The game-changer who just wanted to fly

Perhaps surprisingly for a man who today holds one of the top spots in the IP world, intellectual property was not Brian Hinman’s first love. “Flying was my passion,” the chief IP officer (CIPO) of Philips recalls fondly. “I think that all little boys dream of being either an astronaut or a pilot, and I got to live that dream for six years after I graduated college.”

Having fulfilled his childhood ambition, Hinman soon discovered an exciting and relatively uncharted area of industry which offered great potential both for his then employer and for his own career. “I had just left the United States Air Force, had joined a large consumer electronics operating company, was not content with my job as a project engineer and wanted to do something different,” he explains. “I had been reading up on patents and intellectual property and the potential value it could bring to an operating company – this was the early 1990s, before companies had recognised the potential value of intellectual property – and was interested in determining how to unlock this value for my company.”

Hinman duly approached the president of his company’s economic development division to advise him that it was sitting on a potential treasure trove of intellectual property as a result of years of R&D investment. He then asked for six months to develop an effective monetisation strategy. “I’m sure he was thinking I would fail miserably,” laughs Hinman. “But he reasoned that if I did, he was no worse off than he had been before.” Six months later, Hinman had secured several lucrative licensing deals, which would form the cornerstone of a profitable IP licensing programme.

In the early to mid-1990s such scepticism was rife – the idea of actively using intellectual property for anything other than to protect market share was still relatively uncommon. However, rather than being deterred, Hinman saw only opportunity. “A handful of companies were starting to monetise their intellectual property at that point in time: building great portfolios, developing and executing great IP strategies, really getting the message that intellectual property was a key differentiator,” he recalls. “And at those handful of companies, there was only a small number of smart IP professionals who got it. That’s what attracted me: it was an industry that was burgeoning and that was ripe for explosive growth.”

Into the blue

One company that certainly “got it” and was blazing a trail in IP portfolio development was IBM. Hinman’s success in developing a licensing programme got him noticed by Big Blue, which he joined in 1996 to head up business development for IBM Research at the Thomas J Watson Research Centre in Yorktown Heights, New York. “This entailed my obtaining a keen understanding of all the areas of research that IBM was investing in, and knowing how research played a role throughout each IBM business unit and how technology can be a key differentiator in working with third parties in conducting joint development, venturing, alliances and licensing activities,” Hinman explains. “I think truly the best way to learn what a company’s core capabilities are is to crawl through research and the businesses to understand what it is good at doing and what pockets of research are fundamental in differentiating it from its competitors.”

This initial foray into IBM was not only an opportunity for Hinman to cement the foundations on which he would build his future career, but also something he found deeply fulfilling: “Working as head of BD for IBM Research was really fun for me. Finding homes for our technologies and coming up with alternative use cases and executing sound technology licensing deals ‒ IBM was very receptive to that creativity.”

Hinman spent 11 years at Big Blue progressing through the ranks to become vice president of intellectual property and licensing, responsible for developing and executing the company’s worldwide IP strategy – a role previously held by IP pioneer Marshall Phelps. “Marshall was always the IBM IP expert that I looked up to,” says Hinman. “Through watching how he conducted IP strategy and grew IBM’s IP business exponentially, I developed an even keener appreciation of how to do it the right way.”

The highly valued Philips brand

Taking on the trolls

The market changed dramatically during this period. Many companies which had been blissfully unaware of both the value of their own intellectual property and the importance of acknowledging others’ rights had to face up to reality. “Since 2000 we have seen a lot of people entering the IP field and companies waking up to the role that intellectual property can play in enabling an effective business strategy,” confirms Hinman. “Unfortunately, for a lot of companies it was a rude awakening. It certainly gets a CEO’s attention when the company is put on notice for patent infringement by a competitor and some companies had become very litigious.”

Among those asserting their rights was a new breed of litigant: the non-practising entity (NPE). “I had taken over as head of intellectual property and licensing at IBM and in that role I gained experience in running a very strong and effective IP organisation,” Hinman continues. “Companies were struggling how to understand this new threat and how to deal with it effectively. I wanted to be part of that solution.”

Hinman’s next move gave him the chance he was looking for. “I was presented with a unique opportunity to head up a new company as its founding CEO which was poised to address this new NPE threat in a unique way,” he says. “This became the birth of AST, or Allied Security Trust. I was at a point in my career where I wanted to be more entrepreneurial and thought AST would be a great opportunity to do that. It was truly very exciting as it was a totally novel concept ‒ one that I was passionate about and knew would be effective if it was deployed the right way.”

However, Hinman’s enthusiasm for the idea and his faith in its effectiveness were not initially shared by the business community. “People were very sceptical when we launched AST,” he concedes. “I approached companies that really got hit by NPEs and, since it was such a new concept, many of them wanted to wait for the model to be proved successful. Yet I was successful in securing early adopters as the anchor member companies, and as we started securing select patent purchases the model was proved successful and other companies then joined as well.”

