation, products and patents ( a brilliant and frequently re-tweeted example is given by Jackie Hutter, here). In the world we live in today, it is very hard to really be sure that you are the first to invent something and unfortunately a patent is no proof of that. Statistics show us that since 2000, 15 patents have made up for 1375 lawsuits with over 16000 possible parties involved. Interestingly the top 8 litigated patents only have 3 different titles and are all within telecom. Now these lawsuits are not NPE lawsuits, but all patent lawsuits since 2000.a
The point I want to make is that statistics show us the difficulty and very contextual and interpretation based nature of patents, especially in a litigation setting.

Tying things together - with an "arbitrage opporunity"
What I want to show is that it is very hard to judge the outcome of a lawsuit but also to know whether a product actually reads on a patent- bearing in mind those 97 lawsuits for a single patent. Out of this there has rissen a large amount of companies that see this as an arbitrage opportunity by acquiring patents and then finding products that read on patents and settling for an amount equaling costs of a lawsuit with the defendant. The most litiguous actor, Acacia, has filed approximately 250 lawsuits since 2003, this equals 42 lawsuits per year. In contrast, they signed 60 new licensing agreements in the first 9 months of 2008, in 2007 that same amount was 69 (source: EDGAR). Without further research it gives an estimate of their success rate, which accounted for $30 million $40 milion respectively those years.

Just taking a guess, I would say a majority are settlements. I think this could take place based on certain criteria. Firstly, Acacias patent portfolio (493 as of 1/1 2009) consists of patents that are either key inventions (success in techniological arena) or written in a way that suits litigation, e.g. broad (success in legal arena - for this purpose). Secondly and in relation to Acacias patents, the defendants have products which might read on said patents. The key here is the word might. Because, this would never be sure until proven in court (which also can be appealed) and it could also be the case that regardless of commercial success, user friendliness or anything like that, the companies product and surrounding patents perhaps just are not the same thing (similar to Jackie Hutter's example mentioned above). All in all, the companies are not willing to pay to prove that they have adequate patents, neither do the want to go to court and lose and perhaps be senteced to damages or even willful infringement. This usually results in settlements where companies agree to an Acacia license and perhaps also a down payment. Which then would lower the defendants margins on the affected product.

Trolls 2.0 - firing the legal guns
With NPE settlements being mainly in the commercial arena, I would like to attract some attention to another way of litigating - invalidating patents. Now this would be something that I, as a manager or c-level executive, would be really afraid of. Just as there are very many patents out there, there are also almost always two or three companies delivering the same type of product service, i.e. there is competition. While an action from a troll is all about getting paid a share of product revenues by the defendant, we could well se a surge in action by competitiors being all about taking all of the defendants customers. Just as it is possible for NPEs to track down profitable companies, target products and map portfolios based on public data, it's also possible to use the power of crowdsourcing to find relevant prior art. Three recent example of that are Article One Partners , the USPTO' peer-to-patent and the recent "save red hat movement".
Imagine receving notice that your competitor claims your patent(s) to be invalid and has 20 scientific articles to prove it. Now you could potentially risk much more than paying up to a troll. Imagine popular companies with a dedicated fan-base starting to use this, especially in the overcrowded telecom, hardware and software space, and just to save the company they like or a product they use often 10 000 savvy people would spend 2 hours each trying to find prior art and all of a sudden you have the workload equivalent of 10 full time employees working one year done in almost an instant.

2.0 Lawsuits - adding another 0 to the costs
Just as a reference one could think of all those extremely costly lawsuits we have seen. RIM with their $600 million, Medtronic with their $1.35 billion. Well I don't the how reasonable such figures are, but they occur. And as soon as the other party uses the legal and perhaps even technical arena to fight you - you will pay big if you lose. There is a big new initiative started by MAPP where they try to get president Obama engaged in capping damages in patent lawsuits.

Ending thoughts - maybe people should embrace the tax?
What I wanted to show with this blogpost was that the patent system is overloaded and there are so many patents out there in certain fields that they are litigated over and over. Tying that together with the cost of litigation, the NPE licensing deal has become a proven model, with acacias succes as one example.
With all the uncertainty in the patent system I honestly believe that some NPEs actually are rightful owners of some technologies that their licensees incorporate in products.
What I also wanted to say that based on this uncertainty and the new movements of crowdsourcing to reach invalidation, corporations should perhaps look at trolls as tax on commercialization, purely in business terms. And instead be afraid of their new and improved competitors - using the legal and technical arena to put them entirely out of business or if challanged ending up in multi million dollar lawsuits with a very fierce and savvy (based on all crowsourcing) competitor that perhaps could make you wish it would only have been the "good old troll 1.o"

Marcus Malek

Value creation through offered access in Biotech...

