Leveraging ip and patent strategy for business growth

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with panel experts:

Bruno Leduc

Director of Licensing

Intellectual Property IBM Europe

Tom Briscoe

Senior Principal Strategist of Technology and IP

Dako

www.legaliqonline.com

Leveraging iP and Patent Strategy for BuSineSS growth

an industry investigation

Produced in collaboration with the 7th Annual Global Patent Congress

http://www.patentcongress.com

www.legaliqonline.com 2

Executive Summary p. 2 IP and Patent Professionals Survey Analysis p. 4-8

Evaluating Patent Strategy with IBM and Dako:

i. Introduction p. 9-10ii. Meet the Panel p. 10iii. Panel Interview p. 11-20

About Legal IQ p. 21

References p. 22

Contents


“Think about fire. It can be used to defend yourself against wild animals, and also to burn down your enemy’s village. But as we move out of the dark ages, we learn that it can be used to heat up two different metals and make an even stronger alloy…it can be used to help things grow.” – Tom Briscoe, Senior Principal Strategist of Technology and IP, Dako

Drawing inspiration from Tom Briscoe and his intriguing analogy for the development of patent strategy, Legal IQ conducted an investigation into how organisations leverage IP to achieve business growth. The report helps set the scene for the 7th Annual Global Patent Congress, taking place in Copenhagen, 24th - 26th of September (www.patentcongress.com).

Legal IQ – a community and resources portal for legal professionals - has drawn on the results of three recent surveys of 675 IP and patent professionals globally: Portfolio Management 2013, Global IP Exchange 2013 and Global Patent Congress 2013. This report begins by dissecting these findings.

In order to explore and ratify our findings, Legal IQ sought the expertise of distinguished IP professionals from tech giant IBM and cancer diagnostics technology company Dako. IBM, representing the global corporations, opts for a more assertive approach, looking to leverage IP as an asset through licensing. This was contrasted with the approach of more niche operator Dako, to facilitate a well-rounded insight.

I hope you find the material in this report useful.

Thank you,

Karen MagnussonConference DirectorLegal IQwww.legaliqonline.com

Executive Summary




IP & Patent Professionals Survey

Analysis

The following graphs have been derived from three Legal IQ surveys, which attracted the feedback of 675 IP and patent professionals. Analysis is courtesy of Tom Briscoe, senior principal strategist of IP at cancer diagnostics technology company Dako.

The fact that 54% of IP professionals responding named IP & business strategy alignment as the most critical aspect of patent portfolio management is a positive signal for IP, for business and for society.

For decades, the financial community has measured the success of companies and their management on their ability to execute their plans for growth.

Successful leaders going forward will be those that realize that business growth is also the key metric for intellectual asset management. As the ‘IP for business growth’ ethos expands, value creation and productivity will expand as well.

What do you consider to be the most critical aspects of Patent Portfolio Management?

“ As the ‘IP for business growth’ ethos expands, value creation and productivity will expand as well.”

54%Alignment of patent assets with business

strategy

Patent monetisation and licensing

Quality audit and review of patents

Patent costmanagement

and reduction

16%

17%

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Which of the following is a priority in IP?

“No company is likely to successfully leverage IP for business growth without strong internal IP leadership to complement specialized external resources.”

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The priorities topping the list (66.7% mentioning balancing internal & external resources, 63.3% cost control and reducing spend) are not surprising. Many aspects of intellectual asset management can benefit from outside counsel and advisement but no company is likely to successfully leverage IP for business growth without strong internal IP leadership to complement specialized external resources.

The more a company’s CEO and entire leadership team understand the value of IP for business growth, the better they can optimize use of internal and external resources. As a company’s IP Leadership Level improves, strategic use of IP can materially improve margins, deals and relationships. When internal IP champions throughout a company ensure that the dollars spent on IP externally are actually positioning the company to grow revenue, cost control and reducing spend on IP become matters for optimization rather than sources of worry.


Which of the following industries do you feel will face the biggest challenges over the next 18 months?

It’s no shock to see 25% of professionals referencing pharma. In 2011, patent expirations meant that the drug industry lost control of medicines whose combined annual sales totalled $50 billion.