Having established himself as a solutions provider, Hinman left AST and returned in-house, first at Verizon and then at InterDigital. It was in his role as vice president of intellectual property and licensing at the latter that he received a telephone call which was to once again alter the trajectory of his career.

“I was in my office at InterDigital when I had a call from Kevin Jakel,” says Hinman. “He had developed an innovative new concept that he was trying to launch into a new company, Unified Patents Inc, and he wanted me to share my experiences of establishing and running AST, as a lessons-learned experience. I was giving him guidance and when he told me what the business model was, I just fell in love with it. He was a very experienced litigator and I had experience running a start-up based on a similar business model of NPE deterrence.”

Hinman found Jakel’s model so elegant and inventive that he decided to leave InterDigital to help him co-found the company as chief operating officer: “It was truly an exciting experience for me and a way to further my entrepreneurial spirit.”

Unified Patents provided Hinman with a great opportunity and he would have happily stayed there had it not been for the retirement of the man responsible for creating the IP powerhouse at Philips, Ruud Peters. “There was pretty much zero chance I would have left Unified Patents for anywhere else other than Philips,” insists Hinman. “I remember the day I told Kevin and, although he was not happy that I had chosen to leave after such a short time, as the business was doing really well, it was an opportunity I just couldn’t pass up.”

Philips’ health tech in action

Destination Philips

In 2013 Hinman took on the post of CIPO at Royal Philips, responsible for running its Intellectual Property & Standards division – a role he had revered for a number of years. “I remember my first experience with Philips and in meeting Ruud Peters, who was ultimately my predecessor,” recalls Hinman. “This was back in the early 2000s, and Ruud’s IP organisation at Philips had already distinguished itself as a well-run and well-managed IP organisation with a proud history of conducting excellent IP portfolio management and IP monetisation. IBM had a similar history and reputation, and it was indeed a pleasure to see other companies like Philips being so successful in driving a sound global IP strategy.”

A sound global strategy is, it seems, still not as prevalent as one might hope some 17 years later. “Today, a lot of companies are attempting to develop and execute an IP strategy, but many of them either are organisationally not structured to support it or simply do not have the skills to execute,” Hinman laments. “Also, some companies are too short-term focused and interested mainly in short-term cash generation. That is a dangerous approach to take; the world of patents is all about long term. Not only does it takes a long time for a patent to issue, but the real value of an issued patent generally materialises years after issuance.”

Creating such a strategy is not for the myopic or those looking for get-rich-quick schemes. “In developing a long-term IP strategy, you have to really be a visionary and work within the capabilities of your R&D organisation and work with your business groups to determine what the long-term strategy is for each business within your company,” Hinman elaborates. “And then back-track that to determine a comprehensive, integrated IP value creation strategy for each of these businesses to fully enable the chosen IP value capturing strategy.”

Brian Hinman – an insight

Who is your IP hero?

Marshall Phelps.

Outside of intellectual property, who or what has been the biggest inspiration in your life so far?

My father.

Do you have any hobbies?

Running – it’s an obsession for me. Also: reading books, writing poetry and listening to music.

Where is your favourite place to holiday?

Caribbean islands.

What is your favourite season of the year and why?

Autumn – the crisp, clean air and the fall colours of the leaves as they change.

If you could invite any five people (living or deceased, real or fictional) to a dinner party, who would they be?

Albert Einstein, Jesus Christ, George Washington, Jack Nicholson and Jimi Hendrix.

And what would you eat?

Spaghetti.

As a child, what did you want to be when you grew up?

An astronaut.

If you could live anywhere else in the world, where would it be and why?

Australia. I’ve never been there and I hear it’s beautiful.

Looking back at your 18-year-old self, what advice would you give him?

Work hard; don’t ever let anyone tell you that you can’t do something; don’t play the political games; enjoy every day as if it were your last.

And how do you think your 18-year-old self would respond?

Thanks for the inspiration.

Hinman in the tulip fields at Keukenhof, Netherlands

Whereas in previous positions, Hinman had the opportunity to initiate or reinvigorate a company’s IP organisation, at Philips he was taking on a well-oiled machine, already the envy of its peers. “One of the unique differentiators that sets Philips apart from most other IP organisations is the solid IP infrastructure. From tight processes that have been developed over time which detail every aspect of our organisation’s work, to conducting effective global IP management workflow, to development and execution of thorough documentation and effective controls, Intellectual Property & Standards is the best-run IP organisation I have ever experienced,” he confirms. “Another differentiator is the worldwide team that executes on our IP strategy at Philips. Without such a diverse and talented worldwide team, the organisation simply would not function effectively, and this team has been built up solidly over time to become one of the best in the IP business. I am so lucky to be surrounded by such amazing talent.”

