Book Review - Free by Chris Anderson

I have just read Chris Anderson’s book Free. Or to be fair, I did not actually read it. I downloaded it as a free audio book. One of the free versions of which you can reach the book Free.

Chris Anderson is, for those of you that do not know him, the author of the book The Long Tail and editor-in-chief of Wired Magazine.

Though Chris does not make any direct money on the audio book I consumed, he has a shortened (3h instead of 6h) version for sale. This is exactly his message in the book, that when the marginal cost of distribution reaches for zero, the prize will inevitably follow. This it at least true in the intangible economy where his two versions of audio books clearly show one of the several business models containing an element of free, which he lays out in the book. This model, freemium, is based on that you get something for free (the audio book) and you or someone else pays for a premium version (the shortened version).

The book Free also makes example of other ingredients in the complicated business model web. Since Chris is not only giving away the audio book, he is also giving away a pdf version, even though selling the paper book he must make money elsewhere. And yes he does, and do not make any secret of it either. One could almost see the whole book project as a conceptulizer and facilitator for his more lucrative business in selling his time. This through speeches or workshops for instance.

This brings us to one of the key factors in the (Anderson) Free model, except the zero marginal cost, the relation between scarcity and abundance. He argues that in a world, the intangible economy (or the economy of bits instead of the one of atoms), where the cost of producing one more copy of a specific product is almost none it will also be produced. So, this means that the seller has to find a business model where the scarcity comes in to play. Either if it is a constructed one as the premium service on for example FT.com or if it is the limited time of Chris Anderson.

What to learn from the book
I think the book has an interesting point in that we have to not just accept but to act on that free will be a key ingredient in many business models, and already is. This is especially interesting in relation to the new and emerging business models containing copyright, whether it is rights to music or to the written word, where I believe that the rights holders need to think hard on what they are selling. Is it a physical carrier of information or the information itself which is the valuable object?

The distinction between the physical carrier and the content becomes crucial in business model innovation and to actually see and construct the value proposition correctly to each group of customers, both in how if at all they should transfer money in return and also in what the product is and how it can be used.

Do I think you should read the book?
Well, Chris is sometimes repetitive and if you have the money but your time is limited, why not pay for the abbreviated version. The book has an interesting message and covers many innovative business models, which in themselves could be a reason to read it, but the main point might have been better off in a 30 page article.

In The New Yorker Malcolm Gladwell also writes about Anderson's Free and his conclusion is that not everything wants to be free. Chris Anderson responded to this in an interview with Charlie Rose (viewable online).

For those of you eager to know what he has to say, Chris Anderson gives an one hour presentation which is viewable through fora.tv.

[Update] Our Friend Anders Sundelin at TBMDB.com has written a post where he provides the full list of free bisiness models from the book.

[Update] For Swedish speakers, DN has written about the book here.


Johan Örneblad
Follow me on Twitter.

Intangitopia Picks - Brandinavia: Why Nordic Brands Rule

brandchannel.com, a part of Interbrand the brand managing firm, has a weekly newsletter that features different articles about branding. The latest issue dropped in to my mailbox early this morning with a lead story called Brandinavia: Why Nordic Brands Rule.

The story features why Scandinavia has nurtured such a strong branding culture. The writer, Barry Silverstein, finds arguments in such disparate phenomenon as vikings and social democracy. Even though there might still be more to explore about why the Scandinavians are good at design and branding, the article makes a good read.

Johan Örneblad
Follow me on Twitter.

Intangitopia Picks - Digital Europe

On Thursday, Viviane Reding, EU Commissioner for Telecoms and Media gave a speech on “Digital Europe”. An initiative for the next five years and how to boost Europe’s digital presence.

Have we really looked at the issue through the eyes of a 16 year old? Or only from the perspective of law professors who grew up in the Gutenberg Age? In my view, growing internet piracy is a vote of no-confidence in existing business models and legal solutions.

She asks herself an interesting question and the answer to it is in my view even more interesting. Think harmonized and easy ways of clearing rights between countries in Europe. Perhaps with only one internal market for all digital content...

First of all, we could facilitate the licensing of intellectual property rights for online services covering the territory of all 27 EU Member States . Today, right holders and online service providers need to spend far too much time and money on the administration of rights, instead of investing this money in attractive services. And consumers often cannot access online content if uploaded in another Member State. ... We had a similar problem when commercial satellite TV started more than 30 years ago. As right clearance for this per se cross-border service became increasingly complex ... I believe it is now time to develop similar solutions for the evolving world of online content.

