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May, 2008
Intellectual Property Law
The Need for BalanceIntellectual Property and Innovation
Manny SchecterAssociate General Counsel, IBMschecter@us.ibm.com
Intellectual Property Law
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Intersection
IP in the Limelight
Balanced IP Balanced Innovation
Intellectual Property Law
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Intersection
IP in the Limelight
Balanced IP Balanced Innovation
Intellectual Property Law
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To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to
their respective Writings and Discoveries
Purpose Innovation incentive Dissemination of information, including gateway to
additional publications
Use Traditional (exclusivity, defensive, offensive) Influence development of common platforms Mechanism for technology transfer and collaboration Gloss and credibility Marker for technical information
Intellectual Property Law
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IP is Central to Economic Growth & Competition
0
2
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1954 1964 1974 1984 1994 2004
% o
f G
DP
US investment in intangible assets (>$1T/year)equivalent to investment in tangibles
~80% of the value of modern companiescomes from intangible assets
~80% of the value of modern companiescomes from intangible assets
Tangibles
Intangibles
Sources: US Federal Reserve – Nakamura, Ned Davis Research
“The competition of the future world is a competition for Intellectual Property Rights”
Chinese Premier Wen Jiabao
Japan intends to “bring about a nation founded on intellectual property”
Japanese Prime MinisterJunichiro Koizumi
“Intellectual property is the backbone of America's economy”
U.S. Commerce Secretary Carlos Gutierrez
Intellectual Property Law
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Patently Political
“So I call on the Congress to pass legislation that bans unethical practices such as the buying, selling, patenting, or cloning of human life.”
President Bush, state of the union address, January, 2008
“A system that produces timely, high-quality patents is essential for global competitiveness in the 21st century. By improving predictability and clarity in our patent system, we will help foster an environment that encourages innovation. . . . As president, Barack Obama will ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration.”
Senator Obama campaign statement, November, 2007
“I firmly believe that part of the underpinnings of our strong economy is the protection offered by a strong U.S. patent system.”
Governor Romney campaign statetment, November, 2007
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The Importance of Intellectual Property
Top CEO business priority: “Growth driven by innovation”
A new IP marketplace and economy is emerging
The idea has become the product
Increased competition for ideas
Strong, global intellectual property systems encourage innovation
Source: IBM Institute for Business Value, CEO Study 2006
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Evolving IP Strategies
19601990
2008
ProprietaryProduct Exclusivity
InfluenceCross Licensing for Freedom of Action
IncomeEnforcement for Income
GrowthLeveraging for Business Growth
Knowledge Economy based on collaborative innovation
Industrial Age focused on proprietary innovation
Intellectual Property Law
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Intersection
IP in the Limelight
Balanced IP Balanced Innovation
Intellectual Property Law
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More/Stronger Patents = More Innovation?
Intellectual Property Law
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Intellectual Property Law
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The Impact of Patent System Imbalance
“We estimate that the deadweight loss of a “loose” patent system from lost innovation is approximately $21 billion each year in private costs alone, or nearly $200 per household per year. This sizeable deadweight loss constitutes approximately 7% of annual R&D spending in the United States.”Ford, Koutsky, and Spivak, Quantifying the Costs of Substandard Patents: Some Preliminary Evidence, Phoenix Center Policy Paper Series, September, 2007
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Top Defendants in US Patent Litigation# Suits, 2006-2007
Microsoft (43) Verizon (29) Target (28) Dell (28) Wal-Mart (24) HP (24) Apple (23) Motorola (20) Sprint Nextel (20) AT&T (19)
Source: Troll Tracker, December, 2007
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Plaintiffs in US Patent LitigationNon-Practicing Entities
2006-2007 26% of overall infringement suits 50% of infringement suits against
large companies
3 months in late 2007 80% of infringement suits against
large technology and financial companies
Source: Troll Tracker, December, 2007
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US Patent Reform Legislation
Harmonization Alignment with foreign patent laws First-inventor- to-file v. first-to-invent
Patent application examination Improvement of patent quality Post grant review without resort to
litigation
Patent infringement litigation Discouragement of inappropriate
litigation tactics Damages assessment
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Patent ReformMore Than Just US Legislation
Reports from FTC/DOJ and National Academies
Patent quality initiatives USPTO Strategic Plan IP association activities Trends in judicial decisions Worldwide interest
Net: easily the most significant reforms to the patent system in decades
Intellectual Property Law
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Intersection
IP in the Limelight
Balanced IP Balanced Innovation
Intellectual Property Law
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innovation: how?
