Joff Wild

The first full day of the IPBC Global 2014 is now done and dusted, with plenary sessions and breakouts both provoking a good many talking points. IAM’s Jack Ellis, Richard Lloyd and Joff Wild take a look at some of the highlights.  

Balance sheet blues - Philips CEO Frans van Houten gave a superb plenary presentation to kick off proceedings first thing this morning. Revealing a level of IP knowledge that most CEOs just do not have, van Houten explained how IP is fully integrated into the overall Philips business strategy. IP value is about so much more than licensing, he explained, and gave a series of examples, including: the protection of product lines and the delivery of premium margins; freedom to operate; and facilitating collaborative projects and joint ventures. “These invisible Euros are very real,” he said. This was all music to a packed audience’s ears – not many of them get to hear the CEO of a major company speak in this way. Also appreciated was van Houten’s acknowledgement that in many situations landscaping and other analysis tools give members of the company’s IP and Standards team greater insights into how a particular market might look in a few years time than the business units that operate within them. Less comfortable, though, was van Houten’s reluctance to embrace the idea of putting IP on the balance sheet. He wants to know its value, but he is less keen on transmitting this publicly before necessary –it’s never a good idea to give competitors the kind of information that might reveal what your future plans are, van Houten said (although if they are as well-informed as the Philips IP team aren’t they going to have a very good idea anyway?). In addition, he said, the value of IP can be so elastic that from year to year valuations could move around sharply - markets may find that very disconcerting. For many IPBC delegates putting IP on the balance sheet might have seemed a no-brainer. Getting a CEO’s perspective reminded them just how different things can look on the outside of the bubble. But, there was no escaping van Houten’s overall message: for a company like Philips, which employs tens of thousands of people and generates billions of euros annually in revenue, IP is essential to ensure on-going investments in R&D and the resulting innovations. Without strong IP, van Houten concluded, the copycats – already a growing force – would dominate completely and the world would stand still. That’s not the kind of world many people want, is it? JW

World Cup watch – Given the strong contingent at the IPBC of Korean delegates, South Korea’s 4-2 defeat to Algeria on Sunday night was not the result that anyone was looking for in the interests of conference morale. However, the US conceding a late goal to Portugal hadn’t appeared to dampen the mood among the large number of American delegates. All still to play for against Germany – which, of course, is more than we can say about England. RL 

Bad timing – Talking of the World Cup, we could have picked a better time to hold the IP Hall of Fame Gala Dinner than the day the Dutch take on Chile to decide who finishes top of their first round group. In a concession to football fever, we are putting a screen in the pre-dinner reception room so die-hard fans of the Oranje can get their fix. By the time we sit down to eat, though, it will be done and dusted.  With all due respect to our Chilean readers, a positive result for the Netherlands will probably make the night a little more relaxed. JW

Culture shock - In the breakout session entitled 'Opportunity: Asia', panellists debated the impact of cultural differences on Western IP owners' doing business in the East. For Poh Chua, chief IP counsel at Zhejiang Geely Holding Group, difficulties faced by Western companies in the region ultimately boil down to a fundamental difference in understanding as to what actions are justifiable and which are not. "The West is a guilt-based culture, meaning that, generally speaking, if something is illegal you can't do it. The East is a shame-based culture - so if it is illegal but it doesn’t bring shame on you or your family, then you'll do it!" For Steve Lee, president at Lpines, cultural asymmetries are also evident in terms of the ways in which businesses are set up and organised. "Structurally, there are still very big differences between Asian and Western companies," he said, pointing out that many corporations in east Asia have rigid top-down structures, restricting possibilities for business model innovation. Chua summed up the Asian attitude like this: "Flexibility is great, but doing what the boss tells you to do is even better!" This has the downside of perpetuating the 'silo effect' in many Asian companies, he added, meaning that IP strategy is often not given the attention it needs by senior management. However, Ira Blumberg, vice president of IP at Lenovo, said that he had increasingly seen both local and overseas professionals with US training taking up senior positions within IP functions in Asian corporates, underlining C-suite commitment to getting modern IP strategies in place. JE

ID on the up? – Also speaking in today’s Asia-focused breakout was Choongsoo Park, executive vice president at Korea’s Intellectual Discovery. The government-backed patent-aggregation fund has come in for some criticism since its foundation, with questions raised about the entity’s purchasing activities (or rather, the lack thereof). However, Park’s announcement that Intellectual Discovery has so far spent $100 million of its current US$250 million in funds in return for around 4,000 patents suggests that it may finally be gaining some momentum. JE

