ip strategy and open innovation policy updated

IP Strategy & Open Innovation PolicyInnovation & Entrepreneurship in Universities

Bill PontikakisBill Pontikakis © 2013

The Modern University Ecosystem

Bill Pontikakis © 2013

New Startups

Industry Innovation

Projects

University Ecosystem as

Leader in Innovation and

Entrepreneurship

Top World Innovation Ecosystems [1]


Traditional IP Strategy [2]


Control and exploit your IP

Limited Impact, Shortsighted Decisions

Driver of Revenues (free cash flow)

The “Medusa Effect” [3]


• Excessive patenting

• Overly stringent IP policies

• Prohibiting communication between company researchers and those outside

Procter & Gamble

• Use 10% of their patents

• Pay millions in annual renewal fees for remaining 90%

Procter & Gamble

• Unused IP can create patent thickets that inhibit potential collaborations

Economic Consequences [3]


Opportunities for 2nd

generation innovations

are lost due to lack of

collaboration with 3rd parties.

60% of the

patent holders receive

1% of the revenue

40% of ALL U.S.

patents receive 99% of patent-

licensing revenue

Traditional Approach to IPConsequences to Education Ecosystems


University IP

Ownership

A major barrier to

collaboration with Industry

Rolls Royce

Takes 18 months to negotiate a

research collaboration agreement

with a University

partner

Rolls Royce

Due to the delays the company is considering whether to

terminate its network of

research centers

The 10 Most Successful, in License Income, U.S. Universities

1.40.5 0.4 0.4 0.4

1.0 1.50.8 0.4 0.4

15.012.2

9.3

6.0

4.8

3.8

2.73.5

2.11.4

Licensing Income ($ Billions) Research Expenditure ($ Billions)

33.4


Less than 5% Annual ROI from IP Licenses

NYU

Wake

Fore

st

Northweste

rnEmory

Florid

a State

U of Florid

a

U of Minneso

ta MIT

U of Califo

rnia

U of Wash

ington

4.3

3.4

1.91.7

1.4

0.70.5

0.3 0.3 0.3

Annual Average % Return


Canadian Universities The Trend is Worse

…and it Doesn’t Improve Over Time

IP Revenues Earned by U.S. and Canadian Universities 1991-2008 [5]


The New PhilosophyOpen Innovation (ΟΙ) Policy [6]


Opportunity

The “one-size-fits-all”

approach to IP is generally unhelpful

Open Innovation

The company’s use of internal as

well as external ideas,

and internal and external

paths to market, as it

looks to advance its technology

Goal

To create an ecosystem

around your IP or “a system of value” to

multiple parties

Closed Innovation (CI) vs. Open Innovation (OI) [7]


IP as a Disabler or Enabler of Open Innovation [3]


How to Create Value withOpen Innovation (OI)


Idea

Create an Innovation Ecosystem. Within the ecosystem

grant access to large

portion of your IP basis

Goal

Parties within the ecosystem

will use the open

technology as a basis for their own

products and services

Outcome

The 3rd parties will increase

the total value of the

ecosystem through the creation of

complimentary products

and services

How to Create Value with OIIBM – Eclipse Project


Action

IBM in 2001 released to

public its Eclipse

project, a developer tool

worth some $40 million at

that time

Strategy

To replace competitor software-

development products with

a standard framework into which

might better integrate its

Rational software

product line

Outcome

Eclipse is now one of the

world’s most widely used

software development tools, actively supported by almost all the major players

in the software industry

How to Create Value with OIGlaxoSmithKline Pharma [3]


• GlaxoSmithKline Created a “patent pool” of 800 granted or pending patents

• Researchers can license freely in order to develop and produce new products and formulations

Objective

• To generate public goodwill for corporation

Objective

• To Create a network of potential collaborators with whom the corporation can license IP for profit

How to Create Value with OIUniversity of Glasgow - Easy Access IP [8]


IP and granting rights are

provided free in a standard legal

page legal agreement

A preliminary piece of IP can

add to the portfolio of a

young company and help it attract

investment

Most of the 25 licenses executed under Easy Access

IP terms have been with SMEs which are known to find it difficult to interact with

universities

How to Create Value with OIUniversity of Manitoba – IP Ownership [8]


