protection, mistakes and your yellow brick roadin learning, teaching and research • today - most...

Protection, Mistakes and

Your Yellow Brick Road

Managing Intellectual Property in Engineering and Manufacturing

Dr Jamie Ferguson, Isis Innovation

Followed by a networking session with light refreshments

Operational Programme II – Cohesion Policy 2007-2013

Empowering People for more Jobs and a Better Quality of Life

Event part-financed by the European Union

European Social Fund (ESF)

Co-financing rate: 85% EU Funds; 15% National Funds

Investing in your future

isis-innovation.com

Objectives for this evening

• Introductions

• Developing a strategy for IP

• Managing Innovation

• Effective Engagement with the University

• Case studies on what other companies have done well/badly - Do's and Don'ts

• Discussion

• Networking

isis-innovation.com

Isis Innovation Ltd

Oxford Technology Transfer IP, Patents, Licences, Spin-outs, Material Sales, Outcome Questionnaires, Seed Funds, Isis Angels Network, Isis Software Incubator, OUH NHS Trust

Oxford Expertise Consulting, Services

@isisinnovation

A profitable company 100% owned by the University of Oxford

Isis Consulting Business Technology Transfer and Innovation Management

http://www.linkedin.com/company/isis-innovation-ltd.

https://twitter.com/

isis-innovation.com

Oxford University & Isis Innovation Ltd

• Oxford University is the oldest university in the English-speaking world (founded c.1188), and a leader in learning, teaching and research

• Today - Most Powerful UK Research University

• Research Fortnight, December 2008 Research Assessment Exercise

• Highest University Research Spend in UK

• £501 million (2010/2011)

• Isis Innovation Ltd is a company 100% owned by the University of Oxford, established in 1987

• Isis helps researchers who wish to commercialise the results of their research

• A world-class Technology Innovation business

• Isis 9th highest British filer of PCT patent applications (WIPO Data, 2010)

• Highest European University PCT applicant (WIPO Data, 2010)

Christ Church, Oxford

Ewert House, Oxford

isis-innovation.com

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Subvention

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Intellectual Property in the Physical Sciences

© Copyright 2011 Isis Innovation Ltd.

Overview of Different Forms of Intellectual Property

Legal right For what? How?

Copyright Original Creative or

Artistic forms

Trademarks Distinctive

Identification of Products or Services

Use and / or Registration

Reg. Design External Appearance Registration

Patent New Inventions Application and

Examination

Exists Automatically

8 Trade Secret?

Q. What IP would you find in an iPhone?

9


IP found in a mobile phone

• Trade Marks

• Made by “Apple“

• Product “iPhone 5“

• Software “iOS6"

• Patents

• Data-processing methods

• Semiconductor circuits

• Chemical compounds

• Gestures

• Copyright

• Software code

• Instruction manual

• Ringtone

• Trade secrets

• ? manufacturing

• Designs (some of them registered)

• Form of overall phone

• Arrangement of buttons

• Three-dimensional form of buttons

Image: Wikipedia 10


Other examples of valuable intellectual property

Coca-Cola®

Apple® iPod®

DNA copying process

Harry Potter

Instant camera

11


What is a patent?

12

• Protects technical innovation (an Invention) and requires a formal application process

• Gives the owner the right for a limited period to stop others from making, selling or using the invention without the permission of the owner (on a geographical basis)

• Bargain between the State and the owner/inventor offering a short term monopoly (20 years) in return for a full description of the invention, which is published (after 18 months)


Can You Patent? – Three Criteria

13

• Novel? = is it different

• Inventive? = so what

• Useful?

• Also has to be.....

• Not excluded

• Sufficiently described


Can You Patent? - What Can’t Be Patented

14

• Business Models (In Europe)

• Inventions not considered to be useful or possible (e.g. Perpetual Motion Machines)

• Various non-technical categories

• Non-technical software – but complex

• Anything contrary to the laws of physics

• Surgical Methods

• Physical Phenomena

• Abstract Ideas


Patenting Process

> US system had been very different to UK & Europe (first to invent, not

first to file. Now changing under America Invents Act)

> PCT (Patent Cooperation Treaty)– International application

> ISR (International Search Report)

–prior art the Examiner thinks may be relevant, about which we can

make arguments

> Costs build significantly at each stage ~ GB£30k by year 4

> Complex and requires professional advice

Month 20

0 12 18 30 years

Priority PCT ISR National ……………Grant………………

Filing Publication Phase

15

Q. You’ve developed a new microprocessor: why protect it?

16


You’ve developed a new microprocessor: why protect it?

