bu intcap.ppt printed 3-nov-99 page 1 version 01 intellectual property prerequisite competence and...

BU IntCap.pptPrinted 3-Nov-99

Version 01

Intellectual PropertyIntellectual PropertyPrerequisite Competence and Competitive Capabilities for the

Next Millennium: A View from the Business Unit

John W. Peterson Senior Manager, Technology Strategy

Switching and Access Solutions [email protected]

Working PaperNovember 1999


Version 01

IP In The News


Version 01

CREATING AND MAINTAINING IC ASSETS

Patents

Copyrights

Trademarks

Trade Secrets and Know-how

Non Disclosure Agreements

Questions and Answers


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Copyrights

Copyrights come into being upon creation of a work and fixation in a tangible form.

Protection afforded literary, artistic, and other works, such as software, to prevent unauthorized copying.

© 1999 LUCENT TECHNOLOGIES INC.

Works to be published should carry a proper notice (i.e.):

individual - life of creator + 70 years corporation - 95 years from publication or 120 years from creation, whichever is shorter.

Duration of rights, after which the work is in the public domain:


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Trademarks

Federal Registration

Anything (word, phrase, design, sound, smell, etc.) used to identify source of origin of goods or services

® – Symbol:– Nationwide coverage– Apply to U.S. Patent & Trademark Office

™

™)

– Symbol:– Regional coverage– No application - just mark (e.g., Apollo

Common Law:


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Trade Secret

Any information which is used in one’s

business and which gives one a competitive

advantage over those who do not know it or

use it.


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PRIMARY FEATURES

Confidential information can be used only for particular purposes for limited period of time.

WHEN NEEDED Prior to negotiations where it is likely that confidential information will be disclosed.

Obligates receiving party to not disclose confidential information for certain period of time.

Can cover incoming and/or outgoing information.

Preserves eligibility for foreign patents.

ADVANTAGES Preserves trade secret value of confidential information.

Non-Disclosure Agreements


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Requirements for Patentability

Test for Each Requirement

Useful - Can it be used? (It does not have to be better)

New - Was it ever done before in its entirety elsewhere?

Non-obvious - Is it an obvious variation of prior art?


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Time Requirements for filing a patent:

Within 1 year of publication

Within 1 year of public use

Within 1 year from an “offer to

sell” IF “ready for patenting;” i.e.,

1. Reduced to practice , OR

2. Described sufficiently to allow a person skilled in the art to practice the invention


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U.S. Specific Publication, Sales, Offers for Sale and Uses Grace Period for Inventor

Factors Affecting Novelty

Global Public Disclosure No Grace Period


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Protect, Project and Leverage Intellectual Capital

Understand Current Position

Analyze Situation

Identify Achievable Alternatives

Protect Future Desired Position

“Leverage IP”

Design Program & Set Goals

License, Litigate or Lose

Execute Program

Monitor & Control, Fix and Follow-Up

Assessment Strategy Execution

TechnologyOffice, BLGs & Strategy

Organization

EC - Senior Management Team

Strategy Organization,Functional (BLGs) &Core Organizations

Value: Alignment, Leverage, and Returns

Drivers: IP Strategy and Innovation


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Intellectual Capital Strategies In Context

• Provide a means to “manage the present from the future,” not from the past

– Snapshot of current expectations (Executive Vision)– Multiyear view (Platform and Core Product Family Product Technology Roadmaps)– Updated continuously via Product Technology Roadmaps, formalized at least annually

• Align strategy and technology based on business priorities and investment levels (Technology Value Chain)

– Reflect the pull of strategy– Reflect the push of technology– Reflect current investment plans

• Integrate intellectual capital strategies based on served market relationships and targeted rates of return

– Business Leadership Needs first (may require business case)– Targeted rates of return and appropriateness of revealing technology (interface with IP Law)– Competitors and Assertion (Support IPD as appropriate within scope above)


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The Corporate “Battlespace”

Within the Context of the Corporate Strategy: • High Impact - Low Internal Influence: Cumulative influence of governments, regulators and competitors far exceeds that of the business. It is here that the LONGER TERM FUTURE is determined.