The 1709 Copyright Blog also has a comment here.
A transcript of the full speech can be found here.

Johan Örneblad
Follow me on Twitter.

R.I.P. Ocean Tomo - Intangitopia Special Report

Last week Ocean Tomo sold their patent auction part to ICAP. This created some stir in the news and blogosphere, examples and very few (bloggers) actually seemed surprised. IP Law&Business , and Managing IP among others, have good pieces on the deal. That articles also feature commentary, also found elsewhere, by Ron Laurie from Inflexion Point who says that the major reasons were:
* The Ocean Tomo business model of targeting the low end of asset quality
* The difficulty to conduct diligence.
He also mentioned Intellectual Ventures' likely withdrawal from bidding at Oceant Tomo auctions as. That rumor, which fueled the debate of IV "puppetmastering" the auctions, led to another good IP Law&Business piece (pdf), an interview with IV chief of acquisitions Kevin Barhydt.

The 5$ million in cash and possible 5$ million in stock is a fire-sale price for OT, which for long time where hyped as the saviours of IP liquidity (also by myself, as found in previous posts here and here). Personally I must admit that I believed in the OT model for a while, but in hinsight it was more likely due to lack of experience. Regardless if it was IV in disguise who bought the OT patents or not, it seems as if buying patents "blindly" is not something people are less interested in doing - also likely related to the recent drop in financial strength of many firms. Regardless of that, I still would like to cast some light, in form of Ocean Tomo statistcs, on what I believe to be the death of the public IP marketplace.

Please find a Intangitopia Special Report - where 8 full Ocean Tomo auctions are analyzed inside and out in order to provide you with a better and objective view on what once was the great Ocean Tomo.

Complete Ocean Tomo Auction Analysis

View more Microsoft Word documents from Marcus Malek.

// Marcus Malek

(Follow me on twitter)

IP as a financial asset will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden

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.

Intangitopia Pick - Larry Lessig on Copyright

For the last couple of days, Intangitopia posts have been mostely by shorter posts. The mix of long and short posts will soon be restored. However, we would like to share the most important talks and reports via this blog as well. Enjoy Larry Lessig's exceptionary presentation skills and thoughtful but provocative message.

Intangitopia pick - Fred Wilson on Disruption

I saw this slideset and I thought that it was very insightful: the coming disruptive digital development.

Disruption

View more presentations from fredwilson.

Intangitopia Pick - The Future of Content

In relation to two recent posts by Mathias (here) and Johan (here) where they bothe highlight a new way of delivering content, stored digitally, but in a physical medium. To me the idea is great as people (including me) often have an easier time paying (or even prefer) paying for something that has a phyisical aspect. Nowadays technology makes this possible (as seen in the two examples) and the distribution chain is "skipped" in favor of on demand local production.

A Digital Library, Free to the world
Brewster Kahle speaks about this in an inspiring TED talk from 2007, sharing his vision of a unified enormous digital library, brining knowledge to developing countries and helping education. The ingenuity is that he applies pragmatic methods for scale at low cost (e.g. using the same production method as described in Johan's post) but also with a grand vision including audio and video. Best of all it is already started and actually feasible.


// Marcus Malek (follow me on Twitter)

New Addition - Intangitopia Picks

As you may or may not have noticed, we just added another tab on the right side "Intangitopia Picks".
This section is where we will feature shorter blog posts where we choose to highlight interesting performances, thoughts, presentations, reports etc. that are made by people we believe to be among the best.

As attention is the new scarce resource we thought this could be a way to firstly give credit where credit is due and secondly act as a filter for you, our readers. Hopefully you will find our picks as interesting, inspiring or just jaw dropping as we did.

Enjoy!

Qflix enabeling in-store DVD duplication

Sometime ago I had the pleasure to visit Media Tech at the Frankfurt Exibition. One of the presenting companies was Qflix. They have a similar approach to DVD as Johan so nicely fleshed out regarding in-store printing three day ago.

The Technology
Without going into detail the system is deployed close or in immediate contact with the point of purchase. The user chose a DVDtitle and sends a request to the Q-Flix system. The system starts the burning procedure, labeling and packaging. All in a couple of minutes from that the customers have made the choice. Naturally, the more advanced in-store burning kiosks can handle multiple request at a time.