• It blocks my competitors

• I can choose to licence it to others and can take action against infringers

• It’s valuable in R&D collaboration

• It’s the starting point for a new spinout company

• It’s good for our reputation

• We have to gain a monopoly on commercialising otherwise developing it is not worthwhile

• Society in general benefits from improved and better made products

17

Q. What inventions need IP protection most?

18


19

Answer:

• IP is particularly necessary to offset extremely high development costs, such as for new drugs.

• Pharmaceutical companies sell these much above costs, but if we did not grant, through IP, ‘monopolies’ then governments might have to fund expensive clinical trials

Q: What inventions need IP protection most?


Relationship between Technology Positioning and Possible Exit Scenarios IP in different sectors

20

Patent alone is enough

Patent + Trade Secret

Trade Secret + Patent

Trade Secret

Contracts

Trading, Cooperation

Functional integration

Dynamic integration

Level o

f in

teg

rati

on

req

uir

ed

betw

een

p

artn

ers t

o t

ran

sfe

r t

ech

no

log

y

Type of asset, and role of patents in commercial protection

High

High

Low


Is This Protectable?

21

• Proof of Fermat’s Last theorem Y/N

• New method of medical treatment for eczema Y/N

• A smartphone Y/N

• This course Y/N

• ‘Great Expectations’ novel by Charles Dickens Y/N


Is This Protectable? - Answers

22

• Proof of Fermat’s Last theorem

• No. Scientific and mathematical theories and methods cannot be patented.

• New method for medical treatment of eczema

• No, exceptions might include combination (eg of drugs) that create a new therapeutic entity, copyright around published literature.

• A smartphone

• Yes, multiple patents manufacturing process, parts – patents; shape and colour – design; ringtone and website content – copyright, logo – trademarks.


Is This Protectable? - Answers

23

• This course

• Yes. Owned by the University of Oxford, copyright-protected, uses ‘Isis Enterprise’ trademark.

• ‘Great Expectations’ novel by Charles Dickens

• No. original written works or ‘literary works’ are covered for the lifetime of author plus seventy years.


IP protection

• Patenting not always possible for software…

• Article 52 – Excluded matter

• method for doing business

• program for a computer

• method for performing a mental act

• ….or desirable

• Value of patent to licensees

• What is the industry norm? Open source/patents/trade secrets?

• Value to Isis/Oxford

• Enforceable? Could the Oxford contribution be written-out? Other IP protection may be relevant

Copyright and Design protection

Database right

Trade marks


Taking on the Project: Commercial Value

25

Before patenting:

• Does it have commercial value?

• Stage of invention – time to market

• Market size and need

• Freedom to operate

• Competition

• Can you really sell it?


Is it Worth it? Patent Costs v Market Opportunity

Potential commercial gain must outweigh costs of technology development and

patenting

Over a 20 year lifetime, filings and maintenance costs in major territories can total £100,000

26


Look Ahead at the Cost-Benefit

Our Proprietary Patent Portfolio Analysis Tools

Periodic review

is

recommended!

27

• How much will the patent portfolio cost to

maintain?

• Which countries are crucial? Which are optional?

• What is the size of the market opportunity?

• How close to market is the technology?


Patent Can Take Twenty Years

28


Should an Invention be Patented?

Advantages Disadvantages

Advantages Disadvantages

• Exclusivity, enables investment and higher return on investment

• Strong, enforceable legal right

• Makes invention tradable (licensing)

• Reveals invention to competitors (after 18 months)

• Can be expensive

• Patent enforceable only after grant

• (This can take 4 – 5 years)

29


Alternatives to Patenting

• Cheap • Hinders others to patent

• Does not offer exclusivity • Reveals invention to competitors

• Cheap (but there is a cost of maintaining secrecy)

• Does not reveal invention

• No protection against reverse engineering / duplicating invention

• Difficult to enforce • ‘Secrets’ often leak quite fast

• No effort required • Does not offer exclusivity • Competitors will often learn

details

Information Disclosure (Publish)

Secrecy (Create Trade Secret)

Do Nothing

30


Summary

31

• Patents are as complex and value-laden as politics; take advice

• The law is more grey, than black and white

• It’s not often worth it if it’s not new

• Consider your options.

• It’s only worth it if you can fight it.

Managing Innovation

32


What is Open Innovation?

• A term promoted by Henry Chesbrough in his 2003 book entitled “Open Innovation…“*

• “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”

• “The use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.”

