IPBC Global 2019 – Day One highlights
The first full day of IPBC Global is winding down now with everyone enjoying an evening cocktail at a reception in the exhibition hall. There have been a number of plenaries, breakouts and boot camp sessions for delegates to take in and the IAM editorial team has been moving around the event looking for all the best stories. Here are today’s highlights identified by Bridget Diakun (BD), Richard Lloyd (RL), Jacob Schindler (JS), Joff Wild (JW) and Bing Zhao (BZ) …
Talking with CEOs - In her keynote speech, Maria Varsellona, president of Nokia Technologies and chief legal officer of Nokia Corporation, preached the power of involving the C-suite in licensing negotiations after an address largely focused on encouraging alternatives to litigation. When top executives from counterparties can meet face-to-face, she said, it changes the dynamics, tone and speed of the talks. This is true not just with high-profile face-offs like the Nokia-Apple dispute a couple of years back, but also in discussions with Chinese implementers. In fact, Varsellona suggested that this approach is one reason for Nokia’s recent run of success in concluding SEP licences in China. The Finnish company was able to get CEO Rajeev Suri across the table from Xiaomi’s CEO Lei Jun and Huawei chairman Ren Zhengfei. That’s an indication that IP is higher on the corporate agenda than ever in China. Nokia is one of the companies profiting from this trend. As Varsellona explained: “The discussion is no longer about whether they should take a licence, which was up in the air a few years ago, but instead how much they should pay. That’s just like any other commercial negotiation.” JS
No time to wait - As in many industries there has been an evolving discussion in the IP sector about the importance of increasing diversity, particularly gender diversity. On the opening day of IPBC Global, IAM and US law firm Finnegan hosted a boardroom meeting with a large group of senior female and male IP leaders to discuss how the industry can evolve. Gender diversity was also the subject of our second plenary session, with a stellar group of panellists tackling the topic of women in dealmaking. During the discussion, Anna Holmberg from Gothenburg’s Centre for Intellectual Property highlighted that questions around diversity need to be addressed in part because the IP industry is in a battle for talent. “A lot of our students say that, “well I’m very interested in IP, I’m very interested in these organisations, but it doesn’t really feel like something for me”,” she remarked. “This is boiling down to a question of, will you be able to attract the next generation of talent, the next generation of leaders? And if you’re not taking this issue seriously at this stage you will struggle in the future because they will move onto other professions and other fields instead.” Holmberg added that she wanted to be part of creating a “sense of urgency” among IPBC delegates and beyond, warning that people can’t simply fall back to saying, “well a lot of these things will work themselves out with time”. She doesn’t have time, she said: “My career is happening now!” And the same applied to every single person sitting in the plenary room. RL
5G kings – One of the narratives that has been a feature of discussions about the 5G patent landscape is the supposed leadership that Asian entities – and those from China, in particular – enjoy in the space. But in a presentation that opened the morning’s IP in the 5G era plenary, Derwent’s Ed White went some way to correcting that narrative. First, he identified what he called the Big Six of 5G, which between them are responsible for over 40% of the inventions in the field: Samsung, Intel, Huawei, Qualcomm, Ericsson and Nokia – or, in other words, two Asian businesses, two from the US and two from Europe. And, if you drill down to the strongest inventions, White stated, their share rises to 54%. Then when it comes to patented innovation output, the US and Europe combined comfortably out-perform China. None of this is what you’d think if you read the mainstream media. But it’s knowledge that is vital to share. Unless business leaders and policy-makers have access to it the danger is that they will make damaging decisions that may not only have negative implications for consumers, but potentially for global trade, too. JW
Diversity power - Women in IP is a key focus of this year’s IPBC Global. In the ongoing discussions it has been clear that gender equality is not the only goal, but that there is a need to promote diversity on a wider scale. The legal profession has a long-standing reputation for operating with an old-school mindset. Many companies within the engineering and technology sectors are not much better. There are some businesses which have overhauled the traditional workplace culture – and these have seen success in attracting talent – but the IP field has largely been left behind. In the Women in IP Dealmaking session, though, delegates were told that there is a lot to be gained from employing a diverse team. Vicki Barbur, from Battelle, highlighted the issues that arise when companies try to enforce a one size fits all approach. It