Relating back to my previous post, I would like to continue the discussion about how intangibles are made into value propositions by applying layers of control. Last time I concluded that the vast number of control systems, both contractual and technical, enables the biotech firm to create a variety of “goods” by making these into an artificial state of scarcity where they are experienced as durable and non-durable depending on the combinations of control layers. From that discussion, it can be concluded that only the creativity by the firm will restrict what is possible. This time I would like to expand upon that concept by adding another layer to the value proposition that makes the business model options for creative design even broader, which is: access.

Biotech Market Transactions
First of all, it is important to realize that the traditional model where the seed seller offers a variety or hybrid with a set of fixed traits “locked into” a germplasm is obsolete. Nowadays, a biotech firm may isolate, sequence, redesign, and make a gene proprietary only to offer it to a number of simultaneous markets (e.g. healthcare, agbio, nutraceuticals, etc.) and applications. This means that the firm selling plant varieties to farmers does not necessarily have to be the same company that owns the pest tolerant trait in that very same variety nor does the company have to rely on a single source of income. Innovations in the seed germplasms therefore often create a number of transactions that all need to be controlled in some way for value to be maintained.
This value, however, will not automatically increase as customers or collaborators’ freedom is restricted, which seems to be how many companies measure the value of their intellectual property in many cases. As an example 26 leading corn insect scientists in the US recently submitted a statement to the EPA regarding how unreasonable restrictions in technology agreements hinder their research. Patent Baristas discusses the issue and links to Monsanto’s Technology/Stewardship Agreement (and Technology Use Guide) as an example, in an interesting recent blog post.

Access as Business Model
Control can instead be used as a gatekeeper to enable access rather than restrict it. Allowing farmers to save and replant seed is an example of a light form of this “enabling” thinking in contrast to the “protect and fend off” thinking. The right to save seed varies among countries and between plant species (according to regulation, e.g. UPOV directives) but the rule, in general, is that farmers should pay a reduced royalty fee if seed is saved and re-sowed the next season (with some prohibitions, such as brown-bagging: here & here). It is quite fascinating that despite the options for farm-saved seed (FSS) are in many regards rather limited, FSS actually still has created intermediate markets in Europe where organizations collect royalties from farmers for FSS to the seed companies, e.g. SVUF. It seems a whole range of new business models would be possible if access was made the focal point in the strategies of some of these companies. It is therefore particularly interesting when access is offered openly to technology such as when the US Department of Energy Joint Genome Institute in December released a complete draft of the soybean (Glycine max) genetic code freely to the research community.

Open vs. Free
I would like to emphasize that my viewpoint is certainly not that companies should offer their services without making a profit or even less. What I am suggesting is that business owners and developers should rethink how their value propositions are constructed, to create more value for their value recipients, which could mean that they could make even more profit but from multiple revenue streams. As pointed out above, a gene technology company does usually not have to rely solely on one particular product for revenue, but can often diversify by offering the technology in many simultaneous markets. The concept of how value recipients does not necessarily have to be the restricted to be the same as a company’s current customers is eloquently discussed more in-depth by Anders in tbmdb.com this week. Genetic engineering and software programming have many structural elements in common, so if profitable in-direct business models can be generated from open initiatives in software (e.g. IBM, second life, Linux Desktop business models, etc.) wouldn’t that mean that openness, and access, also could be made profitable in biotech?

Tobias Thornblad

When will Spotify’s regional restrictions be removed?

As you probably are aware of, Spotify announced last week that they were about to apply the regional restrictions which were part of the license agreements with the record companies. This is not such a surprising step though it might be annoying for us users.

Using the function to show unplayable tracks give me this image of one of my playlists. The red/brown tracks cannot be played. I am in the UK at the moment and since it is country specific restrictions they might very well vary. It might seem as a significant part, and I guess it is. But I also imagine that they will try to include them in the 10000 tracks added each day.

The discussion around regional restrictions should definitely be held but it must be around having them as a general phenomena and not whether or not Spotify should apply already agreed upon contractual regulations.

When it then comes to the record labels and they applying restrictions to music based on geographic territory I think it makes sense in the old economy thinking. When music mainly was (intended) to be sold on physical carriers such as CDs having regional limitations and using different distributors in different areas made perfectly sense.

But today, when music as easy could be downloaded in Gothenburg, London or Doha the restrictions makes less sense. The user will most certainly want to hear the same music independent of where in the world she is at the moment. As well as she would like to share the playlists or suggestions of interesting songs with friends around the globe.

When it comes to Spotify I am not sure if they will be the force that will change the thinking of the whole music industry. But they might at least change the customer behavior which eventually will change the labels, even if it probably will take some time.

Johan Örneblad