It can be difficult to make one’s mark at such an organisation; alternatively, there might be the temptation to effect change for change’s sake. Not so for Hinman who, from the outset, made it clear to his colleagues that he knew a good thing when he saw it. “I have a town hall meeting every quarter with my team. In the very first speech I ever delivered to them, I mentioned that my intent was not to make drastic changes to the Intellectual Property & Standards organisation,” he states. “The recipe that Ruud Peters had developed was a very effective one and it worked very well. The old saying in the United States is ‘If it’s not broken, then don’t fix it.’ That definitely applied here. Obviously, there have been some changes that I have made over my four years at Philips thus far ‒ mostly due to the changing industry and business landscape that Philips competes in and the associated competitor changes, and also due to the changing nature of Philips’ businesses. But overall, my organisation continues to flourish.”

Hinman takes a selfie with the IP&S team

Refocused

By far the most significant of those changes has been Philips’ shift in focus to become a health-tech company, including the divesture of its Lumileds lighting business. “Philips had been a high-tech consumer electronics company for many years, so that’s what our IP portfolio looked like. To a large part, our legacy licensing business still reflects this high-tech portfolio, which we continue to invest in and develop,” says Hinman, describing the impact this change of company direction had on him and his team. “We have also expanded our IP licensing practice to include select healthcare areas where Philips chooses to pursue a licensing value capturing strategy.” In addition, Philips’ global brand licensing practice has greatly expanded over the past four years and now accounts for a large share of the IP licensing revenue that Hinman’s organisation secures.

In order to ensure that his team kept on top of the corporate changes that Philips made, Hinman had to take a good look at what the company had, where it was positioned and – ultimately – where it was heading: “The change in direction to a healthcare company meant that we had to conduct a thorough IP landscape and gap analysis. By doing this, we could figure out the right blend of organic and inorganic IP growth to generate a portfolio that covers what Philips will be doing in the healthcare space in the future.”

Having the right people in place to support this transition was crucial and fortunately Hinman already had a strong team capable of doing just that. However, he did make some additional hires to ensure that his organisation could be effective in areas such as design, digital, trade secret protection and brand protection. With the advent of the Internet of Things (IoT), it has become increasingly important to have individuals skilled in these less traditionally commercial areas. Yet Hinman is quick to point out that this does not diminish the value of the core IP assets themselves: “In the world of digital and IoT, I think that what you are finding is not that patents are becoming less important, but that other elements of intellectual property are growing in importance. Digital plays a huge part in IoT and all forms of intellectual property become prominent, such as copyright, trademark, trade secrets and design rights, as well as patents; and if you are not prepared to deal with all of these elements, you could be left unprotected.”

To ensure that Philips never finds itself in such a vulnerable position, Hinman takes an integrated approach to intellectual asset management: “Essentially, we combine the optimum IP elements in order to secure the right mix of intellectual property to support the needs of the business: patents, design rights, copyright, trade secrets, trademarks and domain names.”

Global presence

Despite Philips’ pivot in focus, Hinman’s task as CIPO ultimately remains the same today: “I see my principal objective as developing and executing a sound global IP strategy that enables Philips to sell its products and services through providing an IP value capturing strategy that is unique and effective, and is distinct for each of the many Philips business groups. I need to ensure that long-range IP strategic plans are in place for each of these businesses, consistent and aligned with the overall corporate strategic plans.”

This is predicated on a nuanced understanding of the individual businesses themselves and the role that intellectual property could and should play in their success. “For each business unit within Philips, we conduct a SWOT analysis to identify the strengths, weaknesses, opportunities and threats, along with a detailed IP plan on how to address these in an effective manner,” he explains. “This ultimately becomes part of the overall IP strategic plan for these business groups.”

An essential part of developing an effective global strategy is an appreciation of how both challenges and opportunities differ from region to region. In recognition of this, Hinman’s operation has 15 offices in 10 countries, with approximately 330 people spread between them. “Wherever geographically Philips has a significant market presence with revenue generation, coupled with an R&D presence, I have an office,” he confirms. “Philips effectively employs a business/market combination strategy, which I also employ in our IP strategy development. So, for example, my people in Japan work with the businesses and the local Japanese market leaders to develop an IP strategy that combines the business/market elements specifically for the Japanese market based on products/services that Philips ultimately sells. By having people there on the ground in these market locations, addressing the needs of their clients on a daily basis, I can ensure that we have each of our important markets covered.”

Relying on his people, and ensuring that they recognise their own contribution to the success of Intellectual Property & Standards, is integral to Hinman’s management style: “It’s important to me that I empower my executive management team as much as possible. I have a very qualified, intelligent team and they are fully capable of making important decisions, so I allow them to do this. When I want to develop a new idea or strategy, I have my own opinion on how best to implement these ideas, but I also ask the executive management team to put their heads together and come to me with some proposals. I don’t have the monopoly on good ideas and I always appreciate how they can help me refine the specific idea or strategy to make it even better.”