Pfizer, for instance, lost $10 billion per annum in revenue when the patent on its cholesterol drug Lipitor expired, as companies providing cheaper generics took advantage.

But it’s not all doom and gloom. When I was a technology product line manager and IP representative at LSI Logic, we had an outstanding design engineer that was first named inventor on dozens of patents. He told me whenever there was challenging problem, he saw it as an opportunity to create a valuable invention. Whether there are general business challenges for an industry such as we have seen in banking, automotive, and construction in recent years, or IP related challenges as we've seen in the pharmaceutical and telecommunications industries, excellent leaders can outpace competitors by strengthening IP portfolios via internal and external IP investment during economic downturns.

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“Excellent leaders canoutpace competitors by strengthening IP portfolios via internal and external IP investment during economic downturns”


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Why does your organisation look to file patents?

While many companies and individuals think about protection against copying as a key reason for filing patents (25%), there are many ways to leverage patents for business growth that go beyond protection and even negotiating cross licenses. Patents can facilitate collaboration between competitors, attract buyers and sellers, and enable companies to influence official and de facto standards. Patents provide quantifiable evidence of technology and innovation leadership that can influence customers, suppliers, investors, and employees to see your company as the most preferred partner for business.

Only 15% of professionals cited improvements to company reputation and product image as the reason for filing patents. Flip it the other way though, and branding goes a significant way to monetising patents. Intel Inside was part of an aggressive advertising campaign started by Intel in 1991 to trigger demand for its patented Pentium processor. Whether there was a discernible difference between it and competitor devices was unclear. But intense branding in 130 countries through a five note, tone-based jingle gave the Pentium margins three times higher than its rivals.

“Patents provide quantifiable evidenceof technology and innovation leadership that can influence customers, suppliers, investors, and employees to see your company as the mostpreferred partner for business.”


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Any company from a one-person start-up to a multinational corporation can improve its IP Leadership Level over time but it takes investments of time, money and effort. So it’s no surprise to see professionals alluding to a lack of in-house manpower (42.1%).

Moreover, IP is a dynamic combination of business, legal, and technical concerns where a company’s ability to successfully leverage IP for business growth is continually impacted not only by its internal competencies and execution but also by external macro factors such technological advances, economic conditions, case law, and legislation. No matter what an organization sees as its key obstacles to optimizing patent portfolio management, one of the first steps is to help senior management develop a vision and passion for using IP for growth by providing relevant credible examples of the material impact of IP on business success.

In the beginning, some of the examples come from others, but as a company gets guidance from competent IP leaders and begins to think about IP as an integrated part of their business processes, internal successes will build momentum and a culture of IP (mentioned by 38.9% of professionals) for business growth will begin to flourish.

What do you see as your organisation’s key obstacles to optimising your Patent Portfolio Management?

42.1% of professionals said lack ofin-house manpower


Evaluating Patent Strategy with IBM and Dako

Legal IQ provides a short overview of patent strategy before launching into a panel interview with representatives from tech giant IBM and cancer diagnostics technology company Dako.

Introduction

Such is the multi-faceted nature of new products and services in the information age, they require technologies from previously segregated markets. The modern smartphone is a prime example, embedding an array of capabilities and technologies such as connectivity, imaging and audio. Companies are now utilising technologies from the “common market,” intensifying competition and escalating patent infringement cases.

Companies use patents to deter competitors from encroaching upon their developed technology, and preserve market position. The patent is a means of generating revenue, realising tax incentives and justifying higher share prices, and a bargaining chip in strategic alliances and original manufacturer agreements. The dangers of an incomprehensive patent strategy are well documented in the media; in April 2013, Korean tech behemoth LG accused arch rival Samsung of corporate espionage in the use of White OLED (digital display) technologies, which violated seven of its OLED patents. This is the latest in a slew of cases; in August 2012 a jury sided with Apple to the tune of $1 billion in a patent lawsuit against Samsung. In July of the same year Facebook and Yahoo settled on a cross-licensing agreement based on content distribution as a resolution to a dispute over the authenticity of social networking tools and website interface.

And then there’s the ignoble threat of patent trolls, who merely bolster patent portfolios, chase companies they believe are infringing, convince others to license the patents and use the proceeds to fund more purchases and litigation. Their entire enterprise is predicated on suing people, or at least threatening to, causing exasperation for larger firms.