• ...The new imperative for creating and profiting from technology?

33

* Open Innovation: The New Imperative for Creating and

Profiting from Technology (HBS Press, 2003).


The Basic Idea

Technology Providers

Technology Seekers

• Universities

• Research Institutes

• SMEs

• Large Companies

• Start-ups

• SMEs

• Large Companies

Technology Providers

• Government • Research

Funders • Investors • Science Parks

…to commercialise, source & develop new technologies.

Maturity ideas products companies

1 2 3 4 5 6 7 8 9 10 Technology readiness level (TRL)

Skilled translators

34


Prof Henry Chesbrough UC Berkeley, Open Innovation: Renewing Growth from Industrial R&D.

The Closed & Open Innovation Paradigms Open Innovation in a Company

Our current

market

Our new

market

Other firm´s

market

External technology

insourcing

Internal

technology base

External technology base

Internal/external

venture handling

License, spin out,

divest

Where the firm’s boundaries are ‘porous’…

…allowing flow of ideas and IP in and out.

35


36

Why is There a Need?

http://www.sciencephoto.com/media/203130/enlarge



Economic Evolution

37

• In the past, economic power was built on manufacturing capability which was in large part dependent on semi-skilled labour

• Over the last 50 years, manufacturing has been steadily moving from global region to region in search of low cost labour, the least amount of government regulation and the most attractive tax structure

• China and India now dominate the manufacturing world and there is little room or interest in most other countries to try undercut these by offering a less expensive labour alternative


If Manufacturing is No Longer a Significant Economic Option, What are the Alternatives?

38

• Service Based Economies – In some countries, the trend is toward service based economies that employ mainly semi-skilled people and are often centred around tourism

• Wages are relatively low, less opportunity for social mobility and

career growth

• Tax base low compared to evolved economies

• Knowledge Based Economies - Knowledge is the New Product of Choice for Many Countries

• More opportunity for bright, ambitious young people

• More potential to grow the economy faster and create a larger tax

base


Stay Competitive in Changing Markets

39

• To develop new markets

• To improve brand reputation

• To offer customers & society new benefits

• Ultimately, to sustain and grow business

• Build a knowledge economy (government)


Where Does Knowledge Come from?

40

If knowledge is becoming the most

valuable product, where is it being

produced?

• Individuals

• Companies

• Government Research

• Universities


Traditional Innovation Management

Traditional innovation management:

• R&D department develops products

• M&A activity acquires innovation

41

http://www.sciencephoto.com/image/465976/large/F0052516-Scientist_examining_test_tube_of_liquid-SPL.jpg


Traditional or ‘Closed’ Technology & Product Development

…mainly optimizing internal flows of knowledge & information.

Technology research

Product development

Closed system

view Organizational

boundary

Limited ideas from outside

Ideas &

requirements

New

products

Internal innovation

42


Drawbacks & drivers for change

43

Drawbacks of closed technology

• Insular, not responsive to the environment

• Focus too much on efficiency to detriment of creativity

• Arguably discourages an ‘entrepreneurial spirit’

Drivers for change

• Competitiveness & globalisation

• Increasing development costs

• Increased mobility of skilled workers – leaving corporate R&D

• Expansion of venture capital

• External options for unused technologies


Typical Features of Open Innovation

• Active IP management (licensing)

• Licensing in rather than developing in-house

• Out-licensing agreements, patent sales, joint ventures and spin-offs

• ‘Platform’ technologies licensed exclusively to different markets

• Less dependence on centralised R&D (for mature technologies)

• More collaborative R&D with universities and other companies

• More Corporate / start-up / SME interaction

• Launching new ventures using internal and external technologies

• Focuses more on ‘configuring’ technology and external supplier relationships

44


Much Talk of Innovation Values

• “Innovation is a cornerstone of Siemens’ success. We closely align

R&D activities with business strategy…have a strong position in both

established and emerging technologies”

• “The process of developing new products – from initial research to

reaching the market never ends at GE. Across the business we follow a

long standing process for new product introductions”

• “The Innometer is a tool for Tata companies to spark and nurture

innovation, and ultimately build and foster a culture that encourages

new idea generation and implementation”.

• “At Kodak, we’re smart enough to recognize that we don’t have all the

technologies needed for success nor do we need to re-invent the wheel.

Where there are gaps we’ll seek out the best – from universities, start-

ups and the leaders in the field. You can see these partnerships and

collaborations in action across our product portfolio today. And will

continue to see additional collaboration announcements in the future, as

an ongoing strategy.”

