IPBC Global 2019 – Day Two highlights
It’s all done and dusted, and the drinks are flowing at the closing reception. Yes, IPBC Global 2019 is over. But in another full day of plenaries, breakouts and masterclass sessions there was plenty to get delegates thinking. The IAM editorial team was on hand to record it all. Here are today’s highlights identified by Bridget Diakun (BD), Richard Lloyd (RL), Jacob Schindler (JS), Joff Wild (JW) and Bing Zhao (BZ) …
C-suite view - The keynote address today was delivered by Dolby Laboratories’ general counsel Andy Sherman. In a wide-ranging, compelling presentation, Sherman talked delegates through what is one of the most sophisticated corporate approaches to IP anywhere in the world. The way in which the company packages different kinds of rights together for licensees and business partners – and its constant focus on the core Dolby brand value of permanent innovation - is a clear indication of the extent to which IP is at the heart of the company’s overall business strategy; and it’s one that the board clearly guides, taking inspiration from an approach pioneered by founder Ray Dolby in the 1960s. Towards the end of his speech, Sherman put up a slide of company brands that are no longer with us. They included names such as Sears, TWA, Kodak, Yahoo! and Motorola. In their time, Sherman observed, all were best in class; their demise demonstrated that nothing in the business world stands still – the mighty can easily fall if they fail to respond successfully to change. There are many things company boards need to do if they want to ensure their organisations transcend time, Sherman continued, but, he said, you could distil it down to three key points: (1) Never forget who your customers and the key players are in the eco-system in which you operate. Make sure you always know exactly what they are doing and why. (2) Continue to innovate, even when the return on investment is not immediately clear. (3) Make sure you have a comprehensive, nuanced IP strategy that is completely aligned with the business and reflects the values of your brand. It was a view from the C-suite that was as unusual as it was compelling. JW
Great leap forward - There’s no doubt that the strength of patent rights, particularly in the US, is currently seen to be slowly improving - and has arguably helped bring a greater sense of optimism to this year’s IPBC Global than has been apparent in the last few years. As the panellists in the View from the Pantheon session discussed in today’s second plenary, part of the reason for that has been USPTO Director Andrei Iancu who, as Bowman Heiden from the Center for Intellectual Property pointed out, has helped change the narrative around patents. That, he added, has presented new opportunities to open up different kinds of dialogue. He suggested that perhaps additional, more significant steps could be taken to help the system. “Maybe the US needs a national IP policy,” Heiden posited. “Sometimes a little industrial policy can work well.” It’s probably best not to hold your breath waiting for that to happen. For now, rights owners will have to make do with Iancu’s positive impact. But stranger things have happened in recent years, so never say never. RL
China choices - One of the refrains we have heard several times over the past two days is that the value of a patent is dependent on who is holding it and what they are willing to do with it. And that is a factor that may be somewhat underappreciated when it comes to thinking about the value of Chinese patent rights. The perception is that the worth of CNIPA grants is on an upward trajectory as more litigation takes place in China, producing injunctions and steadily increasing damage awards. But in a discussion of how to build a portfolio in China, during the morning’s CIPO scenarios plenary, Facebook’s Jeremiah Chan pointed out that the IP department first needs to reckon with how realistic it is to expect that the C-suite will sign off on enforcing Chinese patents. Speaking about a hypothetical scenario, not Facebook’s position, Chan summed up the attitude of many US companies toward China litigation, saying that it can sometimes be “a scary proposition” where even decisions like which counsel to retain can be fraught. That’s no surprise given the tenuous position of many Silicon Valley firms in China’s highly regulated internet sphere. “You need to understand what senior management is willing to do with assets before you spend all the money,” Chan concluded. It’s an issue that is could affect patent value in China for some time yet. JS
Careful calls - A key takeaway from this morning's informative CIPO Scenarios plenary was the need for IP counsel to have a proactive approach to patent strategy. Google's Michael Lee told the crowd that it is critical to have an idea of what the size, shape and composition of a portfolio should be, and to think about this from an early stage. The first step, according to Lee, is to understand what the patents are being used for. IP counsel should be able to define the primary use cases and show how the patents align with these. He warned that this will be a time-consuming project, but it is worth doing. Once this is complete, the next stage is to figure out what the portfolio needs. Things to consider are the number of products the company has, the differentiators within the product slate and the quantity of patents needed to protect these. Then comes figuring out how to get from point A to point B. The creation of strategy is an ongoing process, but by taking these steps IP counsel will be able to answer the be-all-and-end-all question, which inevitably will be asked: what is being done with the patent portfolio? Jeremiah Chan, head of patents at Facebook, added that when doing this assessment it is critical to be seeking the right goals. He raised the issue of framing patents as either high or low quality, arguing that the word 'value' is the more appropriate term. When discussing patent portfolios, the mantra these days is often 'quality over quantity', but Chan said that this can misrepresents a portfolio. Patents are a complex business, never this black or white, and by focusing solely on the issue of quality you may end up making bad choices. BD
