Category: Patent

How SME’s can strategically manage IP during economic events (Step 6)

This is Part 6 of a 8 step series on how SME’s can strategically manage IP during economic events: Outside Counsel & IP advisors

The key to successfully managing strategic IP prosecution during economic challenges relies on an understanding of “value adds” counsel and IP advisors may add in reshaping a strategy due to external changes in the IP environment.

Changing landscapes

During economic downtime it is not uncommon for ventures to look at reducing patent budgets, which trickle down to abandonment and divestitures.  Why? Organizations facing liquidity issues often sell IP, or fully abandon their IP. With cash flow becoming a challenge for some firms, the IP on the open market may only increase with the possibility of lower pricing to come for some portfolios. For companies facing bankruptcy and potential liquidation of assets there is the real threat that the assets will be sold at a high discount, leaving Freedom to Operate control in the hands of competitive ventures or larger market players with the capital to acquire assets for future market control. Firms with available capital to acquire and hold can now move to increase or restructure their future IP positions for a fraction of the cost.  In either case, the result may be a competitive shift in patent or other Freedom to Operate positions. 

As the market changes, data driven IP trends can be an invaluable source of competitive market intelligence. In practice this means engaging outside advisors (counsel, IP analysts) to help identify upcoming trends that can be capitalized on, but also tracking of any portfolio changes from key competitors or IP owners.

Prosecution strategies

Working to reduce costs, outside counsel can be an ally in working out various prosecution plans with regard to delaying or deferring patent office extensions for non-core IP, and prioritizing core IP that is necessary for continued operations of the business.  Much like was outlined in the IP Budgeting discussion (Step 2), taking an approach that lays out the portfolio spend over a timeline and mapping out various options will provide the ability for an IP team to proactively make prosecution decisions in parallel with budget change requests.

If material changes are made, should include having counsel assess IP obligations from contracts as changes to the portfolio are made will ensure (both for your organization as well as companies that have obligations to your organization).

Seek to answer the following questions:

  • For our business and our existing IP plans, what can be delayed and deferred using traditional patent office extensions, and what are critical decisions to consider that may prompt loss of rights?
  • What other IP obligations do we need to consider?
  • How can we be creative with our IP prosecution plans (resourcing, budget)?

Moving forward

A useful patent strategy still needs to have real market applicable patents that can be used to at least defend, license, or enforce. In-prosecution repositioning will build on the IP audit (Step 1) and budgeting (Step 2) outcomes.  This may be mixed with IP operational updates (Step 3) while building a business relevant portfolio (Step 4) that respects and leverages contractual obligations (step 5) that may change over time. Next, an approach that leverages external advisors to help assess changes in the external IP environment using IP intelligence lays the groundwork to update a prosecution strategy based on budget and business requirements.

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Modernizing Board Governance through Intellectual Property

“IP in the boadroom” is one thing, but “IP culture consistently championed by directors in and out of the boardroom” is another. So how can directors and boards create value and lower risk via IP?

For my final resarch paper for my LLM in Intelletual Property at Osgoode Hall, I researched how board governance needs to evolve given the current IP challenges in today’s business world,  what legal requirements they had to meet that aligned with both IP and Director requirements, and finally what best practices directors and boards should have.

The abstract is below, and I will post a longer business oritned writeup in the coming months. In the mean time a copy of my paper is up for peer review on SSRN or here for download. Comments are always welcome.

Abstract: This paper examines the gap between the historical prioritization of non-IP (intellectual property) issues for board of directors against both the legal requirements and market activities which suggest IP should be a key topic for boards to consider. A survey of current law and literature was conducted to identify the top IP specific governance challenges, looking at business IP transactions and patent pools as proxy to extract governance related topics. As a result, this paper provides a better understanding of the top IP related governance issues and opportunities boards and directors should consider, and recommends five best practices to enact an IP governance framework. In assembling these best practices this research has implications beyond board members and directors. Shareholders, analysts, regulators, and policy makers need to be aware and actively influencing boards to prioritizing IP assets and IP risks in their governance frameworks.


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Part 2: Intellectual property and artificial intelligence: what does the future hold?

In April we looked at IP and Artificial Intelligence, based on my recently published IAM article, specifically where ownership sat by country and company. The key takeaways were three fold:

  1. There are key players leading the AI patent charge (Microsoft, IBM, Facebook, Qualcomm, etc.)
  2. US and Chinese ventures are leading in terms of AI investments, and will have a huge advantage over other countries R&D direction (Canada, France, UK) in the future.
  3. China is poised to be well ahead of the US by 2020, and the push is coming from the research institutions

As an AI researcher, startup-venture, or institutional policy maker, how do we address this?

AI researchers:  it is critical to ensure a plan of IP protection is discussed as a critical component of both the research plan and commercialization plan.  Foresight is needed to ensure relevant patents are filed, and rights are either kept by the research institution for future license opportunities, or freedom to operate for commercial spin-offs. While technology and IP transfer to an industry partner is one option, patent protection with a non-exclusive license may keep future opportunities open to the institution to build on the research in their own commercial setting.

Startup Ventures:  As with researchers, foresight through the creation and execution of a patent strategy is critical. This will reduce the freedom to operate risk as the venture scales, as well as ensure intangible asset value is built into the venture for future needs of cross-licensing or M&A.