It is up to the company to implement a patent or “appropriability” strategy that is aligned with their chosen business model. Broadly speaking, patent strategies can be classified as defensive, or offensive. The defensive strategy is a way of incentivizing R&D efforts. It is designed to protect a portfolio, seeking the exclusive right of utilization and exploitation of the patented technology and to ensure the freedom to operate, i.e. to avoid legal conflicts and claims of infringement.

Smaller companies tend to build barriers to block competitors from gaining access to their proprietary technologies.

Offensive patent strategies may involve encircling the competition and slowing the proliferation of new technologies. Companies may look to manage the patent portfolio proactively so as to leverage IP assets.

“Companies are now utilising technologies from the “common market,” intensifying competition and escalating patent infringement cases.”

Is your patent strategy offensive or defensive?

“Threat of patent trolls”


This approach is fuelled by the need to extract and generate maximum value from intellectual properties by commercializing patented technologies, licensing out patents, partnering with companies to access other markets or technologies, or selling unutilized patents.

Somaya, Teece and Wakerman explain how a company’s business model impacts on the licensing approach in the Ivey Business Journal:

“Innovators pursuing integrated business models to commercialize multi-invention products may employ lateral patent-leveraging strategies somewhat differently from those pursuing non-integrated models. For example, the former may be better positioned to directly profit from licensing royalties due to their large and relatively less proprietary patent portfolios. By contrast, non-integrated firms may value more highly the ability to influence component or licensing decisions by potential partners, or even the direction of technology standards.”

Global corporations such as IBM have generated significant licensing revenues by leveraging their patent rights into royalties and business deals.

The exploitation of patents requires considerable expenses and time for the licensor, who must perform due diligence on the licensee, supply him with details of the license and the underlying technology during the entire period of agreement, and negotiate the licensing deal. Yet the benefits are significant; Texas Instruments decision to license its Kilby patent for integrated circuits to Japanese companies at a 3% royalty fee generated 727 million dollars per year.

Meet the Panel

Bruno Leduc

Director of LicensingIntellectual Property IBM Europe

Tom Briscoe

Senior Principal Strategist of Technology and IP

Dako


Panel Interview

Legal IQ: Gentleman, welcome to this Legal IQ Panel. Bruno, IBM is heavily involved in licensing. This explicit “monetization” of patents sees it generate approximately $1 billion per year. How would you describe your approach to licensing, and the way licensing is structured internally?

Legal IQ: Tom, how do companies like Dako, who operate in more niche market spaces yet still look to leverage cutting-edge technologies, work internally to decide the value of patents and IP?

BL: We are a small team that generates all of our organisation’s technology and intellectual property, reporting into our research organisation. We have a team of licensing reps and patent engineers working together with the support of our legal organisation, our IP Law Department. The community of people working on licensing amounts to about 200 people worldwide.

The first patent licensing activity is centralised, which involves a few people from IBM Corp Research. Then we’re licensing technologies coming from the Values Division. And then we have a third component, a very important one, which is a joint development. Our Micro Electronics Division and our Research Division are doing joint development agreements with all kinds of companies around the world. For example, microelectronics, a development of the next generation of chips, is on this joint development with, in fact, our competitors. We put money together to reduce the cost for each party to access this new technology. And we are developing a company totally outside the microelectronics / IT world. We are developing new kinds of technology to help their product development, and in return our research people develop their skills in various domains…in software and in software analytics. Big Data is currently the biggest driver behind developments in the software industry.

TB: Very simple, one word, growth. There are lots of seminars and services on IP valuation, and all those can be very useful comparables, previous scales, and all those things like that. But, in the end, if you look at it from the Board of Directors level and CEO level, the foundational way of thinking about

IP, which a lot of people don’t do, is to think about IP for growth.

How can this innovation, this creation, this investment we’ve made and documented, and for which we have obtained or are seeking official recognition, how can that IP really help our business grow? Or how can this IP that others have made and that we’re considering licensing or purchasing be combined with IP we’ve developed and help our business grow?

“Big Data is currently the biggest driver behind developments in the software industry.”