A new Europe

So Hinman has a great team, tried-and-tested infrastructure and a solid strategy and portfolio all in place. It seems, then, that the biggest challenges to contend with today are coming from outside the company. “One of the problems companies like Philips are facing concerns the area of licensing standard-essential patents (SEPs),” he points out. “The court landscape has been fluctuating on how to interpret such issues as fair, reasonable and non-discriminatory licensing and the ability for patent holders to actively pursue injunctions.” Hinman believes that licensees are more reluctant now to take a licence than they have ever been, preferring to wait and see where the dust settles once some of the headline court cases have been decided. “This makes running a licensing business pretty tough,” he concedes. “However, we have had some good successes in licensing our SEPs and have achieved good decisions in the courts in being able to enforce these patents and obtain injunctions; so I remain optimistic for the future.”

Ultimately, the foundations on which all patent suits and licensing agreements are built are the rights themselves. Regardless of the prevailing political and judicial climate, the success or failure of your IP strategy will hinge on the quality of those rights. Ensuring this is largely down to granting bodies, which continue to face scrutiny from the IP community. “There are still a lot of backlogs at patent offices and unless there are enough examiners given enough time to be able to analyse the patent applications and consider them thoughtfully before deciding which should be granted and which rejected, you are bound to get quality issues,” Hinman argues. “It’s inevitable that you are more inclined to make mistakes when you’re under stress to process applications quickly.” In his opinion, the European Patent Office (EPO) is probably the best office at forestalling such problems. “They constantly expand their network of examiners and have consistently focused on quality, which is reflected in the strong EPO issuances.”

The dominant narrative in Europe at the current time is the imminent arrival of a single, unified system. “I’m certainly in favour of the unitary patent, as it promotes cost efficiencies and provides broad patent coverage among a number of key countries,” enthuses Hinman. “But it has to be implemented correctly and Brexit has created some uncertainty regarding the timing of the rollout.” However, despite these hurdles, Hinman remains positive: “I’m confident that it will be implemented soon and that many companies will take advantage of it.”

And what of the second element of this new system: the Unified Patent Court (UPC)? “The UPC will operate as a single court with jurisdiction over multiple European states. That will be less expensive than the current requirement to bring separate infringement actions before the national courts of each State where there is infringing activity. It will also avoid the undesirable outcome of national courts in different European states coming to different conclusions. We’re looking forward to embracing the UPC when it is launched.”

Philips’ three-dimensional ultrasound

However, not everybody shares his optimism – some commentators fear that the UPC will open the door to increased NPE activity. “NPEs have to a large extent shied away from Europe and there is now a worry from European companies concerning whether the UPC will affect that,” says Hinman. “I don’t necessarily think that we will see an influx of NPEs into Europe as a result of UPC implementation, but it is a risk.”

Another risk is that, after decades of work, the unitary system will not be fully utilised by European companies which are wary of change and underestimate the commercial role of intellectual property. “I think it remains to be seen whether other European operating companies will embrace the new unitary patent and UPC systems once they are up and running,” he acknowledges. “I am hopeful that they will see the merit in these initiatives, but I imagine that inevitably there will be those who choose to sit on the sidelines and wait to see how well it works for others before opting in themselves.”

First class

For his part, Hinman is not someone who could ever be accused of sitting on the sidelines: since making the Netherlands his home in 2013, he has wholeheartedly embraced Dutch culture and taken Dutch lessons in an attempt to master the language. “This has been the most inspiring and rewarding four years of my life – being here with Philips, and here in Eindhoven,” Hinman asserts. “There are so many benefits to running this organisation and the support I get from my CEO is unmatched. There is no question that the company is focused and committed on allowing me and my worldwide team to continue executing a strong, global, effective IP strategy to support each Philips business.”

For many heads of corporate IP teams, what Hinman describes is the Holy Grail, as eagerly pursued as it is elusive. “In order for intellectual property to be truly incorporated into a company and for an IP department to truly be effective, a cultural change has to happen from the top,” he explains. “So you have to convince the CEO and C-suite of the importance of investing in an IP portfolio and show the business benefits of doing so. The CIPO has to be effective in communicating how effective the IP value capturing strategy can be when implemented correctly, such that the CEO can quantifiably see the true impact that intellectual property has in his company, beyond the heavy costs associated with building and maintaining an IP portfolio asset base.”

Ultimately, he concludes, you have to convince the top brass that if the company wants to succeed, it must have an IP strategy to support this ambition. “Without that mind-set from the CEO and below, it is never going to work, as you will never be able to get support – financially or culturally – to make that change happen.”

It may seem a lot to ask – but then if anyone knows what it takes to get a successful IP programme off the ground, it is Brian Hinman.