Policy makers: To ensure some level of returns can be generated for AI based research investments, policy makers must ensure funds allocated to AI based investments are not left as unprotected research. Further, as some level of protection is sought, ownership must be structured to ensure future access to the IP. This could be done through retaining either freedom to operate access, or preferred licence access.  This future access is critical to ensure the policy investment can be built on with future investments.  Alternately, following the model by Israel’s Office of the Chief Scientist, IP can be acquired and but require monetary level of reimbursement to the policy maker to ensure funds for re-investemetns continue to grow if the technology or R&D roles are transferred out of the Israeli jurisdiction.

In summary, any research group, scale-up, or multinational working and patenting (or not patenting) in AI should be aware of their competitive IP position against the patent pace of both US based corporations and Chinese based research institutions.  The future of AI is on pace to be owned by a select few – yet a well crafted and cohesive strategy for a researcher, startup, or policy group has the ability to level the playing field.

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Part 1: Intellectual property and artificial intelligence: what does the future hold?

Last month I co-authored an article with James Hinton in IAM Magazine, entitled “Intellectual property and artificial intelligence: what does the future hold?“.We looked at the IP trends in AI, specifically where ownership sat by country and company.

Overall, any research group, scale-up, or multinational working and patenting (or not patenting) in AI should be aware of their competitive IP position – and unless the group is from China they are already at a disadvantage for the future.  While companies like Microsoft, Alphabet, IBM, Facebook, Qualcomm, Yahoo! and Amazon are leading the way and ahead of most companies, they will be poised to relinquish their IP leadership to Chinese institutes and companies soon.

Our research indicated that US and Chinese ventures are leading in terms of patent ownership, and other countries investing in AI technology (eg, Canada, France and the United Kingdom) need well-crafted and cohesive strategies that consider the country’s position in the international landscape or else technology startups from these countries will be paying royalties to US and China based ventures in the future.

In more detail – where is the Chinese push coming from?  AI, a research heavy technology, is primarly being protecetd by Chinese institutes:  China accounts for 15 of the top 20 research institutions filing AI patents, while the United States accounts for the other five.  My estimate is that this push by China is likley strongly supported from their 2006-2020 Medium and Short Term Development Plan, which has China targeting to be one of the top 5 patent countries with patents granted to its own citizens by 2020.

I would encourage you to read the article and consider the strategy shifts and action plans we propose.  (Download is here)

Until then – as an AI researcher, startup-venture, or institutional policy maker – where does this leave us, and what do we do about it?

That’s a discussion for Part 2….


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Does your Scale-up Reality Check Show an IP Strategy?

Investments in technology and global marketing are still happening, but in Canada, 90% of companies are not protecting the innovation as they move to grow. 

In the past several months I have talked with numerous startups and high-potential scale-up ventures, few of which are ready or able to adequately invest in protecting their R&D investments as they grow. The key challenge they all face? IP obstacles – both in funds to invest and the experience or expertise to do so efficiently, which will in turn become a limiter to their growth. The end result, at least for the ventures I met with, was they are at serious risk in expanding their global market footprint while keeping global competition at bay.

I considered if my experience was limited to the groups I spoke to, so I analyzed some additional Canadian market data, which confirmed my view.

First, we have to consider that there is support for company growth, and both Government and Canadian ventures are continuing to show success in innovations for global scale up. As an example, almost 75 Canadian companies were exhibitors at January’s Consumer Electronics Show (CES 2017) in Las Vegas, with more than half of them coming from Ontario. Navdeep Bains, Canada’s minister of innovation, science and economic development, was in attendance and met with a number of Canadians companies such as Blackberry, Mighty Cast, Interaxion, and Paradigm Electronics, to discuss innovation and access to global markets.  Considering the Government of Canada is investing $218 million over the next five years to increase global investments, and CES 2017 is billed as the worlds largest consumer technology tradeshow, the attendance by both Minister Baines and the exhibitors to help promote our innovations on a global scale makes sense.

However, when I look at the data, the long term impact of the Government’s global investments drive coupled with the ventures R&D investment, I struggled to find a way these investments would be protected. My analysis of the all the Canadian SME companies exhibiting at CES 2017 indicated only 18% had publicly listed patent protection for their technology. In fact, less than 10% of the SME’s reviewed had the beginnings of an Intellectual Property (IP) strategy. This implies that upwards of 90% of the ventures promoting their innovations on a global scale were not set-up to protect the benefits of their efforts in the long term.

What this means is while high-potential scale-up firms are producing ideas, ownership eventually will lie elsewhere as larger global competitors move to copy the product, or protect new iterations with their own IP protection.

Looking globally, there are several countries that realize this, and are moving to act on it. In April, Singapore launched a $1Billion innovation fund, which was partially funded by the IP Office of Singapore. Their goal is to fund companies that have “globally competitive technology”, and also begin to move Singapore as a “Global IP Hub in Asia”. With this it is clear that the innovation investments via Singapore will have a strong IP aspect to them. Canada, with creation of a National Patent Strategy in this years Federal Budget, will hopefully not be far behind.

In 2014 I posted a writeup about “Innovation and Sovereign Patent Pools”. The global IP licensing market has changed dramatically and while SPF’s and Patent Assertion Entities are still relevant, their approaches are expanding from pure licensing to stronger linkages to local innovation projects and funding.

So where do we move from here?

As a company, one must invest in not only research and global growth plans, but ensure they have the freedom to own their success – which can be accomplished by an IP Strategy. As an investor, either a private or government fund, policy and action via funding must consider the ownership of the technology: are we satisfied with merely creating technology, or will we strive to be the beneficiaries of our intellectual property?

To be successful, all key parties – ventures, investors, and government groups – need to make strategic investments in intellectual property to give freedom for growth.

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