“The foundational way of thinking about IP…is to think about IP for growth.”


It’s those strategic questions that need to be addressed, not in isolation and not statically, but as a part of a visionary, dynamic business strategy process. That’s how you decide the value of IP. Once you know how you intend to have the IP grow, or even ways that the IP can help your business grow, then you can decide, for each of the stakeholders to which you might offer that IP, what it might be worth to them and what it might be worth to you. You’ve got to put it in the context of how does this help us grow, how does this help them grow?

Legal IQ: Broadly speaking there are two patent strategies: a defensive approach which looks to incentivize R&D and protect the freedom to design and innovate, and then a more offensive or assertive approach, which may look to encircle competitors and manage the patent portfolio proactively so as to leverage IP assets. How would you summarize the strategic approach of your respective companies?

BL: We are not really an aggressive company. We’re using the patents we are creating for our own business and realising that they may be of benefit to other companies. I would describe the IP world as a pretty honest world. When we contact a company offering them to look at our portfolio, very often it translates into a deal. We also have many companies contacting us directly asking for a licence under some of our patents because they know in the course of their developments, we have to check whether or not they are infringing on others.

I would say we adopt a friendly approach and then from time to time we contact companies in a more assertive way, developing value presentations and proof packages demonstrating that our patent still reads on products from the other companies. We are rarely going to litigation. Our goal is to close a deal with the company showing some evidence of necessity and trying to convince them that it’s better to spend maybe a few million taking a licence from IBM to their patent portfolio, rather than spending more money with their lawyers, with external counsel, and going to a court.And I think that’s the right strategy. You have to clearly explain to people that you have invested billions in research and development, you have created thousands of patents, and these patents have a value for your company, but can run for other companies as well, and it’s better that everybody respects IP from the other party. IBM is also taking licences from other parties, so we think that fairness is key in the IP world

TB: A lot of recent rhetoric has focused on patent wars, and you hear a lot about offensive and defensive uses. Of course patents can be used offensively and defensively, but if thinking about the way the world has been globalizing and the tremendous financial value of being able to work with others and getting your product out to as broad a market as possible, then you can realize that there are other uses.


If you look at the literature in the last decade, you’re seeing something that actually was prophetically described in the US constitution in the patent and copyright clause. They basically said that congress has the power to promote the progress of the useful arts and sciences by securing to the authors and discoverers thereof, for a limited time, exclusive rights. If you think about what they mean by secure, most people, when you talk about secure, they’re thinking about secure in the sense of protection. 99% of the time, when I talk with people about IP, they talk about protection, but you don’t grow a business by protecting it. Protection is sometimes necessary, but you grow a business by projecting the value of your creation. A good example of this is that when you take, for example, Google. The real value in Google is that as many people as possible are using it, and Google has programmes where they allow other people who are developing tools to have apps or webpages that tap into some of the technology they created.

There are books that you can read now about how Microsoft has, sort of, seen the light. There’s a book called, Burning the Ships, and how that they’re really looking for compatibility, interoperability, and cooperation and using IP to help establish that. So the way we see it at Dako is, I certainly would not classify us as litigious or offensive. As far as defensive, we certainly have the capability, and we’ve done it on occasions that when someone comes to us with a technology, where the technology itself has nothing to offer and they’re really trying to shake us down for a payment for no technical contribution, we can defend those type of actions. But what we’re really interested in is growing our business and growing the business of our customers, our suppliers, and the stakeholders that we work with.

Legal IQ: Bruno, how do you begin to determine the financial value of a licence and how do you weigh this up against maybe alternatives such as acquisition and strategic alliances?

BL: We’re generating $1 billion, $1.2 billion. It has been around this amount for a couple of years from licensing the patents, the patents technology and the IP we licence as a joint development. It is pure profit for our company and it represents a great recovery of the $6 billion we spend in R&D each year. Since Louis Gerstner became CEO in 1993, we have developed models on how to generate value from a patent license or a technology license. We take into consideration cross licensing arrangements where each party opens his portfolio to the other company. It’s based on a balancing payment which is calculated as a relative value of the patent portfolio for each party with respect to the licensed product… so where the other party’s products are licensed, and where they are manufacturing and selling their products.

