More than 600 delegates from over 45 countries gathered atthe sell-out IPBC Global 2014, which took place at the Hotel Okurain Amsterdam from June 22 to 24. Attended by senior operators fromall parts of the IP marketplace – including chief IP officers, executivesfrom major public IP companies and other non-practising entities,financiers and investors, brokers and other intermediaries, policymakers, lawyers and service providers – IPBC Global 2014 was aresounding success, from the first plenary session featuring Philipspresident and CEO Frans van Houten to the final breakouts
Sunday’s opening reception in full swing
When you bring together leaders from across the IP ecosystem for three days of discussion and debate, there will always be more said than can be reported over a limited number of pages. That certainly applies to this year’s IPBC Global, which took place in Amsterdam in June. Among the multiple subjects that formed the basis of conversations and controversies during the conference, a few in particular stood out. In addition to the keynote presentation and Q&A session featuring Philips president and CEO Frans van Houten (see box opposite), the other three plenaries also attracted a lot of attention.
Panellists in the “Building a world-class patent portfolio” breakout listening to a question from the floor. From right to left: Julia Elvidge, Chipworks (moderator); Charles Clark, Edwards Ltd; Peter Spours, ex-Tom Tom; Graham Gerst, Global IP Law Group; Tao Zhang, Huawei
As ever at IPBC events, wherever you looked impromptu meetings were taking place
In an excellent session on cooperative patent purchasing that followed the van Houten keynote on Monday morning, there was some confusion over whether the acquisition of Kodak’s patent portfolio by a consortium led by Intellectual Ventures (IV) 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-chief operating officer of Eastman Kodak; Rockstar’s John Veschi; Micky Minhas of Microsoft; Kenneth Lustig, vice president of global licensing at IV; and Dan McCurdy, whose move to RPX from AST had been announced that day.
Quatela was pretty clear about where she stood – in acquiring a portfolio of patents from Kodak that had been valued at $3 billion for just over $525 million, 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 intellectual property.
The session also touched on the difficulties in negotiating complex consortium transactions (at times up to 50 individuals were involved in talks on the Kodak deal, said Lustig) and how to reach agreement between parties (don’t sleep, was Lustig’s advice). Putting deals together is not helped by the increasingly complex regulatory environment – a point which Minhas raised when he referenced Microsoft’s recent acquisition of Nokia’s mobile phone business. Minhas added that he and his colleagues had seen an uptick in deal interest since Lenovo’s acquisition of a large portfolio from NEC at the start of this year, but that patent values were not at the levels they were at the time of the Nortel auction. He went on to cast doubt on whether the Nortel portfolio would generate the same money it did back in 2011 were it put up for sale today. Judge James Robart’s decision in the Western District of Washington case of Motorola v Microsoft has helped to drive down the value of standards-essential patents (SEPs), said Minhas – though Veschi noted that there was a lot more to the Nortel portfolio than SEPs.
Inside the mind of a multinational CEO
During a Q&A session van Houten took a number of questions from audience members
van Houten in conversation with IAM editor Joff Wild
Philips president and CEO Frans van Houten was the keynote speaker in the first plenary on the morning of June 23. In a 25-minute presentation and then an unscripted 35-minute Q&A session with IAM editor Joff Wild, during which he also took questions from the floor, van Houten revealed a detailed level of IP knowledge that most CEOs just do not have. The key message that he got across was just how central what he called “integrated intellectual asset management” is to the overall Philips business strategy.
IP value is about so much more than licensing, van Houten explained: “IP rights can protect new technologies and deliver premium margins through exclusivity of product features. IP rights can guarantee companies freedom of action. IP rights are a great currency that facilitates joint ventures, partnerships with start-ups and research cooperation with knowledge institutes. These invisible euros are actually very real!”
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 intellectual property on the balance sheet. He wants to know its value, he stated, 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. In addition, he explained, the value of intellectual property can be so elastic that from year to year valuations could move around sharply; markets may find that highly disconcerting. For many IPBC delegates, putting intellectual property on the balance sheet might have seemed a no-brainer. Getting a CEO’s perspective reminded them just how different things can seem 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, intellectual property is essential to ensure ongoing investments in R&D and the innovations that result. Without strong intellectual property, van Houten concluded, the copycats – already a growing force – would dominate completely and the world would stand still.
