making innovation pay: creating a valuable portfolio · 2.building the patent portfolio...

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Making Innovation Pay: Creating a Valuable Portfolio

The Web Conference Series for Corporate Counsel

February 14, 2007

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Addressing Trends…Sharing Solutions

2006 Year in Review book available

– Email [email protected]

– Visit www.Foley.com/webconference

Today’s Moderator

Nat Slavin

ModeratorLegal Industry ConsultantFormer Publisher of InsideCounsel

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Today’s Presenters

Stephen P. FoxOf Counsel, Foley & Lardner LLP

Former VP and Deputy General Counsel for IP, Hewlett-Packard CompanyMember of Foley’s Intellectual Property DepartmentExperience with all aspects of strategic IP counseling, licensing, patent procurement and patent litigation

Today’s Presenters

Harry GwinnellVice President and Chief IP Counsel, Cargill,

Incorporated

Joined Cargill in 2001Former patent examiner with the U.S. Patent and Trademark OfficePresident of the Intellectual Property Owners Education Foundation

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Making Innovation Pay: Creating a Valuable Portfolio

The Web Conference Series for Corporate Counsel

February 14, 2007

IP Trends Around the World

All IP is more importantPatent, Trademark and Copyright power is expandingIP owners are more aggressiveCustomers are more aggressiveCounterfeiting is more prevalent

There is a need for: -proactive strategies

-managing IP risk

-leveraging IP assets

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Finding your Intellectual Property

Explore your business model and look at Complementary AssetsLook at your strategy and the available IP protection tools:

Apparatus, Compositionsof matter & processes-------Patents

Brand & trade dress -------------TrademarksSemiconductors -------------------TopographyComputer code ---------------------CopyrightsManufacturing ----------------------Trade Secrets

Intellectual Property

Patents Trademarks

Copyrights

Public Domain

Trade Secrets ) (

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Getting a patent takes years –Know why you want one:1. To protect a product, service, or business

model from being copied by others, especially “free-riders”

2. To gain freedom to operate and access to developments of others: leverage through licensing and counter-ammunition

3. To preclude others from getting patents on your own developments

4. To generate an optimal return on your investment

How are innovations made?

1. Companies operate on different paradigms• Small vs. Large Narrow vs. Broad

2. Innovation can occur in different ways• “Eureka” vs. Incremental

3. Simultaneous discoveries can occur completely independently• “Great Man” theory vs. the evolution of

enabling, underlying technology

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Three Challenges in a Knowledge-Based Company

1. Getting information from the innovatorsIncentives and motivation

2. Building the arsenalProcesses

3. Extracting value from the portfolioPurposes

Three Challenges in a Knowledge-Based Company1. Getting the information from the

innovators• Inventor motivation through “Invent shops”,

“Innovation Workshops”, or specialized R&D to build the portfolio

• Incentive program to encourage timely submissions

2. Building the patent portfolio3. Extracting value from the patent portfolio

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Capture Innovations with Inventor IncentivesA. Objective: To increase and focus invention

disclosuresB. Get high-level managers to evangelizeC. Give cash awards to inventors (U.S. example):

1. On invention disclosure: $X2. On patent filing: $10X3. On patent grant: Personalized plaque

D. Recognize innovators in peer groups, annual banquets, etc.

E. Set up cooperative administration: By legal dept, HR, R&D function and business groups

Strategic Futuristic Portfolio

Capturing Innovations

GUIDED

BRAINSTORMING

Innovation Workshops

Marketing, Business,or R&D Roadmaps

INVENTION

HARVESTING

Invent Shops

Traditional Patent Portfolio

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Poll Question #1

Do you have a cash incentive program for innovators in your organization?

YesNo

Live Meeting Poll

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innovators2. Building the patent portfolio

• Thoughtful selection of innovations to patent• Use Patent Portfolio Management processes and

tools

3. Extracting value from the patent portfolio

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Institutionalize portfolio development processes that help to:1. Spot future trends before they come into focus

• Seek to learn and intersect the business strategies of competitors (competitive intelligence)

• Identify and cover missing enablers (gap analysis)2. Focus on ALL strategic directions, covering:

• Competitors, Complementors, Substitutors• Upstream suppliers and downstream customers

3. Identify problematic patents owned by others• Design around them; invalidate them; or license them

4. Create patents covering competitors’ businesses for use as counter-ammunition in disputes or licensing negotiations

5. Look at ALL complementary assets in the value chain

Human Capital

(Tacit)

Intellectual Assets

(Codified)

Intellectual Property

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Faci

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apab

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Cust

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Suppor

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Structural Capital

Intellectual Capital Complementary Business Assets

A Company Model

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Intersecting Strategies Result in theSame Product: Who Owns the Patents?