When you look at an individual patent licence or when we licence to a company in a field without cross licence, it’s also based on how much revenue the company is going to generate in the coming years using this patent.

“99% of the time, when I talk with people about IP, they talk about protection, but you don’t grow a business by protecting it.”


We basically have the rule of one patent equals 1% of the revenue generated, but we have to take into account the countries where the sales occur, because we don’t have patents in force everywhere.

We have to consider also what the value is of the product that the other company is selling. Is it in a litigious space? Would it cost us a fortune to get this contract signed? And at the end, of course, we do not force a company to sign an agreement. We’re selling freedom of action, so we try to be as fair as possible in the valuation. The most difficult part of the negotiation is to convince the other companies that it’s better for them to take a licence and then, of course, the range of the agreement – difficult when you’re dealing with small to mid-size companies.

We are doing strategic alliances in microelectronics where we are involved in joint development with our competitors, such as Samsung. Acquisition is also something important. We have a strategy... well, IBM is no longer a hardware company like we were in the 60s or 70s, where sales in that were the fulcrum of our revenue. Today the sales of systems and servers, storage servers, and so on, represent 15%, software and services 85%. So this is a different world and IBM in software is licensing, acquiring patents and acquiring companies to fill the gap in our portfolio offering and to offer more IP to our partners.

“We have to consider also what the value is of the product that the other company is selling. Is it in a litigious space? Would it cost us a fortune to get this contract signed?”

Legal IQ: And what do IBM look for in the terms of the license agreement – long term or short term, exclusive versus non-exclusive?

BL: Exclusivity is a word we don’t really like. Exclusivity reduces the freedom to licence to other parties and it’s difficult to value exclusivity. So we do it from time to time, but on a very narrow field or when it is outside our core business. A good example is what we did 10 or 12 years ago where we exclusively licensed to one company patents relating to robotic surgery. This was clearly outside IBM core business, so it was not a problem and the company in front of us was ready to pay a premium to get a five year exclusivity on these patents.

Regarding the term of a licence, we are open to discuss a term, but it’s of course based on how much we could forecast what’s going to happen with the business, so we have solutions where we say, okay, let’s go for a five year time, maximum seven year term, because we don’t know where the business you are in will be in five years.

But we are also - and this is true mainly when we are doing a cross licensing arrangement with large companies - doing life of patent licence. It’s easier to manage, reduces the length of the negotiation and how many times you have to sit down together with the other company to renew the licence. So our strategy is a 5-year licence for a field with small companies, and life of patent for a cross licence with larger companies.

“Exclusivity is a word we don’t really like. Exclusivity reduces the freedomto licence to other parties and it’s difficult to value exclusivity.”


TB: As a programme manager, I used to tell my team, most companies find when they think they’re 90% complete with a project, it’s the second 90% of the project that’s always the hardest. The same thing can be said for icebergs and IP. It’s really the part that you don’t see that’s most likely to sink you. So maintaining secrecy definitely has its place, as does being first to market, but sometimes the things that you don’t think of, that are involved in good IP strategy, can be more important to the ultimate success of a product.

A quick example is there’s a technology in medical research called polymerase chain reaction. It was developed by Kary Mullis who got the Nobel Prize for that, later. At the start, being first to market wasn’t enough and even having the patent applications wasn’t enough. It was only when those patent applications were licensed, and Roche ended up with a patent strategy that allowed researchers to freely use this technology, and in turn promote the use of technology. They didn’t try to say “we’re going to develop every use of the technology” - they got it out there into the world. They got it out there being used, and over the course of those patents, they and their partners earned well over $2 billion in licensing royalties as well as all the technologies that came out of that. So secrecy and first to market is a good part of it, but it’s not the only part. It’s that second 90%, that part that most people don’t think about, that’s a reason why you need to have a forward thinking IP organization.

Legal IQ: Tom and Bruno, you seem to be involved in “open book” patent policies. What credence do you give to maintaining secrecy and being first to market?

Legal IQ: Tom, your responsibilities aren’t confined to licensing. Talk me through the process of patenting a company’s flagship products or technologies, with reference to the strategic decision making and pressure points etc.