• High Impact - High Internal Influence : Day to day commitment of resources to new and emerging opportunities. GROWTH and CURRENT PROFITABILITY are determined here

• Low Impact - Low Internal Influence: Domain of economists, external affairs and attorneys. Economic planning assumptions and DEFENSE of the enterprise from litigation and adverse regulatory intervention. • Low Impact - High Internal Influence: Domain of legacy products. CORE PROFIT generation. Bureaucracy’s infra- structure. Training ground for next generation of managers.

High

Impact

on

Corp

ora

te

Str

ate

gy

Internal Control/InfluenceLow High

Monitor, Anticipate, Precipitate, and Respond

Low Impact - High Internal Influence

High Impact - High Internal InfluenceHigh Impact - Low Internal Influence

Low Impact - Low Internal Influence

Manage for Growth and Share

Monitor, Advise, Counsel, and Defend

Manage for Efficiencyand Profit

Generic Objectives and Major Players

• Lobbyists• Attorneys• Economist

• Bureaucracy• Functional Support

• Regulators• Competitors

• Customers

Intellectual Capital Issues

Enterprise Positions

External Pressures


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Wall Street measures patent performance Market Capitalization Value to being in the Top 10

Why Is IC Important?

IBM: 1Canon: 2

NEC: 3Motorola: 4

Sony: 5Samsung: 6

Fujitsu: 7Toshiba: 8

Kodak: 9Mitsubishi: 10

Hitachi: 11Matsushita: 12

Lucent: 13U.S. Philips: 14

HP: 15Xerox: 16

GE: 17Intel: 18

Siemens: 19TI: 20

Sharp: 21Micron Tech: 22

Nikon: 22AMD: 24

3M: 24

26821934

16321428

13211306

12051194

11251120

11071058

927845

811769

729705

631618611

580580

557557

0 500 1000 1500 2000 2500 3000

Top Recipients ofU.S. Utility Patents

1/1/98 - 12/31/98


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Strategic Issues

• Must Align Strategy and Technology– Align technologies with specific strategic thrust– Time thrusts to create specific market opportunities by inserting technologies– Balance timing and technology for competitive advantage

• Technology is intellectual capital, it must be leveraged:– Limit access to and leverage “strategic” technologies– Enhance the served market relationships with strategic customers including accelerated access to new

customer identified technologies and to new partners, markets and customers– It must generate cost-offsets through royalties and technology use fees– Increase strategic competitors costs to stay in the game (require comparable investment in R&D to keep

pace with the market leader(s) -- Lucent Technologies

• Intellectual capital must generate returns comparable to those of other assets

– Minimum: Average weighted cost of capital– Target: Average weighted cost of capital + 20%– Maximum: Whatever the market will support


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The Strategic Business Development Spectrum

ComplexStrategic

SimpleTactical/Operational

Suppliers

Licensing SalesAgents

OEMStrategicAlliances

Expand Internal Units

EstablishSubsidiary

Mergers/Acquisitions

Cross Licenses

Joint Ventures

Legalistic & Contractual

Collaborative & Flexible

Commanding & Directive

Control Style

Joint Development

JointMarketing

Adapted from Zielinski 1998


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Product Technology Roadmaps

• Technologists interpretation of a platform, product, platform life cycle plan

– Direct link to strategy and business objectives

– Direct link to financial metrics

– Align customer needs with price points, architecture, and enabling technologies

– NIH? (Sourcing Internally or externally)

• Require virtual teaming to complete– Multiyear planning horizons

– Market and cost projections

– Strategy alternatives and metric sensitivity

– Technology attack strategies

– Common Technologies Roadmaps

– Assembly Process Roadmaps

– Technologies to protect (see Intellectual Capital Continuum)


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PRODUCT ATTRIBUTES ANDPRODUCT ATTRIBUTES ANDVALUEVALUE

AT&T PROPRIETARY -- Use pursuant to company instructions

1995 1996 1997 1998 1999Product

EvolutionPlan

CustomerValue

1995 1996 1997 1998 1999 VISIONCore technology Area

PRODUCT TECHNOLOGY ROADMAPCustomer drivers

Ease of useDisplay

User interface

Keypad

Software

Talk timePower management

Baseband processing

Microcontroller

Mixed signal

Memory devices

Batteries

Low cost

Radio

Antenna

Power amp

Housing

Shielding

PWB technology

System designStandards

Accessories

Audio quality

Voice recognition

Voice coders

DSP algorithms

Transducers/microph.