Waiting for SCOTUS - The prospect of the US Supreme Court agreeing to hear a patent case has in recent years prompted a sense of trepidation among some IP stakeholders with the justices grappling controversially with issues such as patent eligible subject matter. The impact of its decisions can cause a great deal of uncertainty and directly impact IP value creation. How IP leaders prepare their companies, and senior leadership particularly, for significant changes in case law or legislation was raised in the CIPO scenarios plenary. With 101 reform currently being discussed on Capitol Hill and SCOTUS considering granting cert in two cases pertaining to subject matter eligibility, it is certainly a very hot topic. But, as Gillian Thackeray of Thermo Fisher Scientific explained, a judgment from the US’s highest court should be relatively easy to prepare for. “A decision is slow - you see it come up from the lower courts and then to the Federal Circuit and then the Supreme Court. It is not going to go faster than a certain time period,” she highlighted. That progression also means that industry groups have plenty of time to feed into the process. Congress, she admitted, was “a little more of a wildcard” in terms of trying to figure out what to expect. As 101 reform continues to be debated in Congress, rights owners will at least be hoping that, as with a Supreme Court decision, they have plenty of time to prepare for any legislative shift. RL
Patent politics - A good geopolitical sense is an important, if often unacknowledged, part of a top CIPO’s competencies. In the View from the Pantheon plenary this morning, Bowman Heiden of the Center for Intellectual Property joked that he might have to add a master’s in political science to the interdisciplinary IP business education programmes he oversees. Indeed, former Ericsson IP head Gustav Brismark said that running the company’s global licensing business had involved daily discussions of geopolitical and policy issues. That echoed a comment that Fortress’s Courtney Quish made yesterday afternoon, when she said that day-to-day conversation among the firm’s IP team was like something you might hear on CNN or Bloomberg. There is a real sense that political trends – above all the US-China trade and IP confrontation – are shaping big decisions and investment choices within IP departments. Maria Varsellona of Nokia yesterday suggested that the Finnish firm portrays itself as a neutral player in its dealings with Chinese firms. With high tech set to remain a political flashpoint, experience across different cultures and political nous could be at a premium in IP executive searches. JS
Proving a negative - The topic of IP value creation is at the heart of every IPBC event with delegates from a range of industries discussing how they demonstrate the value that patents and other forms of protection can bring to a company. This can be relatively easy if you’re at a business that has a significant royalty-bearing licensing arm, but for the vast majority of patent-owning entities that is not typically the case. So, IP leaders at those types of companies must find other ways to show their ROI. That was one of the discussions in this morning’s CIPO scenarios session and prompted Facebook’s patent head Jeremiah Chan to highlight one way that can make a particularly powerful statement to his company’s senior leadership. He revealed that the social media giant has a fairly active cross-licensing programme which can help it negate possible threats. “One of the things I love in telling the story of ROI for us is where we close a cross-licence and then the party we’ve done a deal with goes off and sells those patents to a variety of NPEs and those NPEs then go after peer companies,” he commented. “It’s hard to prove a negative but that’s pretty close and it’s a pretty compelling story.” RL
The need for speed – IP Hall of Fame inductee Ruud Peters, the former chief IP officer at Philips, is an old China hand. When he took the top IP job at the Dutch company back in 1999, it was already long-established in China and encountered all the problems that western companies did back then: widespread IP theft and a deep suspicion of practices such as licensing. But the time he retired from the job 15 years later, so much had changed – Chinese entities, he said, were among the most dynamic when it came to embracing IP and innovative protection and exploitation strategies. Still active in the country as both a teacher at universities and an adviser, Peters is impressed with what sees now days. “In China, companies are more willing to try things out, to see what works and what doesn’t. In this way, they learn things fast,” he said. It’s very different in Europe, he continued: “Things move slowly and cautiously. You need to build a plan and get the plan approved before starting a project, and this process takes time. Meanwhile, China is moving much faster and leaving the rest behind.” There is a lesson there somewhere. BZ
Calling out network operators - In a discussion of IP policy work within corporates, former Ericsson CIPO Gustav Brismark had some criticism for wireless network providers during this morning’s View from the Pantheon plenary. He lamented that some telecoms operators have been less than vocal in their support for the SEP and FRAND policies that underpin the open standards which benefit the whole industry. Discussing some of Ericsson’s past policy work, Brismark stated: “I think support from operators has been weak” – though he pointed specifically to Orange as one notable exception. Given the extensive commercial ties between equipment vendors and network operators, it’s not a tension that is likely to surface much. But it is there. JS