This might look like a fairly simple technical task to perform and I am not really knowledgable enough to commnet on that. However, for those of you knowing about DVD crypto keys to prevent copying and printing a DVD label in less than a minute can perhaps figure out that quite some engineering is encumbered in the solution.

Intangible Assets and Capabilities
The most important asset is access to content. Currently Q-Flix claims to have agreements with all major studios and access to 14,000 movie titels and over 2000 TV episodes. Another asset is compliance to standards. The DVDs bought from a Q-Flix system must be no different from the ones I buy online of off the shelf. The third asset is strategic alliances. Currently Q-Flix has an alliance with Dell, where Dell is acting as a technology supplier and retailer. They also have alliances with other companies to get access to their distribution and sales channels.

Providing access to the Long Tail and the merchandized feeling
Well, given that you now can reduce/remove the shelf space and there is not capitalization in stock the Long Tail of golden oldies and niche movies can now be brought back to the supermarket. Moreover, since there is a digital process forming the image to be burnt onto the disc customization by the customer and merchandizing by the provider is possible.

Closing comments
Weather or not this will save the optical information carrier from disappearing is quite unclear. I like the approach though, at some sense it is greener and it enables more spontaneous shopipng for physical copies of old or more niche copies.

Mathias Hellman (follow me on Twitter)

The Future of Books and Why Access is the Key

Yesterday I visited the Blackwell book store at Charing Cross Road in London, to have a firsthand look at their new Espresso Book Machine. It is said to revolutionize the book distribution and give readers access to out-of-print books. As Blackwell’s Andrew Hutchings puts it:

"It's giving the chance for smaller locations, independent booksellers, to have the opportunity to truly compete with big stock-holding shops and Amazon.”
"If you could walk into a local bookshop and have access to one million titles, that's pretty compelling."

Great Selection, Quite Old Though
I like the idea of having my local bookstore stock “all” books. Just pop down on a Saturday and order a book I fancy reading. This was what I tried yesterday. The book machine was all in place but what surprised me was the fact that there was no possibility for in store searching of which book I would like to get printed. I could ask the store attendant to find a book for me. But I could not browse around as I usually do in a book store, trying to find a good read.

The Blackwell book machine has access to some 500.000 titles of which most is out of copyright and therefore free for all. I was told that I could search myself at archive.org for books to be printed. Sure, it is a good way to do it. But in the same way as mp3 is a good format for music and most mp3 players are capable of playing the files in a acceptable way. It is the Apple iPod that has won in the market place. I believe that it will be somewhat the same in the book market in the, hopefully, near future. The service which offers the best integrated search and distribution model will have a great advantage.

The Long Tail
The concept of the long tail is based on that you can offer an almost unlimited range of content with electronic distribution. No shelf space to consider. When looking at the sales number of this content a curve with just a few top sellers and an unlimited tail of titles selling less and less. It has of course been a typical problem in the book store business that you only have a limited shelf space and to prioritize between titles have been hard.

My prediction of the future is that the distribution method of the content will be of declining importance. If it is a tangible book as the ones we are used to, or if the written text is distributed to a reading device will be a choice of preference by the reader. The relevant part is the content database and the size of it. In a long tail distribution model the key is the amount of titles offered and the ability to make it attractive to look through and easy to find what you were looking for, or did not know you were looking for.

This is also what was lacking in the Blackwell store. A way to actually browse through the extensive content they actually have access to. I believe that this will be even more imminent when they add titles still in copyright to the database. Especially since they most likely, to some extent will compete with the already printed books on the shelves.
Licensing Model
To be able to use the book machines I do not believe that there is that much needed to be changed in the contracts with the rights holders. The end product is still the same, even if it is produced in store instead of in larger quantities. From the knowledge I have of royalty models in publishing, it could perhaps be some other models needed to be negotiated. Especially since the risk element is somewhat limited without any large quantities printed. Differentiation between the first and the rest of the sets of printings might be of declining importance. Perhaps the first step is to introduce a clause offering a flat rate of sharing the revenues from this form of distribution.