45


Corporate Agenda and Research Policy are Converging

Companies are looking to the outside for R&D and new ideas:

• Increasing competitiveness and inadequate results from internal R&D

• Increasing development costs and pressure to reduce R&D Spending

• Increased mobility of skilled workers – leaving corporate R&D

Research Organisations (including Universities) are under pressure as well:

• More scrutiny to show that government

and donor spending on research is

relevant to society and contributing to

the national economy

• Reduced government funding for

research

• Entrepreneurial culture increasing in

Universities

46


Example - Pharmaceutical Industry

Some of the largest pharmaceutical companies, such as Astra Zeneca, are shutting down most of their internal R&D:

• Will rely on new drug discovery and development being done by universities

• Will acquire these new products in the final stages of human trials

47


Example – Proctor & Gamble (P&G)

48

• P&G used to be a very closed organization

• “We invented ‘Not Invented Here’; now we

don’t care where good ideas come from”

- Jeff Weedman VP External Business

Development

• P&G financial crisis, in 2000

• Missed a series of quarterly financial

estimates;

• Stock market lost confidence in the

company;

• Stock price fell by more than half in 4

months - CEO was fired

• Searching for the root cause:

• “…Our current brands were performing well.

But we weren’t developing many new

brands.” – C. Wynett

2001 <10% new initiatives involved external innovation partnerships

2008 this was >50%

Huston, L., & Sakkab, N., Harvard Business Review (2006)


P&G Asks on Open Innovation

49

• Business architecture modelling and simulation

• Digital skills – improve digital skills of organisation

• Next generation visualisation – mapping of networks

• Projection and simulation capability

• A service to simply and reliably select, recruit, train, educate, manage, assess performance, execute payroll processes for a distributed non P&G workforce that interacts with shoppers in-store on P&G behalf.


Kodak Interest Areas

50


The Machinery of Open Innovation

51



What Makes Open Innovation?

52

Relationships Agreements Product

Innovation

Knowledge Transfer


Risk or

Uncertainty Applied

Research (Corporate Research)

Product

Development

(Business Unit Focus)

Event Driven Event Driven Schedule Driven

Basic

Research

(Universities,

Government labs)

Universities/Govt Labs/Research Institutions Venture Capital/Early Stage Firms

JDA Fellowships Grants Supply/Distribution

Sponsored Research Consulting

Agreements

Minority Equity Investments

License

Research & Development Continuum

53


Collaboration Mechanisms with Universities & Public Research

UNIVERSITY OF

CAMBRIDGE

54

• Academic Engagements

• Fellowship Grants

• Unrestricted Grants

• Sponsored Research Agreements

• Consortia / Memberships

• Advisory Boards

• Internships

• Student Projects

• Sponsored postgraduate Research Agreements

• IP agreement up front

• Accelerated project development

• Broad collaboration


The Rolls-Royce Approach

55

“University

Technology Centres

help protect our

capability into

the future”


Organisational Bridges

University tech transfer

offices:

• University research

connection to commercial

world

• Focus for commercialization

and corporate collaboration;

models vary across

University / Research

organisation sector

University Science Parks and

Applied Research Centres:

• Providing cross-discipline resources

for companies

• Nurturing resources for university

spin-outs

56


Small & Medium Sized Enterprises (SMEs)

Enterprise category

Headcount Turnover or Balance sheet total

medium-sized

< 250 ≤ € 50 million ≤ € 43 million

small < 50 ≤ € 10 million ≤ € 10 million

micro < 10 ≤ € 2 million ≤ € 2 million

The EU defines SMEs as…

…US small firms (<1,000 employees)

R&D spend increased x40 from 1981 to 2005.

57


Limiting features affecting SMEs Engagement with Open Innovation

• Less capacity for managing the external relationships

• Lack capability and capacity for translating and exploiting technology.

• Insufficient market power to capture value of ‘in-sourced’ technology?

• Potentially less attractive as partners to other firms (Corporate or start-ups).

• Limited resources available to manage & protect IP.

= structural disadvantages, or possible advantage?.

58


Some Structural Advantages

59

• Exploit new trends sooner,

greater agility and focus

• Focus on expertise

technology. offering narrow

field knowledge to a wider

range of markets.

• Entrepreneurial

spirit...finds new business

models for new

technologies, adaptable

• Speed of decision making

and committing to action.