New Forms of Collaboration
Source: IBM Institute for Business Value, CEO Study 2006
Business partners
Customers
Consultants
Competitors
Associations, trade groups, conference boards
Academia Internet, blogs, bulletin boards
Think tanks
Other
R&D (internal)
Sales or service units
Employees (general population)
5% 15% 25% 35% 45%45% 35% 25% 15% 5%
CEOs: Sources of new ideas and innovation
“We have...today a lot more capability and innovation inthe [competitive] marketplace...than we [could] try to create on our own.”
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The Changing Nature of Innovation
Open
Collaborative
Multi-disciplinary
Global
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Proprietary Innovation Income and Royalties
Collaborative Innovation Interoperability
Patent Pledges and Commons
Patent Assignments
Open Source Software & Open Stds
IP-only Companies
A Spectrum of Collaboration and Competition
The Changing IP Landscape Balanced Innovation
ProprietaryProprietary OpenOpen
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Intellectual Property Law
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ProprietaryInnovation
Open,Standardized
Proprietary,Differentiated
Solutions
Standardization Cycles Promote Innovation
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Striking the Balance Needed for Collaborative Innovation
Balance between proprietary and non-proprietary Today’s law should be neutral & support each
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21st Century Demands Uniquely-Skilled People
Cross-disciplinary programs
and degrees
Fusing technical competency with industry-specific knowledge and business-process expertise
Success requires open collaboration among academia, government and industry
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• Clinical Decision Support
• Software Quality Research
• Privacy & Security Policy Management
• Mathematical Optimization
University-Industry Collaboration
August & December ‘05
Bill Bonvillian,
Legislative Director & Chief Counsel to
December ‘06
Announced in over 35 media outlets
IBM’s Open Collaborative Research Program
Announced in over 60 media outlets
June ‘07
University & Industry Innovation Summit, Washington D.C. & Summit Team’s Open Collaboration Principles
Summit Team’s Free Participant Use Principles
2008 Priorities:
More pervasive acceptance of both collaborative research principles
Continued progress and summit team expansion
Continued internal & external education
Principles based on:
Free participant use
Fee free or reasonable & non-discriminatory fee based for non-participants
Informed participant disclosure
Publicly shared
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Intersection
IP in the Limelight
Balanced IP Balanced Innovation
Intellectual Property Law
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The Interdependence of Patents and Innovation
The patent system fuels innovation
The patent system has not kept up with the shift to a knowledge based economy
Innovations to the patent system itself are needed to bring the patent system into the 21st century
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The Intersection of IP and Collaborative Innovation
Open Invention Network
Patent pledges
University collaboration principles
Marketplace Wiki
IBM Patent Policy
Inventors Forum
Open standards
Standards for Standards (S4S)
Open Document Format
Peer to Patent: Community Patent Review
Open Source as Prior Art
Patent Quality Index
Patent Policy Patent Quality
Standards Collaboration
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How the Scientists Can Help
Automated prior art search techniques
Common software taxonomy and/or automated search of source code and/or flow charts
Automated extraction of level of ordinary skill
Analysis for Patent Quality Index
Central repository for patent commitments to standards organizations
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Intellectual property will become
one of the key geopolitical issues
of the 21st century. Already, focus
has begun to shift from protecting
IP to maximizing intellectual
capital, which is based on shared
ownership, investment, and
capitalization.
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Thank You. Questions??
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