Business Model
In the future there are several possible licensing models for this type of distribution of content. For example:

• Pay per copy
• Full access and limited prints of each

I guess that the most probable in the in bookstore book machine case will be something which have close resemblance to how you buy books today. Pay per copy will therefore be the most likely option.
Since the book content in most cases already exists in an easy to access pdf format there are initially probably no direct intellectual property issues, especially since the tangible carrier of the content is the same. Just another form of distribution.

The Future
The publishing industry is about to enter in to the stage where the music industry were some 10 years ago. The carrying media is challenged and you need to be thinking ahead and question your current business- and distribution models in order to survive. But the future looks bright and with some interesting, but also frightening creatures emerging.
Just think of the Google Book Project will reach its goal of scanning all books there are. This source of information and content will create interesting new business opportunities. Both for distributors and aggregators. Perhaps Google and the publishers need to get to an end with the current licensing issues first though.



What did I then end up buying? Well one of the books which they knew to print out fine was “Sonnets and other poems” by William Shakespeare. I picked it up still warm from the printer and paid £7.99 and went out in to the London sun to get me some culture.

Johan Örneblad
(follow me on Twitter)

IP Value in Pandemic Swine Flu Times

This weekend I decided to postpone a trip to Washington DC as a result of the recent swine flu outbreak. As media has been following the pandemic alert levels ever since the Centers for Disease Control (CDC) and Prevention’s first announcement on April 23, as an inspiration from Duncan Bucknell's tweet today about IP value I thought it would be interesting to look at how the value of IP may change as situations in the world change. The post became quite long as I got carried away so bear with me...

Industry Impact and Emergency Preparation in Swine Flu
As the threat becomes more immediate, many of the giants, such as MedImmune and AstraZeneca, gets into standby positions to participate in playing their parts in making the world situation better. This is to be expected, of course, since few companies would be uninterested in ‘saving the world’ while supplying vaccines, drugs, or diagnostic tests for a demand that can reach pandemic levels in very little time. An interesting aspect, however, is the fact that many of the most promising technologies (e.g. unapproved drugs and medical devices) still have many years to commercialization but in an emergency situation may get authority by the FDA to be released on the market as an emergency plan without having finished clinical trials. This creates an interesting situation for biotech companies who has recently been suffering during the financial crisis since their expected return-on-investement from an investor’s perspective may go from 5 years to 0.

One example of a sudden change was the share price of Rockville based biotech company Novavax, that experienced a 173% increase during the midmorning trading on Monday, closing up 80% at the end of the day, after it had announced that it could produce a vaccine in as little as 10 to 12 weeks using an emerging vaccine production technology. The technology uses virus-like particles rather than the entire virus strain and is currently not approved by federal regulators (it is currently being tested in a clinical trial involving 300 patients). Other promising technologies to follow in relation to the swine flu are being developed by Bacilligen Inc. and Cel-Sci Corp..
In its recent guidance to Influenza laboratories issued on April 25, the WHO stated that "Rapid antigen tests designed to detect Influenza A viruses should be able to detect this swine virus but due to the low sensitivity, compared to other lab diagnostic methods, may give false negative results". I thought it would be interesting to look at influenza diagnostic technology using PCR from an IP standpoint since this is considered to be faster and more reliable than other methods (e.g. immunodiagnostics).
IP Value Case Study: Qiagen NV
Company Background
Qiagen claims to have the worldwide broadest portfolio of molecular screening solutions for viral infectious diseases and that public health institutions and more than 80 reference laboratories around the globe use the company's molecular tests and testing components for surveillance and research of viral infections. Qiagen is the leading provider of Avian Flu (H5N1) molecular detection tools worldwide and has also developed the first test for the detection of SARS.
Swine Flu Technologies
The solutions for swine flu screening, testing and research which Qiagen provides include (as declared in their press release);
1) QIAGEN's artus Influenza Kit, globally one of the most widely used assays in influenza screening, uses Polymerase Chain Reaction (PCR) and runs on LightCycler, a widely used detection platform.
2) QIAGEN's Resplex II v 2.0 assay, a multiplex test which is also PCR based, not only differentiates between Influenza Type A and B, but also detects whether a sample contains additional respiratory related viruses.
3) QIAGEN components, a number of components used for testing of samples including sample preparation reagents, PCR enzymes, and instrumentation. These components are widely used by laboratories to create their own tests (so called homebrew assays).
“The primers, which define the starting and end points of a genetic sequence that is amplified to make the target sequence visible, match 100 percent for the artus kit [artus Influenza LC RT PCR Kit (at € 1.857,00 for the (96) RUO kit) ] We are now working closely with reference institutions to have both assays further re-validated and optimized based on clinical samples”, was stated by Dr Thomas Grewing (Senior Director R&D Qiagen Hamburg).
Current World Impact of Technology
The CDC have announced that they have created diagnostic screening tests that use the components (3) developed by Qiagen after having identified a study performed in Norway that incorporated the components.