Philips CEO Frans van Houten delivers his keynote speech during the first plenary session of IPBC Global
IP Hall of Fame inductee Thierry Sueur addresses guests at the gala dinner held to honour his achievements and those of his fellow inductees
One of the key talking points throughout the event was the pan-European Union unitary patent right and the Unified Patent Court (UPC) that will enforce it. The consensus was that these should both be up and running some time in the next few years.
IPBC TV saw its debut at this year’s IPBC Global. Here IAM Asia editor Jack Ellis interviews David Koris of Shell. All interviews are available to view here
Todd Dickinson, who at the time had not yet stood down as executive director of the American Intellectual Property Law Association, led a lively plenary session on the new patent regime. He asked for a show of hands from the audience to gauge enthusiasm for it and was surprised by what was almost unanimous support. The four panellists – Donna Rankin-Parobek, IP director at Carestream Health; Ton van Hoef, vice president of intellectual property at SML; Luc Savage, director of IP and licensing at Orange; and Daniel Papst, managing director of Papst Licensing – were all broadly in favour too.
They agreed that under the new regime, the value of intellectual property is likely to increase – both strategically and financially. Management would find it easier to grasp the importance of one-stop protection in a market of 500 million, they stated; while the size of the market will also boost the monetary value of quality patents covering it. Some were less sure, though. During a coffee break discussion, a European patent attorney pointed to what he believed could be the potential longer-term negative impact that opt-outs might have on small and medium-sized enterprises (SMEs) – entities that advocates of the new system have often held up as being its main beneficiaries. “If large companies see little value in the unitary patent, then that will lower the value of patents for everyone – including small European businesses,” he observed. If that were to be the case, it could make EU SMEs much less attractive as investment prospects or acquisition targets.
During the plenary, there was some discussion around the possibility of rogue divisional courts in faraway places, presided over by inexperienced judges, becoming favoured venues for plaintiffs seeking to game suits in certain ways; but such worries were largely dismissed. Protections have been built into the system so that technical and judicial expertise will always be on call, the consensus seemed to be.
Laura Quatela, the former president of Kodak, describes the deal that saw the company sell a portfolio of patents for $525 million to a consortium led by Intellectual Ventures and RPX, as her fellow panellists in the second plenary session listen carefully to what were strongly expressed views
Of more concern, claimed one member of the audience who used to manage HTC’s (defensive) litigation programme in Europe, is Germany. This is a country which is looking to create four divisions, each of which will be home to German judges who are used to bifurcation and the virtually automatic issuance of injunctions to prevailing plaintiffs. In the future, though, instead of their decisions covering just Germany, they will cover the whole of Europe. Non-practising entities (NPEs) – which are already beginning to explore the country’s potential as a litigation venue – will flock there, the delegate predicted.
Four of this year’s five inductees into the IP Hall of Fame were present at the gala dinner to receive their induction certificates. From left to right: Thierry Sueur, Gary Griswold, Heinz Goddar and Daniel Bereskin
Todd Dickinson (centre), then the executive director of the American Intellectual Property Law Association, moderated the well-attended plenary on Europe’s new unitary patent and Unified Patent Court. To his right, Luc Savage (Orange) and Donna Rankin-Parobek (Carestream Health); to his left, Daniel Papst (Papst Licensing) and Ton van Hof (ASML)
CIPOs and NPEs
As ever, the Amsterdam IPBC brought together a wide array of characters from operating companies, NPEs and various service providers. As one delegate remarked, the event can be something of a surreal experience: “I see my friends over here, my enemies over there and someone trying to sell me something on the other side of the room standing next to someone we owe money to!”
The participants in the PIPCO challenges breakout, from left to right: Phil Hartstein, Finjan; Joe Beyers, Inventergy; Peter Hardigan, DSS; and Bruce Berman, Brody Berman Associates (moderator)
For a large number of operating companies, defending against NPE assertions is becoming a time-consuming task. But despite the ire that the acronym arouses in some, it is also increasingly clear with each passing year that for most of the operating companies that send representatives to the IPBC, NPEs have a net positive impact on the IP marketplace. One chief IP officer at a large high-tech operating company stated that although NPE litigation causes him no end of headaches, on the other hand: “These are the people that are creating a market in IP rights. They are buying, selling and licensing them, using them to secure finance and investing in them. All of these things put a monetary value on IP, which is something that many of us in the manufacturing world want to happen. NPEs are our enemies, but they are also helping us in the longer term.”