ultimately limits the success of the team, she said. By contrast, when individuals from a variety of backgrounds work together they end up complementing each other’s strengths. Talking about the need for diversity is the first step to tackling this issue, but companies and firms need to be proactive to push this agenda. HP is one business which has come up with a tangible solution. It introduced an initiative in 2017 where it gave its outside counsel one year to comply with specific diversity quotas, the company’s Ceyda Maisami explained. The consequence of not doing so was that HP would either end the relationship or continue forward while withholding a portion of payment. In the end an overwhelming number of firms worked to adhere to HP’s requests. While many have implemented preliminary policies to tackle their diversity deficits, those who push past the minimum and establish ambitious goals will drive forward this change. Maybe it will need a few more HP-like strategies to make it happen. BD
What’s selling - The patent sales market has remained somewhat slow, but the panelists in this afternoon’s discussion of The investors’ perspective did offer up some anecdotal examples of technology areas in which assets are moving. “We see financial investors pulling away from smartphones – ‘I’ve talked to those three companies too many times’, they’re telling us,” reported Elvir Causevic of Houlihan Lokey. He said patents covering a variety of implantable medical devices are “going like hotcakes” and also said he had done deals for drone assets. Intellectual Ventures’ Mathen Ganesan stated connectivity (both short and long range wireless) and “classic” semiconductor assets are still the key areas where the fund is attracting buyers. Lawrence Davis of GE said that while there is plenty of interest around trendy areas like AI, the assets that are actually moving are more likely to relate to surgical robotics or power electronics. Speaking for a company that’s been active on the buy side, Courtney Quish explained there isn’t a particular “hot area” for Fortress Investment Group: “We’d like to diversify – depending on what we already have in the portfolio we want to see assets in other areas.” JS
More than just patents - It’s a little over five years since the Supreme Court issued its decision in Alice, the landmark case on patent eligible subject matter that, along with a series of other 101 judgments, has been heavily criticised by patent owners in many sectors. In the afternoon Five years on from Alice breakout the general message from the panellists was that after an initial shock the impact of the case had become much more muted and businesses in recent years had largely learnt how to cope with its effects. With both Facebook and Amadeus on the panel, the high-tech industry was very well represented and the reaction to Alice might have been different if, say, an IP leader from a medical diagnostics business had been speaking. But Cassandra Derham from Amadeus did highlight one area where the Supreme Court ruling had had a clear impact on her company. The decision, she said, had acted as something of a catalyst for the business to look much more closely at other non-patent, forms of protection for its intangible assets. “After 2014, it’s been much more difficult to justify the spend to the C-suite on patents, but we’ve been able to justify spend on other things,” she explained. “So, design rights for interfaces, trade secrets, open source which we now regard as an intellectual property right, and defensive publications which are a much cheaper way of publishing something than filing a patent.” Prior to Alice Derham admitted that the choice the company often contemplated was simply whether to patent something or largely not pursue any form of protection. While serious concerns remain over the case law surrounding patentable subject matter in many sectors, for Amadeus it has helped lead to a marked shift in their approach to IP. RL
Predicting the future - Speakers discussing the 21st century IP department in this afternoon’s breakout session moderated by Jens Bordin of Konsert IP and Strategy made a range of interesting predictions for how the in-house world will change in the next few years. “IP strategy is going to become business as usual for banks, entrenched in our industry, and going forward you can expect there will be patent departments in every bank,” said Josh Death of TD Bank. David Dutcher of Western Digital stated there will be a much greater demand for accountability for IP functions in businesses that have not been monetisation-focused. “We are being asked to articulate all the value propositions we bring the business and express them in dollar terms. This is the level of scrutiny that the rest of the business has always been subject to, but it’s fairly new for the IP team,” he stated. At Ericsson there has been a huge emphasis on quality that may result in decreasing quantitative patent filing rates, the company’s Gabi Mohsler speculated. “We’re needing IP protection now to protect our own products and services,” said John Hudson of Deloitte. “We want to make sure other professional services companies can’t take our market share and in the future we may be a much smaller organisation providing more services,” he explained. For Phil Hartstein of Finjan it was all about a new landscape in which technology is coming faster and faster, and consumers demand more and more of whoever they choose to integrate with. “Only those that adapt will survive,” he stated. “I hope at that point I’m less frustrated than I am now, not seeing that transition happen faster.” JS