Time

?

Co. A

Co. B

What Are the Missing Pieces?Invent and Patent Them Now

?

?

?

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General ManagerStrategic Patenting

Survey

InventionDisclosureSubmitted

Recommendations byTechnology Managers

Recommendations byIP Attorneys

Evaluation Guidelinesand Checklists

Keep asTrade Secret

PublishDisclosure

File PatentApplication

Prepared by In-House

Legal Staff

Prepared by OutsideCounsel

Patent Coordinator Review Meeting

Set up a Patent Coordinator & Review Process

Strategic Patenting Survey

TECHNOLOGIES/PRODUCTS

List: (i) Strategic Technologies: technologies or products that have the highest strategic importance over the next five years, and (ii) Futuristic Technologies: emerging and futuristic technology opportunities of likely use by competitors, substitutors, complementors, downstream customers' customers, and upstream suppliers.

$100 TEST

Allocate $100 to pay for patenting activity

among all listed.

NON-US PROTECTION

Name non-U.S. countries where patents should be obtained

(e.g. Japan, Germany, UK, China).

1. (Check: ___ Strategic or ___ Futuristic)







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Use an Invention Evaluation Matrix(Source of example: www.Anaqua.com)

Use a Portfolio Evaluation Matrix(Source of example: www.Anaqua.com)

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The Patent Portfolio

Patents That Have Lost Value Patents On Strategic Technologies

Short-Lived and Irrelevant

Simple Solutions forSpecific Products

Market Based, Covering:1) Competitors

2) Complementors3) Customer’s Customers

4) Suppliers

Corporate BasedTechnical Jewels

Low Value -- Weed OutHigh Value -- Can Also Be Used For Access

To Innovations Of Others(e.g., through Cross-Licenses)

Characterize your Patent Portfolio

Poll Question #2

Do you have a process for engaging high level managers to help prioritize and select innovations to be protected?YesNo

Live Meeting Poll


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innovators2. Building the patent portfolio3. Extracting value from the patent portfolio

Patent cross-licensing & out-licensing for: • Generating revenue • Obtaining freedom to operate• Maintaining control • Settling disputes

Out-Licensing Factors

Out-licensing evolves from awareness of one or more of the following:

1. Core technologies not fully penetrated into markets2. Non-core technologies can produce income3. Non-strategic markets have revenue potential4. Trading IP rights enables freedom to operate5. Alliances can leverage capabilities6. Industry standards can be created or perpetuated7. Inevitability: Others will license if you don’t

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An Economic ModelYes

R & D LEADS TO SOMETHINGCOMMERCIALLY FEASIBLE ?

Yes

BREAKTHROUGH OR DOMINANT DESIGN ?

Yes

INTEGRATE INTO THE BUSINESS & SELECTIVELY LICENSE TO ASSURE FUTURE DESIGN FREEDOM

FREEDOM TO COMPETE?

STRATEGIC(Value is based on the BUSINESS)

OPPORTUNISTIC(Value is based on LICENSING INCOME)

NoFORGET IT OR LICENSE OUT

NoFORGET IT OR LICENSE OUT

No LICENSE OUT

No LICENSE OUTCOMPLEMENTARY ASSETS UNDERCONTROL (e.g. PATENTS, MFG,ADVERTISING, DISTRIBUTION) ?

Yes

Use Tools To Characterize Portfolios(Example is in ICO Suite from www.PatentCafe.com)

Zoom Graphic & Patent Details

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YesNo

Yes Maybe

Patent Out-Licensing Areas

Core

Non-Core

Non-Strategic Strategic

Markets

Technologies

Poll Question #3

Does your company have an active out-licensing program specifically designed to generate revenue?

YesNo

Live Meeting Poll


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In Conclusion: A Summary of Truisms

Innovation is planned, not randomA patent can protect recurring business income from later arriving “free-riders”A patent may be all that differentiates a product or service in a commodity marketThe cost of a patent is a bargain if it prevents a dispute or a lawsuit or provides freedom to operateIt takes institutionalized processes to produce an arsenal of patents as well as an arsenal of prior art

Thank you for your participationFor more information on the Web Conference series visit

www.foley.com/webconference

Stephen Fox([email protected])

Harry Gwinnell([email protected])

Nat Slavin([email protected])

making innovation pay: creating a valuable portfolio · 2.building the patent portfolio...

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