• Partners Gain automatic ownership of IP arising from collaborations

• Royalties on resulting products only after a patent starts generating revenues for the industrial partner

Objective

• Contribute to the local economy

Objective

• Increase the funding of research programs through the industrial collaborations

How to Create Value with OIUC BERKELEY – Industrial Alliance Office [9]


• OTL is a “push” effort, pushing out University patents for licensing in industry

Existing office, Office of Technology Licensing (OTL) focuses on the

licensing of University owned patents

• IAO is a “pull” effort, trying to bring the private sector to the University

New Office of Industry Alliances Office (IAO)

was created to enhance collaborations

How to Create Value with OIUC BERKELEY – Collaborations [9]


Open Collaborat

ions

Results publicly available to everyone

Consortia

Participating firms having preferential access to data and

IP

Sponsored Research Projects

Managed quite selectively, with only one industry partner

How to Create Value with OIUC BERKELEY – Collaborations [9]


How to Create Value with OIUC BERKELEY – Benefits of OI [9]


OTL IAO

600 Collaboration

Partners

$70M / year (Grants + Outside

Funding)

$10M / year (Patent

Licensing)

Suggestions on Open Innovation


• Create Intermediate Organizational Structures within the boundaries of Innovation Hubs

• Foster an Open Innovation culture with shared resources

Large Corporations

• Create Intermediate Organizational Structures within University boundaries.

• Open up underperforming IP portfolio

Academia


Most Vibrant University Ecosystems Foster Collaboration

Collaboration leads to Innovation

Students, faculty, and industry don’t just “consume” University products

Also they volunteer their services and donate money to help innovate with and alongside the University [2]

Benefits of Open Innovation Adoption


Build a regional economic prosperity in the society, not just institutional advantage to the university [2]

The new IP policy will provide mechanisms that create:

New partnerships of interactionMarket knowledgeIncentives that motivate new entrepreneurship

Open IP Strategy – Value Creation


Brand Value

Third Parties Use Your IP

Raises University

Profile

Attract High Quality

Faculty & Students

Increase in Grants &

Corporate Donations

Open IP Strategy – Value Creation


Will increase revenues from

tuition, research grants, alumni donations [2]

Might decrease revenues from

licensing

Innovation and Incubation Centers Recommendations for their IP Policy


Release any IP that has not generated any licensing income for the last 3 years to the incubation center

Any new IP should have the same grace period of at least 3 years, after which, if it has not generated any income, it should be released to the Incubation Center

The Incubation Center will use that IP as a leverage to attract collaboration with SMEs or to assist new startups with fund raising

Any new IP generated from the collaboration, if successfully commercialized, can generate income for the University (from licensing fees or any other form of monetization)

Open IP Strategy – Spur Innovation & Entrepreneurship


Spur Innovation & Entrepreneurship

The University will be at the center of the new innovative Ecosystem

The University will be a key contributor in putting their city on the map of the top world innovative ecosystems

References


[8] Nature Biotechnology, “No-fee university licenses spur biotech partnerships”, vol. 31, no. 5, p. 376, May 2013

[7] F. Wippich, “Leadership in Open Innovation: Examining the Influences of Open Innovation on Competencies, Control, and Behavior in R&D Environments”, Open Innovation in Firms and Public Administrations, pp. 97-125, IGI Global, 2012

[6] Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press, 2003

[1] Cornell University, INSEAD, WIPO, “The Global Innovation Index 2013: The Local Dynamics of Innovation, 2013

[9] Henry Chesbrough, Principal Investigator, “Open Innovation: Implications for Japanese Innovation, Report to NEDO, March 2013

[5] CIC, Rights and Rents, Why Canada must harness its intellectual property resources, 2011

[4] The Kauffman Task Force on Law, Innovation, and Growth, “Rules for Growth: Promoting Innovation and Growth Through Legal Reform”, Ewing Marion Kauffman Foundation, 2011

[3] O. Alexy, P. Criscuolo, A. Salter, “Does IP Strategy Have to Cripple Open Innovation?”, MIT Sloan Management Review, vol. 51, no.1, Fall 2009

[2] John Palfrey, “Intellectual Property Strategy”, The MIT Press, 2011

ip strategy and open innovation policy updated

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