More than just the new black gold - The rise in importance of data to a whole range of companies, including many outside of the high-tech sector, continues to be widely analysed and discussed. The growing value that many businesses realise from the huge amount of data that they gather themselves or acquire has given rise to the claim that it is, in effect, the new oil that will power the largest and richest companies of the 21st century. Speaking in the afternoon New Protection Paradigm breakout session, Microsoft’s IP head Erich Andersen said that the oil analogy wasn’t quite accurate. “It’s kind of right in the sense that data is valuable in today’s world, especially if you can aggregate data that can drive an economic engine,” he said. “But it is not the new oil in the sense that oil, once you’ve used it in an internal combustion engine or whatever, is effectively gone, whereas data does not disappear, it can be reused in many different scenarios.” Andersen offered the example of a large data set related to braking systems on millions of vehicles which might have value to, say, a regulatory body but also to a business developing the next generation in braking systems. There’s no reason why that data can’t be working in both scenarios at the same time. “Sometimes people apply their analogies to data based on their experiences with other classes of assets that are not correct and it’s important to understand the characteristics of data in a way that is different than, for example, code that can’t be shared.” That, of course, may make data even more valuable – and putting in place the right processes to ensure its capture, protection and management even more critical. RL
Big reveal – In the afternoon’s Inside the Global IP Market breakout, delegates were given an early view of some of the results from this year’s IAM Global IP Benchmarking Survey of IP owners – around 70% of who were based in operating companies and 20% in patent licensing businesses. There was much to ponder as panellists and audience members digested findings related to valuation, corporate IP strategies present and future, disputes and transactions. Perhaps the slides that attracted most interest were the ones covering responses to questions about litigation: (1) Which of the following countries offer the best value for money for IP litigation? (2) Which of the following countries has the most thorough litigation system? (3) In which of the following litigation systems do you have the most confidence? In each case, the US pipped Germany to the top spot. For Paul Lin of Xiaomi that showed just how difficult it had become to assert patents in the US. Given that most respondents came from operating companies, he observed, and most operating companies tend to be defendants in patent suits, it’s not surprise that they like to fight in a jurisdiction in which it is almost impossible for plaintiffs to get an injunction even if they win, which these day they very often don’t. John Lindgren, of NPE IP Value nodded along, and then confirmed that all things being equal Germany was the place for plaintiffs to go. JW
Looking forward - In the Preparing for the Future masterclass this afternoon, panellists pegged technology and data as the two forces which will have the greatest impact on the IP industry in the next decade. There is no question that patent-related data is growing at an exponential rate. AON's David Andrews predicted that in the near future analysts will be able to determine the tangible value of individual patents, which will directly impact the daily decisions of patent attorneys. This availability of such information, which Andrews likened to the deciphering of the Rosetta Stone, will be influential in all IP matters and will help corporations and lawyers to make better decisions. Overall, the consensus was that businesses would become more and more data-driven, which would inevitably spill over into the patent space. However, it is not just data in its pure form that will have a significant impact. David Shofi of Univercells warned that the patent industry was already a complex marketplace. If tech and data are to have a meaningful impact, then they must break into the C-suite. To do this Shofi said that the new technologies must enable quicker decisions and the data should be organised in a way that will directly inform business intelligence decisions. BD
Panasonic deploys blockchain - This afternoon’s Blockchain in Focus panel sought to go beyond the buzzwords and look at the underlying technology. And delegates learned that at least one major patent owner is already implementing distributed ledger tech internally in its IP function. Nick Gibson of Operem – a start-up developing blockchain-based tools for IP owners – named Panasonic as one of the firm’s charter customers. The Osaka-based electronics giant is using an Operem system for securely handling invention disclosures. Gibson said that Panasonic had already been researching applications for blockchain within the IP function when it started working with his company. This particular use case for stems from the Japanese company’s ongoing emphasis on open innovation and partnering with startups and academia. Those smaller entities are sometimes worried about losing their technology to a much larger partner, but Operem’s blockchain-based platform maintains an immutable record of what ideas have been exchanged between the organisations and who has made what contributions. It is one of the first applications of this technology to the IP function, but there could be many more to come. JS
It’s a wrap - And so another IPBC Global comes to an end. Boston 2019 has been the most diverse of the series we have ever hosted and this was reflected in the quality of the sessions and the buzz throughout the networking areas and bars. We would like to thank all delegates, speakers and sponsors for their fantastic support. We really could not do it without you. After a short rest, we’ll start planning for the next IPBC Global, which will be taking place in Chicago in June 2020; but before that we have IPBC Asia to host in Tokyo between 28th and 30th October; then we move onto Dublin for IPBC Europe in March 2020. The fun never ends! JW