Right-based Property
Trademarks: QIAGEN®, QIAamp®, artus®, (QIAGEN Group), LightCycler® (Roche Diagnostics).

Patents: The PCR process is covered by the foreign counterparts of U.S. Patents Nos. 5,219,727 and 5,322,770 and 5,210,015 and 5,176,995 and 6,040,166 and 6,197,563 and 5,994,056 and 6,171,785 and 5,487,972 and 5,804,375 and 5,407,800 and 5,310,652 and 5,994,056 owned by F. Hoffmann-La Roche Ltd.

Technology Capabilities
A quick patent citation analysis of the 13 patents stated above retrieves a total of 604 forward citations (i.e. patents that refer back to the 13 patents as ‘prior art’). Where the top assignees citing back to these patents are;
1. ROCHE DIAGNOSTICS GMBH (16%)
2. APPLERA CORP (5.1%)
3. MAXYGEN INC (3.5%)
With Qiagen itself being responsible for 1.6% and Roche 16% (being the marketer of much of Qiagen’s technologies) of all the forward citations, this tells me that the companies are continuing to build on this technology and are likely to have a lot of in-house capability in relation to this specific technology.
Below is the patent citation distribution over years:

Current Value-in-use Contexts
Current technology use context: The artus Influenza LC RT-PCR Kit is for research use only. Not for use in diagnostic procedures. The QIAamp Kits are intended for general laboratory use. No claim or representation is intended to provide information for
the diagnosis, prevention, or treatment of a disease. (according to Qiagen’s product handbook)

License bundled with sale of kit: Purchase of artus PCR Kits is accompanied by a limited license to use them in the polymerase chain reaction (PCR) process for human and veterinary in vitro diagnostics in conjunction with a thermal cycler whose use in the automated performance
of the PCR process is covered by the up-front license fee, either by payment to Applied Biosystems or as purchased, i.e. an authorized thermal cycler. (also according to Qiagen’s product handbook)

Discussion
The data above is obviously way too little information to base a decision as in regards to the “true” value (if there even exists a “true” value) of the IP above, especially since there are multiple categories of assets that are not accounted for, such as related methods, know-how, capabilities, trade secrets, supplier agreements, financial assets, virtual libraries of sequences, databases of research data, etc., that would all affect the value of the technology. But I think that it is still an interesting thought experiment, that a number of registered intellectual property rights (with the right to exclude) may in a pre-“swine influenza” era (i.e. pre-23 April 2009) had a certain value with its limited value in use since the technology was (actually still is) not to be used for diagnostic purposes. However, in the current situation when CDC has publicly announced the use for the technology in diagnosis, the IP value has (or rather is likely to have from an investor’s perspective) dramatically changed.
Something tells me that the patent citation frequency, which has been declining since 2003, will increase for Qiagen’s technology and a number of players will enter the same space trying to claim market share using substitute technologies (see figure below). Maybe IP and patent information will be the best metric to determine stock market purchases and company value in the knowledge economy...

Tobias Thornblad
(Follow me on Twitter)

Interesting discussion about the value of IP in the blogosphere initiated by: Duncan Bucknell

Here’s an overview of the patent citation data for those of you wondering what companies that are developing technology referring to Qiagen’s patent (Y-axis: Assignees; X-axis: IPC codes; Size of circles - relative number of patents).

More of my previous biotech case-studies:
Monsanto: Successful Value Creation in Intellectual Asset Management
23 and me: Community based research

Transactional Norms in the Agricultural Biotechnology Industry

As some of you are aware, I am currently working with intellectual capital management in Agbiotech in the US. One of the most difficult things when working in different industries, in my opinion, is to grasp the implicit structural norms that build up an industry. The major reasons for this, in my opinion, is that the norms are 1) intellectual, meaning that they are hard to "see", 2) taken for granted by the people in the industry, since they are actively shaping these just from partaking in business on the arena, 3) a competitive advantage, for those who understand them. I thought that I would share with all Intangitopia readers some of the norms that I have understood as being the skeleton of the agbio industry and hopefully initiate some discussion (and future blog posts) about norms. The focus I have chosen to describe is how transactions, highly dependent upon IPRs in this industry, can be seen as the structural building blocks that is and creates this market.