Import.Compet.Position

Techn.M/B

PROJECTED COSTS

$0

$100

$200

$300

$400

$500

1995 1996 1997 1998 1999 2000 2001

PRICE

COST

MANUFACTURING ROADMAP

1995-1996 1997-1998 1999-2000

ALGORITHM ROADMAP

1995-1996 1997-1998 1999-2000

Passives

COMPONENT ROADMAP

Memory

Interconnect

RF Devices

1995-1996 1997-1998 1999-2000

ASICsAvailability

MicroelectronicsSupply Line Management

ManufacturingEngineering

Business-driven technologyplans

Needs, Supply

A T & T PR O PR IET A R Y -- U se pursuant to com pany instructions

Advantage Competancy G oals Value Prop.

AT& T

M otorola

COMPETITIVE STRATEGY

PTR (Roadmapping) is a Core Process

Strategy Alternatives

ValueProp Channel

Pro-duct

Bus.Practice

Segment

MARKET ANALYSIS

Market

0

2

4

6

8

10

12

1996 97 98 99 2000

Revenue

0

1

2

3

4

1996 97 98 99 20000%

10%

20%

30%

40%

50%

60%

1996 97 98 99 2000

Market Share

BusinessDrivers

RequirementsInvestments

Offer Portfolio

Gro

wth

Position

Market Basket


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Intellectual Capital Continuum

Retain Ownership

Industry Licensing(Result of Enforcement)

Selective Licensing(The enemy of my enemy is my friend)

• Develop Product/Services• Obtain Marketplace Advantage• Protect, Police, Enforce• Impact Future Competition

• Technology based partnerships• Technology Transfer (More than Patents)• Barter Technology for Equity• Market Entry/Advantage

• Negotiate• Royalties = $$• Protect, Police, Enforce• Selective Denial for Market Positioning• Grantbacks

• Negotiate• Royalties = $$• Added Value to Incremental Development• Recovery on Sunk Costs

Limit Protection to 2 Years onalmost everything

After 2 years, unless product differentiatorlicense almost anything...

“We aren’t cheap but we can be bought!”


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Business Unit View of Intellectual Capital1. Use

In Product No LicensingIn SelectiveLicensing

In BroadLicensing

2. Type of Innovation All

Architecturaland Selected

Revolutionary

Revolutionary,Incremental, and

Niche

Incrementaland Niche

3. Business Strategy

Grow Share, ThenManage Life Cycle for

ContributionFirst to Market Early to Market

MaximizeTechnology

Use andRoyalties

4. IP Strategy Time based:Share Risk, Transfer

Technology,Maximize Sales,

Generate Royalties

VigorouslyDefend through

Litigation

ShareDevelopmentRisks/Costs,Position for

Market Entry

License forProfit andCash Flow

5. TimingProduct Life Cycle

Development,Introduction and

Growth

Developmentand Introduction

Mid to LateGrowth

6. Difficulty Timing and PredictingValue of Patents

Single Source,Non “Standard”

Solutions

Influence Not“Control”

Technologyas a

Commodity7. Cost Moderate

High(Identifying Useand Litigation)

Low toModerate

Moderate toHigh

(Multipliers)8. Benefits

Modest ProtectionTime: Marketand ProductProtection

Sharing Marketand Product

Risks/Rewards

IncrementalProfits

9. MarketPlayers’

Perceptions

Business as UsualDesign around

or fight it out inCourt

Pay forTechnology

Access

Nothingunique, lowvalue/rates


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Conclusion

Intellectual Capital is a Valuable Asset

Protect It– Use Appropriate Markings– NDAs

Grow It– Document Ideas– Generate Patents

Use It– Enhance Marketing Position– Generate Royalty Revenue

bu intcap.ppt printed 3-nov-99 page 1 version 01 intellectual property prerequisite competence and...

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