IP Strategies to Improve Innovation and Reduce Risk

Patricia Folkins

Product Development and Management Association

January 28, 2009

The Dilemma

IP departments must become more efficient and reduce costs, but not at the expense of the competitive advantage their business derives from its IP portfolio

Disaster or opportunity?

Inject efficiency into IP management

Are opportunities opening up in the market place due to market changes?

Intellectual Property

Currency for controlling access to innovation

Innovation relates to the commercialization of new ideas

Invention is the generation of a new idea to solve a specific problem

Not all inventions result in innovation

Components of IP

Inventions, patentable and not patentable

Know-how

Trade Marks

Copyright

IP Management and Business Strategy

IP management cannot exist in isolation, must be part of overall business strategy

Driving force is economic - objective is to maximize value creation through IP, not merely to grow an IP portfolio

Value of creations depends on their value in improving competitive position

Essentials for Success

Strategic vision

Organizational development

“People Power”

Objectives

Mine existing knowledge to facilitate product innovation, product development and cost control

Protect inventions appropriately-neither too much nor too little

Three Stage Process

Assessment of IP Assets - “IP Audit”

Create IP Management Plan

Implement Plan

Stage 1: Assessment

IP Audit: identify all current IP assets (including existing patents, patent applications, Know-How, Trade Marks, Copyrights)

Determination of Business Goals

Understand business goals to ensure that the IP Audit will be useful to overall business strategy

Value of IP is dependent on its successful integration with business strategy

Identification of IP Assets

Catalog all IP wherever located

Determine status of IP

Determine relative value of IP to company’s strategic interests

Create catalog, and keep it up to date

Patent/Know How Catalog

Will help to recognize existing assets

Identify strengths and weaknesses

Compare IP position with that of competitors

Determine value of patents/know how to company

Valuation of IP

Quality, not quantity is important

Assess the relationship between each IP component and business strategy

Does the IP protect present and future business opportunities?

Does the IP help create new opportunities?

Are key markets covered?

Stage 2: Create Plan

“Top Down” approach: determine goals, determine what is necessary to achieve goals

“Bottom Up” approach: assess existing assets, see if such assets can be mined to create new opportunities

The two approaches are not necessarily mutually exclusive

Create Management Team

Team is responsible for development and management of the IP Plan

Team should include technical, legal, business and marketing personnel under supervision of a senior executive

Management Team could evolve into patent committee at later stage of process

Align IP Plan with Overall Strategy

Determine which IP is key, and should be kept exclusive to company

Determine whether any of the company’s IP is licensable to third parties without giving access of company’s technology to competitors

Determine which IP is no longer important and can be abandoned

Competitor Analysis

Establish procedure for keeping informed of activities of both competitors and research organizations wherever located

Useful knowledge is not necessarily restricted to company’s core business: might exist in non-competitive fields

Patent searching can be done in-house, and information made available throughout the company

Stage 3: Implementation

Motivating internal development of IP

Education

Incentives

Patent Committee

Could be same personnel as IP Management Committee

Should meet regularly, e.g. quarterly

Prioritize inventions for patenting, discard applications/patents that no longer are of strategic importance

Be aware of competitors’ IP positions to avoid conflicts

IP Management

Consider an IP Coordinator to interface between in-house inventors/scientists/engineers and outside counsel,

Create in-house filing systems for managing and tracking IP assets irrespective where they are created

Establish a central, accurate database of all IP assets and keep the database up to date.

IP Management Tasks

Motivate internal IP development

Pool existing Know-How

Determine strategies for managing the protection of new IP irrespective where it originates

Consider extension of existing IP to other markets

Prune existing IP that has little or no commercial importance

Challenges

Ensure that IP Assets help company to remain a leader in the development, manufacture and distribution of its products

Ensure a proper balance between protection of IP world-wide and cost

Ensure that the company does not become liable for infringement of third party IP rights

Strategic Considerations -Market Dynamics

How will your market change in the face of this unprecedented financial crisis?

Will product lines change or be pared down?

Can you invent into that new market space and patent it?

Can you create new product synergies and patent the combinations and connections?

Strategic Considerations -Product/Service Portfolio

Has the economic downturn caused any of your product lines or key customers to become vulnerable to competitors?

Can you combine product packages and services to counter vulnerability? Can these combinations be patented?

Strategic Considerations -Business relationships

Keep an eye on suppliers, licensees, business collaborators - are they in distress?

Opportunity to buy but also risk to your business

Reducing Costs

First reaction is to scale back on IP protection, e.g. patent filings

Must continue to make long-term decisions for creating a strong IP portfolio that is ready for the “upturn”

Use P.O. Delays

Many patent offices have processing delays for initiating examination

Use U.S. Provisionals

Use PCT

Watch Claim Scope

Broad claims are likely to be most difficult to obtain and expensive to prosecute

Pursue narrower claims targeted to company’s business (those that cover specific products or that are licensable)

Broader claims may be pursued later in some countries

…and numbers

Excess claim fees in many countries

EP: claims in excess of 15 cost 200 Euro each (effective April 9, 2009, claims in excess of 50 will cost 500 Euro each)

US: claims in excess of 20 cost US$52 each, each multiply dependent claim costs US$390 and each independent claim over 3 costs US$220 each

Small Entity Status

In US

Individual, small business concern or non-profit

50% reduction in certain fees

Must be under no obligation to assign, grant, convey, or license any part of invention to large entity

Better Invention Disclosure Reports

Clearly written comprehensive

Include materials, drawings, descriptions, models

How is the invention distinguishable over the prior art?

What areas do not fall within scope? Include failed experiments

Specify critical parts that make invention operable

Provide in electronic format

Communication with outside counsel

Consider SOP

Talk with them about how to reduce costs

What to report?

Keep them up to date on go/no go decisions

Case Study

Unomedical*

Taken from EPO Website:

http://www.epo.org/topics/innovation-and-economy/sme-case-studies/unomedical.html

Unomedical

Located in Denmark

Develops and sells single-use medical devices

4000 employees

Sales in 2004: 241 million Euro

Unomedical

In 2002 added an IP department

Hired a Group IP Manager

Linked IP department with research and development procedures

“IP plays in everyday decision making”

Unomedical

IP issues considered at an “early stage” - before prototype of new product is ready

IP department checks for conflicting patents

If conflicting patents exist may still file to block others

Unomedical

Danish Patent Office runs novelty and/or Freedom to Operate searches

Danish Patent Office searches competitor filings 4 times a year

Patent drafting outsourced

Unomedical

20 new patent applications filed per year compared to “just a couple” prior to restructuring of IP department

Threatened to sue potential infringer - infringing company pulled product and paid settlement fee

12 Key Recommendations from EPO Survey of SME’s

Develop an IP Strategy

Get Professional Help

Choose the right patent attorney/agent

Do not underestimate the cost

Demand information

Adapt your filing strategy to your real business needs

12 Key Recommendations from EPO Survey of SME’s

Do not view licensing as failure

Revise your patent portfolio continuously

Start a technology and competitor watch process

Communicate pro-actively

Keep in touch with your licensees

Be sure of your case (for lawsuits)

www.bereskinparr.com