Best in class – The afternoon breakout on building a world class IP function attracted a big crowd, but the four speakers made it clear that there can never be a single definition of what constitutes “world class”.  Former CIPO of PARC Damon Matteo and Philips general manager of licensing Jako Eleveld come from businesses where IP is seen as a profit centre; VP of IP at Novo Nordisk Reza Green and Daimler’s head of IP Christian Hahner work at companies where it is viewed as a cost centre. According to Hahner, a problem that poses is that the contribution IP makes to Daimler’s success may not always be clear to other parts of the company; an upside, said Green, is that there is not the pressure to put a numerical value on IP that there may be elsewhere. Changing business models is sometimes discussed at Daimler, Hahner explained, but it would have a huge impact in areas as diverse as investment and managing relationships with competitors. Making a profit might bring an IP function closer to the heart of the business, but there can be downsides. There was no P&L issues at PARC, said Matteo, only P ones. L was not allowed. JW

Deal of the century - In an excellent session on cooperative patent purchasing on Monday morning there was some confusion over whether the acquisition of Kodak’s patent portfolio by a consortium led by Intellectual Ventures and RPX or the Rockstar consortium’s success in the Nortel acquisition was the deal of the century.  Moderated by IPValue’s Peter Holden, the session featured Laura Quatela, former President and Co-COO of Eastman Kodak, Rockstar ‘s John Veschi, Micky Minhas of Microsoft, Kenneth Lustig VP of global licensing for IV and Dan McCurdy, who’s move to RPX from AST was announced today. Quatela was pretty clear though – in acquiring a portfolio of patents from Kodak that had been valued at $3 billion for just over $525 IV, RPX and co made an absolute killing. For Kodak, though, it was a terrible deal (“a disaster” was the term she used). The acquisition was the perfect example, said Quatela, of the dangers that collaborative deal-making can pose to sellers of IP. That said, Kodak’s creditors got the money they needed, so they were pretty happy with how things turned out. The session also touched on the difficulties in putting complex consortium deals together (at times up to 50 individuals were negotiating the Kodak deal, said Lustig) and how you reach agreement between parties (don’t sleep, Lustig observed). Putting deals together deals is not helped by the regulatory environment getting more complex; a point which Minhas raised as he referenced Microsoft’s recent acquisition of Nokia’s mobile phone business. Minhas also added that they had seen an uptick in deal interest since Lenovo’s acquisition of a large portfolio from NEC at the start of this year. RL

Bridge Crossing – speaking on the panel in today’s ‘Collaborative patent buying’ plenary, Allied Security Trust CEO Dan McCurdy shared his insights on the aggregator’s role in purchasing the majority of MIPS Technologies’ patent portfolio. Under AST’s catch-and-release model, patents that it acquires on behalf of its clients are sold on after being held by the aggregator for one year. Among other things, McCurdy revealed that the MIPS portfolio – which was purchased by Bridge Crossing, an AST-devised, ARM Holdings-led consortium – was sold off in January this year at live auction to a holding subsidiary of none other than ARM. JE

Right on cue - Rob Sterne of Sterne Kessler Goldstein & Fox was the first in the hot seat for an interview with the IPBC film team after the opening session. He spoke expansively on the legal climate facing large patent owners in the US and the challenges that they face from USPTO post-grant proceedings. Sterne made it clear just how tough the current climate is for large corporates facing challenges to their patents. As a frequent public speaker and wannabe YouTube star, Sterne was not surprisingly a smooth TV performer, although former CNBC Asia reporter and anchor Mark Laudi was also happy to pass on some top presenting tips. RL

UPC - it will not come as a surprise that one of the key talking points in the coffee breaks at this year's European IPBC is the unitary pan-European Union patent right and the Unified Patent Court that will enforce it. Many large companies already appear to have made it clear that they will continue to opt to use national rights over the unitary patent; while others (including NPEs in particular) have expressed excitement at the possibilities that it could open up for them. However, something that I discussed with several people today was the longer term impact that opt-outs might have on SMEs, which the European Union authorities have often held up as being the main beneficiaries of a unified system. "If large companies see little value in the unitary patent, then that will lower the value of patents for everyone - including small European businesses," was the point argued by one attorney I spoke to. If that were to be the case, it could make EU SMEs much less attractive as investment prospects or as acquisition targets. JE