Overview
This is a dynamic industry characterized by rapid turnover of small and medium sized firms, while a few large companies dominate, with the top four patent holders, between 1990-2000, being Monsanto, Pioneer, Novartis, and DuPont. Large investments in research and development in attempts to differentiate products by developing new and better products is likely to be responsible for the high importance of patents in this industry. Hence, a major driver in this industry is successful objectification of knowledge. It should therefore not come as a surprise that one of the drivers for the function of small and medium sized firms in this industry is the availability of expertise (with the other driver being available funding).

Two Categories of Transactions
Transactions of enabling technologies in plant biotechnology, from an agricultural biotechnology actor’s perspective, can broadly be divided into several types, but I will be covering; Transactions of 1) enabling tools, and, 2) genes or traits.

1. Transactions of Enabling Tools
Enabling technologies transacted at this level are so-called upstream technologies, which mean that they provide important building blocks (often in the form of information and knowledge) and tools for the intellectual value network to provide many of the experienced utilities adding up to finalized products. Examples of enabling tools include elements in vector constructs, transformation protocols, statistical tools for genotype/phenotype selection, selection markers, and so on.
Contractual examples:
• Material Transfer Agreement – Donald Danforth Plant Science Center
• BiOS Open Source License (v1.5) - Plant Enabling Technologies

Norms: Transactions of Enabling Tools
Upstream enabling technologies are often preferred by actors to be protected by patents, or as trade secrets (if they are not going to be used primarily for transactions), either as a way to objectify know-how and information to enable transactions, or as a way to ensure freedom-to-operate within a given technology field. These transactions would normally be utilized as value propositions towards other actors by universities, SMEs, quasi-public and public actors, rather than between large vertically integrated seed companies (e.g. Monsanto Technology, Pioneer Hi-Bred Int, Syngenta, etc.), since they provide inhouse competitive advantage.

However, it is important to realize that certain types of technologies, where transformation protocols is an optimal example, require advanced capabilities and skills in order to work. This means that such technologies are extremely dependent on efficient knowledge transfer of not only the protocols and intellectual property rights, but more importantly the know-how held by the researcher that knows how to perform it. Transactions of this sort, where the knowledge is difficult to objectify, therefore often is more effectively supplied under service agreements where the know-how holder can perform the invention (e.g. transforming cells) itself and return the results (e.g. transgenic cells/organisms) rather than the tool. Hence, one evident norm at this level to adapt to, as an actor, is that all available tools in the market may not be readily useful to be used as stand-alone objects and likewise to ensure that efforts are made to ensure efficient utilization by knowledge transfer when offering such technology. Moreover, this may be one of the reasons why the biotechnology industry is highly collaborative in its nature.

2. Transactions of Genes or Traits
The two major types of objects at this level are either genes or traits. Characterization and patent protection of a gene sequence can be seen as the ‘best case’ scenario, whether it is to be used for commercial transactions or to ensure freedom to operate, where the intellectual object is claimed in combination with a function. Successful claiming of a gene sequence can result in broadscope applicability where the sequence may be used as a value proposition, often through licensing, to a number of actors simultaneously by offering exclusivity of usage in different crops. ‘Next best’ scenario is the occurrence and identification of a particular performance enhancing genetic trait (most commonly caused by a genomic mutation) in a germplasm/variety. In this case, the intellectual claim will be made for the profile of the phenotypic property instead and the claim will be narrower in scope since the applicability scope of the trait will be limited to the organism in which the trait was exemplified. Examples of traits, or genes where the sequence to the traits has successfully been isolated and characterized, may include yield performance (e.g. photosynthesis, seed development, plant structure, nutrient utilization, harvest ability), pest (e.g. disease, insect) resistance, quality traits (starch/carbohydrates, lipids/oils, proteins), nutrient conversion, or stress (heat, cold, drought) tolerance.