Standard declaration - At this year’s event we’re trying something new, with the launch of a series of Chautauqua’s – short presentations, which take place during the networking breaks, from experts in the market on a particular issue. For our first one ever, IPLytics’ Tim Pohlmann was on hand to provide an overview of the 5G SEP landscape. Who is leading the 5G race both in terms of technology and IP has become a keen topic of conversation and debate in recent months – not least on IAM – and Pohlmann has carved out a position as one of the leading data analysts in the space. During his presentation he offered a series of data points, but one issue he stressed was that a lot of the declarations for the latest generation of wireless technology actually represent redeclarations of 4G patents. According to Pohlmann, 40% of 5G declarations are essentially just that and he highlighted that of the 60% of completely new ones, Chinese companies are particularly well represented. Of course, declaring a patent standard essential doesn’t make it standard essential. But that is a whole can of worms that Pohlmann – quite wisely given the 15 minute time limit – chose not to open. RL
Endorsing arbitration During her keynote speech this morning, Maria Varsellona said that litigation is a destructive exercise that wastes time and money. It should always be the last resort. Further, she called on industry to increase the use arbitration in solving patent licensing disputes. But, she acknowledged, many implementors are sceptical about such a solution and have little trust in it. Varsellona said this should not be the case. Confidentiality, she stated, is a particular advantage of arbitration, while a specialist group of IP arbitrators, who both parties in a dispute could trust, is a pre-requisite. She told the audience that Nokia has had consultations with the ICC about creating such a list of experts. What’s more, predictable and accurate outcomes could increase decision makers’ confidence in the less adversarial scenario that arbitration offers. Varsellona surely had a point. Arbitration has the potential to reduce the need for time-sapping, resource-sucking litigation in multiple jurisdictions. The benefits of a single decision, delivered by a panel of IP experts, in a confidential and cost-effective way must surely mean that solutions to the issues that many licensees currently have with arbitration are going to be found. BZ
Tips for the top - In the last of today’s IPBC Chautauquas, Stuart Recher of Derwent shared five tips for corporates looking to improve the quality of their work while protecting the bottom line: (1) Facts are friends – it is important to have measures and metrics you use to run the IP department as a business. (2) Focus on your core – find out what you’re really good at and what things you should outsource. (3) Choose your swim lanes – more organisations are stratifying their prosecution and drafting practices, while keeping some work in-house, sending some to top firms and also utilising alternative service providers. (4) Lift the burden of finding IP experience – hiring, training and retaining staff is a big challenge. But there are some areas where the work doesn’t have to be done in the organisation. (5) Prepare for the unforeseen – have pre-identified partners to go to when a certain events happen. It was food for thought at a time when in-house IP teams have never been busier or under so much pressure. JS
Digging data – Data is becoming a major asset within the life sciences industries; and that presents opportunities and challenges for those who create and exploit it. In this afternoon’s Innovative IP strategies for life sciences, panellists Mark Kokes of Nantworks and Paul Coletti of Johnson & Johnson talked delegates through some of the issues that the increasing prominence of data raises. Kokes cited Roche’s 2018 acquisition of cancer-focused, digital health analytics business Flatiron Health for $1.9 billion as a prime example of how data is moving front and centre in the industry, observing that the Nant family of companies does a lot of M&A and is starting to see that some smaller entities are now placing a greater value on their data than on the IP they own. However, Coletti cautioned that while data could be of huge interest, it was often the case that smaller entities did not know how to manage it properly or do a good job of protecting it adequately. For a company like J&J that is hugely problematic. The takeaway is an important one and undoubtedly applies way beyond the life sciences: yes, data can be incredibly valuable, but only if captured and curated to a high standard. If it isn’t, it is almost certainly going to be more trouble than it is worth. JW