TB: So the patenting process is really an iterative part of the innovation process. Most people, when they think about innovation, or, for that matter, even when they think about patents, think about ideas. Ideas are part of that process, but again, they’re not the whole process. After you come up with an idea, you have to express that in some way so that you can communicate it with others, and that’s part of the prototyping process. The issue that we run into in patenting is that, very often, the ideas and the prototypes and the concepts come up at a time when the market is not quite ready for it. So you have to think about what direction the market headed in general.

“Maintaining secrecy definitely has its place, as does being first tomarket, but sometimes the things that you don’t think of, that are involved in good IP strategy, can be more important to the ultimate success of aproduct.”


I’ll give you an example. In Dako, we had a patent application, an invention disclosure, come in that had to do with a very clever way of helping our customers understand how our instruments and our software would help them improve efficiency of their lab. At that time, it was really more of a sales tool, but it was a very interesting concept, and so the marketing people came to us and said, this is really unique, is there something we can patent? So by taking their concept and their ideas and thinking about the direction the market headed, along with the kinds of trends we see in the industry, we were able to combine some characteristics and features from the original concept they presented with other things that were going on. We come up with a couple of patents that were issued that were prophetic in terms of things that we weren’t. Back at the time we filed, we didn’t have that product, but now, we and our competitors are offering those type of products. So we have patents that we can leverage. I guess the key part about the process is that it has to be iterative, it has to be proactive. The antiquated way of thinking is: I don’t want to know what prior art is out there because if I do, I’ll have to disclose it and therefore if I don’t disclose it, I could be in trouble with triple damages and so forth.

It’s really better to know up front what your real contribution is. So for important technologies, we do a patent search before we patent it, so we know what we really have that’s new and what other people have been working on.

Legal IQ: And how can one use trademark and copyright to complement patent strategy?

TB: That’s an excellent question and it’s one that’s often overlooked. There are a couple of books and articles that I would refer to. One is by Dr Lindsay Moore, called Intellectual Capital in Enterprise Success. In it, she’s got a pyramid where she talks about the knowledge, the people, all of the intellectual assets that a company might have access to, including intellectual property rights like patents and so forth. Then at the very top of the pyramid, as you’re building this value, you have the goodwill and the brand of the company, and that’s the goal, that’s the end of all those other things.

The second article that I refer to with regard to trademarks and copyrights is, there’s an article by James Conley. This was written back in 2006 and the title is, Trademarks not Patents: the Real Competitive Advantage of the Apple iPod. He talks about how the technology of the iPod is not necessarily what gives Apple a market premium. It’s because they had good technology, they also had good design, and then, by use of both trademarks and design patents, both graphic trademarks and textual trademarks, they’ve been able to transfer the value of the experience of iPod and iTunes at the time, and now that carries over to iPhone and iPad, into trademarks.

“The key part about the process is that it has to be iterative, it has to be proactive.”


He gives an example of a very simplified, stylised drawing that says, made for iPad, or made or iPod, and how people now will pay a premium. And that carries over to the Apple brand because they followed a very well thought out strategy of transferring the value, not so much into the technology, but moving that up into the brand. That’s where trademarks play an important role. One aspect of trademarks is that patents have a 20-year lifetime, trademarks can be renewed for as long as you’re using them.

In fact, there are companies that are hundreds of years old - Oxford University Press - and if you’ve been to a concert, you’ve probably seen Zildjian cymbals, Zildjian was founded in 1623. So these companies are still using their house trademark, they’re still recognized for the quality that they have hundreds of years after their founding.

BL: The biggest challenge is to renew our customer base because the technology is changing around the world and the markets are shifting. So our goal remains to generate more than 1 billion out of our IP each year. Of course we have to renew the existing licence, but we have to find and to exploit the best way all the technologies that our labs are developing around the world and convince new customers, new partners, to work with us.

When we started this IP licensing business, our customers were in the service field and the traditional IT field…but the situation has changed. IBM as a company has changed; we have to work with companies that are outside the IT world, and this is what we have been doing for the last three or four years. We’ve been convincing utilities companies, in energy and water for example, that IBM can help with innovation and compliance with demands from cities and local governments.