Norms: Transactions of Genes and Traits
The underlying object of transfer can adopt a range of forms depending on the technology. Objects of transfer for gene patents are, for instance, the genetic sequence that is commonly transferred in one of the following ways; 1) In digital form, accessed either through the licensor or through a patent database where it is stored, 2) As plasmids, with disclosed restriction sites for cloning, 3) As bacteria transformed with the plasmids. Physical transfers of biological material (i.e. 2 and 3 above) are typically accompanied by a material transfer agreement (MTA) that states terms and obligations for handling the material as well as the license that governs the intellectual elements, e.g. rights to use the invention for certain purposes. Publicly available databases based on genome projects have greatly facilitated transactions of type 1) above, since digital versions of genetic sequences can be readily accessed and downloaded by anyone.
Desired traits can be more difficult to successfully claim in patents to generate strong protection since the intellectual claims are focusing on the effects rather than the actual cause. Commonly the beneficial property is claimed (e.g. higher digestibility) in combination with a seed (germplasm) and often also the use of the beneficial property (e.g. feedstock exhibiting higher digestibility useful in biofuel production). One of the strategies to strengthen the protection of the trait is to bundle it with complementary objects such as selection markers that further define the trait by indicating its genetic “address”. Transactions in the form of licenses for a trait should in theory be rather straightforward since it is patent protected, however, in practice, that specific trait may be an integrated constituent in one of the actor’s inbred parental lines meaning that transfer of that trait would risk disclosing the full genomic profile of a valuable asset providing competitive advantage to the holder that may not have been fully IP protected at that stage (or is considered a trade secret).

Two strategies that can effectively be applied, in this case, include; 1) a restrictive license, or, 2) a crossing strategy where one party is held in the dark. The former (1) can be a license to the trait restricted to producing and using the beneficial properties of the traits, while prohibiting breeding and further development or characterizing of the plant supplied. The latter (2) strategy can be likened to a strategy appearing as a “blackbox” for the in-licensing party; First, the holder of the trait requests and receives a sample from the in-licensing party’s seed (in which the trait is desired to be incorporated). Secondly, the holder of the trait crosses* the received seed with his own seed (containing the trait) and provides the first generation offspring back to the in-licensing party along with a license stating the intellectual rights to the trait-of-interest. This ensures that the licensee never comes in physical contact with the licensor’s asset should the licensor wish to keep it undisclosed. An additional measure to prevent reverse engineering by the licensee is to breed the trait into a publicly available line that is supplied instead of using the licensee’s own seed. This may be useful in cases where it is suspected that a licensee can, by the assistance of his own knowledge about his seed genome (e.g. by the assistance of markers), quickly identify the changes in the genome and the licensor expects the licensee to use this to compete against the licensor.

* In the US, transgenic plants are field tested under the United States Department of Agriculture Animal Plant and Health Inspection Service (APHIS) guidelines; if the innovator considers the trial successful, it can then apply to APHIS for deregulation. The whole process may take a couple of years, but if APHIS grants a deregulation, the transgenic plant may be commercialized in the US, as any traditional variety, with no further regulation to specific transgenic status. Once it is deregulated by APHIS the transgenic plant can be crossed with other varieties to pass on its genetics without further involvement from APHIS.


Well, I hope that you found this interesting, and managed to finish it despite of its length. I am looking forward to your thoughts and comments.

Tobias Thornblad
(Follow me on Twitter)

See this previous post for a visualization of such transactions: http://intangitopia.blogspot.com/2009/04/iamipm-system-in-agribusiness.html

Who Licenses out Patents and Why?

I resonantly read a report on patent licensing from OECD called “Who Licenses out Patents and Why?”. The report is based on a study made on patentees in Japan and Europe and focuses on if they are licencing out their patents and if so why.



Main Findings
One of the main findings in the report is that it only is a limited number of the patent holders which actually license out their patents. The number is around 20% for European ones and 27% of Japanese companies license their patents to unaffiliated partners.

When it comes to what companies that license the report find that it is an U shaped curve with higher licensing with smaller and larger firms. This might be explained by that larger companies produce complicated products needing to license in technology and enter in to cross-license deals. Whereas the smaller companies need to outsource their technology to different manufacturers.

This might however not be totally consistent since the main reason for out licensing is to get revenue from the patents the company holds.

Johan Örneblad
(Follow me on Twitter.)

The report can be found here.
IAM Magazine Blog and The 271 Patent Blog have also written about the report.

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