That said, in what was one of the most thought-provoking sessions of the conference, a panel of six corporate IP leaders – moderated by David Brown of Thomson Reuters – came together to provide a series of insights into the challenges that they face. Some of the liveliest comments came from Craig Opperman, general counsel (and the former CIPO) of media company Naspers. He took aim at the mass filing practices of many large companies, claiming that these lead to what he described as a “spray and play strategy” in terms of portfolio construction – essentially, companies stockpiling large numbers of patents without fully thought-through reasons for doing so. The problem, Opperman stated, is that the costs of building and managing this kind of portfolio can lead to pressure to sell IP further down the line. Given that some of the rights divested are likely to end up in the hands of litigious NPEs, he equated that scenario to making a lot of AK47s and putting them out on the street. “I hate mass filing programmes with a passion,” he said. Opperman’s fellow panellists did not take that lying down, with Brian Hinman of Philips pointing out that the size of a company’s patent holding often depends on how big a business it is and how many different sectors it is exposed to. It also enables a company to hedge its bets so that it has protection in industry sectors which may not be significant now, but which could be major business drivers in 10 years.
A final chance to mingle at the closing drinks reception
A perennial subject of conversation at the IPBC is the value of patents in the IP marketplace. In Amsterdam, there was a level of consensus about where things are – as Micky Minhas indicated, this is not 2011 – but less agreement as to where things are heading. Generally speaking, though, the message seemed to be that if you are looking to acquire patents, there are still plenty of them out there for sale. And the good news is that, by and large, the quality of what is on offer is inching upwards, while prices remain below their peak (except at the very top end, where sellers are in a much stronger position).
Because of the supply, those who are looking to divest need to work harder: this means compiling detailed claims charts, providing evidence of use and more besides. That’s a double whammy, of course: having to spend more in time and money to sell into what is largely a buyers’ market.
The participants in the CIPO inside track plenary, from right to left: David Brown, Thomson Reuters IP Solutions; Craig Thompson, Alcatel-Lucent; David Koris, Shell; Peter Toto, Sony Corporation of America; Joo Sup Kim, LG Electronics; Brian Hinman, Philips; and Craig Opperman, Naspers
However, the days when only US patents were of interest are ending. Worldwide packages – with coverage in Europe (Germany, in particular) and China – are of growing interest. Over the longer term, there was a feeling – though by no means universal – that markets in both Europe and China will grow and that, as a result, values may start to rise as the UPC regime is introduced in the former and enforcement becomes more predictable in the latter.
Steve Lee of Lpines (second from the left) makes a point as fellow panellists Choongsoo Park of Intellectual Discovery (left), Poh Chua of Zhejiang Geely (centre) and Ira Blumberg of Lenovo (second from right), and moderator Don Merino of Transpacific IP Group Ltd (right), listen on
What is more, we may well see higher values assigned to patents across a wider range of industries. Up to now, it’s been all about patents in the various telecoms-related industries. In the future, we will be seeing and hearing a lot more about the automotive, energy, financial services and medical devices sectors, to name but four. The overarching message, though, was that it is quality that counts; the days when you might be able to get money for marginal patents, let alone ones that are essentially junk, are long gone.
How to identify the next generation of IP leaders was the subject of discussion in the “Diving into the talent pool” breakout. The panellists did the subject proud. From right to left: Ian McClure, IPXI (moderator); Robertha Hoglund, Elkem; Beatrix de Russé, Technicolor; Christopher Adamson, Adamson & Partners; and Bowman Heiden, Centre for Intellectual Property Studies
See you next time
This was the seventh IPBC Global and by common consent it was among the most successful. But that was no great surprise, given the way in which the IP marketplace is developing in the United States, Europe and Asia. So much is happening currently that has an impact on such a diverse range of stakeholders. Frankly, if that IPBC buzz had not been present as the 600-plus delegates exchanged views, shared experiences, negotiated deals, made new contacts and ran into old friends, we would have been doing something very wrong.
The next IPBC event will be held in Tokyo on September 4, when the first-ever IPBC Japan takes place. Then it will be the turn of IPBC Asia, to be hosted at the Ritz-Carlton Hotel in Shanghai from December 7 to 9. IPBC Global 2015 will return to the Palace Hotel in San Francisco in 2015 between June 14 and 16. We look forward to seeing as many of you as possible at these unique gatherings.