Settling and saving - Litigation is expensive, Maria Varsellona made clear in her keynote. She offered a fascinating snippet of information on the Finnish telco’s settlement with Apple in 2017. After their previous licensing deal came to an end the two companies found themselves in a dispute as they struggled to finalise a new agreement, but quickly settled before the court cases got far. Settling so quickly, Varsellona stressed, had saved Nokia $200 million against the company’s budget for that litigation. Even for a business that spends billions on R&D annually and currently earns around €1.4 billion each year from licensing, that represents a huge saving on what could have quickly turned into an epic global patent fight akin to the most costly ones of the smartphone patent wars. Varsellona used the point to help support her argument that litigation can only ever be seen as a last resort, but she did offer an optimistic note. “As IP commercialisation moves up the C-suite agenda, I expect IP inventors and implementers will increasingly see themselves as partners rather than adversaries,” she said. With millions of dollars in legal fees quickly racked up in any courtroom dispute, it was a powerful message for the licensing community. RL
CRISPR packages - Over in the afternoon’s life sciences breakout session, the potential for the industry to adopt practices from the high-tech sector was a hot topic of debate. In particular, Karen Sinclair of Harvard University shed some light on the possibility of a CRISPR patent pool, which has been increasingly discussed over the past few years. In July 2017, MPEG-LA made the first leap into the space, asking key innovators to submit their IP for possible inclusion should the pool be launched. Since then, though, very little has happened. However, Sinclair highlighted that in the next three or four years the IP foundations of CRISPR will become more certain, meaning that businesses will have a much clearer idea of the patents which they need to license and who they must license from. Critically, one or two licences will not be enough to develop world class products, instead tailored packages will be required that include assets from multiple parties. One way to ensure that this process goes off without a hitch is to create a common marketplace, she said. There are a number of challenges with this, one of which is that there is no agreed standard, as well as no overarching standard organisation. Another is the complex matter of establishing the cost of licences, something that has created numerous issues for pools covering other technologies. But, Sinclair concluded, any CRISPR patent pool is still a long way off, so there is time to address these problems. BD
Asked and answered - In its absence, Huawei loomed over the discussion of 5G which kicked off proceedings this morning. But the Chinese telecom was not absent for long. In the Q&A following the opening plenary, IAM magazine editor Richard Lloyd had asked Nokia’s Maria Varsellona how US-China tensions over Huawei and other IP-related issues had affected the Finnish firm’s business. “We don’t feel that they have a direct negative impact on our licensing model at this time,” Varsellona said. But she did make clear that Nokia will take positions to protect its customers, in reference to reported Huawei actions against network operators including T-Mobile and Verizon. Later on, during the panel discussion of 5G, an audience member asked about whether the inclusion of Huawei on the US Commerce Department’s Entity List would affect the legality of licensing technology to the company or selling it US patents. The answer came not from the stage, but from the other side of the room, where a delegate who identified himself as a Huawei representative stood up and told the audience that according to Export Administration Regulation 734.10, published US patents and applications are not subject to export regulations. That’s a strong signal from the company that it is open for business - and that anybody who is anybody in IP attends IPBC Global. JS
Laughing matters - IPBC Global is many things, but it is not normally a place for comedy. However, during the morning’s 5G plenary session there were two moments that had the packed audience roaring with laughter. First off, moderator Ed White from Derwent asked Avanci CEO Kasim Alfalahi to peer into his crystal ball to predict how the future might evolve. Alfalahi looked at him wryly, before saying: “When I was young, I went to consult a lady who had a crystal ball and I asked her what my future would be. She told me, but the reality turned out to be very different.” Then he paused, before adding: “It was quite a shame really.” The house came down. Then, later on in the session, NXP’s Changhae Park recounted being asked by his 10 year-old daughter what his job was. Back then, Park said, he was involved in licensing transactions. He thought carefully about how he might explain his role to a young girl with no idea about IP, then came up with the perfect answer: “It’s like being a salesman,” Park explained, “except what I sell is something that nobody wants to buy.” There was a lot of knowing head nodding along with the chuckles among delegates. JW