We work also in the security field, which is a measure of concern to most Western governments. It’s a good story because working with new partners outside our traditional business helps us develop new knowledge and knowhow that we can reuse in our software and services. It’s a win/win situation where we develop something with a partner and we reuse it in our own products. IBM is not looking to use its thousands of researchers as a body for services. When we enter into an agreement with another company for jointly developing IP, it has clear mutual benefits. Our partner can use it in the development of new products and new services, whilst IBM acquires new knowledge and knowhow in a specific field.

Legal IQ: Bruno what would you say are the biggest challenges to licensing, and how do you look to overcome these?

“Our goal remains to generate more than 1 billion out of our IP each year.”


Legal IQ: Tom, how does the unique nature of Dako’s products and technologies – the fact that they have such immense public value in that they save lives – impact on your IP strategy? How do you balance the need to protect your IP and get these products to as wide of a market as possible?

Legal IQ: And finally, for a global corporation such as IBM, does strategy differ depending on region?

TB: To start with, we take great pride in the fact that Dako’s diagnostic products can help get the right treatment to the right patient at the right time. I did a masters thesis during my MBA where we talked about how many people were impacted by cancer, and that’s where Dako focuses. 95% of the people that I interviewed had someone in their own family directly impacted by cancer. So we recognize that this is a very important technology.

In Dako, we recognize that there are times when you need to protect from people that outright want to steal your technology, but we’re more focused on projecting and getting our technology in the market to be used as widely as possible to help in the fight against cancer. So we are open to licensing agreements, we are open to partnerships, we don’t feel like we’re the only ones in the world that can provide the cancer diagnostics needed. In fact, we have licensing agreements and partnerships where Dako and on of our competitors will partner together to provide a diagnostic for the parent company of one of our biggest competitors. It’s that type of cooperation, I think, that’s needed to provide these technologies to people.

We don’t think of IP as just a weapon, we think about IP as setting the tone. Just because you have a patent it doesn’t mean you have to use that patent as a weapon. You could use the patent and you could say, anyone who subscribes to a particular standard set up by the FDA or set up by some other trade group or regulatory group has a free license to use that patent to perform medical services. Having the patent allows you to set the terms that you want to do. Those terms do not have to be coercive, they do not have to be mercenary, and the protection only come into play when you get a bad player who comes along who wants to take the opportunity away from patients to get that type of diagnostic.

BL: Unfortunately for us, patent software doesn’t really exist, so we have a different approach with some companies. My colleague responsible for Asia Pacific has, let’s say, the world of the semi-conductor in front of him, he has many consumer electronics companies over there, and big companies, so strategy is different, but they have less software companies in Asia Pacific.

“Having the patent allows you to set the terms that you want to do.”


It doesn’t mean that in Europe I’m not talking to some semi-conductor companies. We have many. In fact when you look at Germany, when you look at Austria, Switzerland, there are a bunch of small and mid-sized semi-conductor companies doing well because they are not trying to compete against the Chinese. They are in the analogue devices and doing pretty well and we have many agreements with them.

We have also a lot of software companies in Europe. At the top is SAP who is by far the largest software company, but there are also other software companies which are global companies, not only selling in Europe, so this gives us the opportunity to licence them because they are doing business, software business, in the US or elsewhere where software patents are harder to obtain. And, of course, regarding the technology it’s the same strategy all around the world. Companies approach us or we approach companies to jointly develop some new products to exploit the ideas generated in our research labs. We have a big lab in Zurich working on hardware, we have a big lab in Haifa in Israel working on software, but they are servicing companies all around the world. We have labs with idiosyncratic functions, but they serve the same universal purpose.


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References

i. “Business Models and Patent Strategies in Multi-Invention Contexts,” Deepak Somaya, David Teeece and Simon Wakeman

ii. “Leveraging Patents Financially, A Company Perspective,” Dominic Vries

iii. “The Strategic Use of Business Method Patents,” Martin Kretschmer and Ruth Soetendorp

iv. Business Models and Patent Strategies in Multi-Invention Contexts,” Deepak Somaya, David Teeece and Simon Wakeman

v. http://www.wipo.int/export/sites/www/freepublications/en/intproperty/834/wipo_pub_834_ch4.pdf

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