Ruud J Peters
You have won acclaim for your ground-breaking work as CIPO of Philips, and now as head of your own consultancy – what is the secret to your success?
I have a good sense for devising IP strategies that are focused on creating value for businesses and for translating them into actionable implementation plans, coupled with the ability to communicate these in clear terms to people in IP organisations, businesses and boards. I also know how to prepare an organisation and its people so that they are able to deliver on those strategies.
What steps can IP counsel take to promote better understanding among key stakeholders?
IP counsels need to communicate more in the language of business instead of legal terms about IP matters relating to the business. This starts with understanding that the purpose of an IP department is not to obtain patents to protect a company’s inventions but to support businesses in achieving their goals. IP counsels have to be closely connected to their businesses and R&D, and understand how intellectual property can support these businesses in growth and become more profitable. This is not an easy task but if IP counsels start doing this and show perseverance, it will be a rewarding journey – not only for them personally but also for their businesses.
While at Philips, you won acclaim for ensuring that intellectual property was properly recognised as a business asset. In your view has this goal been achieved across the majority of corporate innovators or is there still work to be done?
Nowadays many companies know that their intellectual property is a business asset but still many companies do not manage this asset with the purpose of generating value for their businesses. Many companies say that their IP strategy is aligned with their business strategy but when one scratches the surface a bit, it turns out that frequently there is only a weak link. Still a lot of work needs to be done to bring intellectual property to a level where it is really embedded in the strategy of businesses and where intellectual property, business and R&D work together to define and implement the IP strategies. To achieve this, IP departments have to become more business focused and value driven. They have to understand what value intellectual property contributes to each of their businesses in financial terms and thus what the return on the investments in intellectual property for each business is.
You have over 30 years’ experience negotiating complex global IP licensing deals. What common mistakes do parties make when embarking on a licensing negotiation – and how can they avoid them?
I think that at least three elements contribute significantly to a successful outcome of licence negotiations: prepare, be culturally aware and be firm but reasonable. A thorough preparation of licence negotiations is key. Although this seems obvious, sufficient time and effort is not always put into it, which may create problems along the way. One of the tasks is assembling a negotiation team with all necessary expertise and skills. Licensing is a people business!
Often you have to negotiate with parties in another region of the world with a different culture and different habits. Being aware of that is crucial for a successful outcome in licence negotiations.
I always tell people that they should negotiate deals in a way that they can still make another deal with the same company later on. Building long-term business relationships is important. Relationships can turn sour through one bad licensing deal. Companies have long memories!
What are the main challenges that companies face when it comes to patent monetisation?
The biggest challenge for companies in monetising their patents is the limited certainty that they have about whether their patents are indeed as good as they think. When you look at the invalidation rates in instituted inter partes reviews in the United States, in court cases in Germany or oppositions before the EPO, patents do not survive or come out unscathed in roughly two-thirds of all cases. That is a pretty bad outcome for patents granted by patent offices after examination. We now have a climate where invalidation actions have become a regular instrument in licence negotiations instead of a last resort in failed negotiations. I do not expect that this situation will change anytime soon as long as major patent offices continue to examine all patents with the same degree of scrutiny. Companies wanting to monetise their patents need to do as much as they can prior to the patent being granted to increase the chances that their patents will survive any validity challenges.
Ruud J Peters
Ruud Peters is an IP business leader with both strategic and operational capabilities. Under his leadership, the Philips IP department was transformed from a cost centre into a successful profit and loss organisation with full transparency of the return on IP investments at every business and product level in the company. After his retirement, he founded his own consultancy company supporting companies of all sizes in a broad range of IP and organisational matters.