• Respond to the innovation

needs of MNEs, e.g.

providing sub-system

innovation within the

supply chain

• Provide specialised low volume product

& services

• Provide vehicles for assessing

technology & market potential (sharing

risk)

• Provide acquisition targets

• Act as ‘early adopters’ of larger firm

technologies


Crowdsourcing – R&D Platforms

60

• TekScout - crowdsourcing R&D solutions

• Idea Connection- idea marketplace and

problem solving

• Yet2.com- IP market place

• Hypios - online problem solving

• Innoget - research intermediary platform

• One Billion Minds - online (social)

challenges

• NineSigma- technology problem solving


http://www.yet2.com/

http://www.ninesigma.com/


Data Analytics - Open Innovation

61


Apple’s App Store

Closed?

Open?

62


Open Innovation as Utopia

Universities

Public domain IP

Competitors Or collaborators?

Intermediaries

Government

SMEs

Research organisations

…‘universe’ of potential technology and IP opportunities.

Regional Government

Science Parks

Clusters

63


Barriers to Open Innovation?

What do you think are the main challenges in adopting an open

innovation model?

• NIH (Not Invented Here) syndrome

• Competitive (& protective) not collaborative

cultures

• Tendency to protect rather than share

knowledge & IP

• Poorly developed networks – with

universities, start-ups / spin outs etc.

• Lack of IP, licensing and venturing expertise

64


Research – Corporate Considerations

65

Research Organisations

Academic priorities: freedom,

publication

Timelines less important

Industry needs

“Industry is out to cheat us”

Companies

Protect not share; competitive not

collaborative

Few networks with research

organisations and SMEs

“Academia is out to take our money

and waste our time”


Company Definition of Strategic Benefits to SME / Uni Partners

• Definition (validation) of market, technology,

business model

• Big company expertise, brand, funding

• Big company market knowledge

• Channel access

• Pull for future product & services

• Scaled

• Manufacturing / supply chain

infrastructure

• Technology access

• Patents, Know-how, Services, Support

• Competitive and technology intelligence

• Early insight to market trends

• Interaction with technology leaders &

innovators

How valuable are

these to

Universities /

Research

Organisations?

66


Example – Pharmaceutical Company

“Open Innovation enhances our ability to identify and use

externally originated innovation. In exchange, we offer our

partners:

• Insights on important unmet needs in the healthcare industry

• Information on innovation processes and best practices

• Guidance, advice, and partnership on commercialization efforts and

links to our company”

Adoption

Historic Targets Open Innovation

Targets

Adoption Curve

67


Corporate Culture of Innovation

Network across many types/sector

Try things; prototype fast; allow failure

“Dreamers with Deadlines”

Decision-making of every sort is far better with diverse views

Good project managers key

HR is chief carrier of culture of innovation

68


The Six Deadly Sins of Open Innovation

• Not Building Enough Flexibility into Timetables and Deliverables - Managing outside schedules and deliverables requires a higher level of risk management and contingency planning

• Not Looking Far and Wide Enough for What you Need – Utilizing outside global networks for scouting and evaluating innovations is essential to find what you need

• Not Exploiting the Value of Internal IP to the Outside World – Out licensing of technology can be a significant source of revenue for companies

• Not Getting Buy-In - Open innovation initiatives require senior management commitment and guidance, but also, real buy-in from everyone involved is essential for success

• Not Understanding Both Sides – A keen understanding of how R&D is conducted in universities, research labs, and start-ups is as important as knowing your own internal innovation programs and processes

• Not Involving Outsiders as a Part of Your Internal Team - Looking to the outside world for innovation requires bringing outsiders into your R&D planning and management

69


Companies….

NEED:

• Support for both parties to

navigate the other’s

system

• Flexibility to enable

movement of key people

• Balanced IP terms

• Understanding of

resources required to

commercialize an

invention

• Understanding of

university constraints

70

• Technology portfolio management and responsiveness

• Enables investments in different approaches to reduce uncertainty

• Provides alternatives to acquisition with options for increased future participation or exit

• Early access to new technologies / IP or business models


Summary - Closed & Open Innovation – Corporate & SME

SMEs

• Recognise how they can support the innovation needs and ambitions of their larger customers.

• Identify niches and specialist opportunities.

• Acquire capabilities to support growth, innovation & IP management.

71

Large companies:

• Need a combination of ‘closed & open’

innovation approaches, policies &

processes.

• Engage established SME suppliers in their

innovation plans for existing technologies.

• Network, monitor & invest in spin-outs /

start-ups for new technologies.

Discussion

isis-innovation.com

www.isis-innovation.com

Isis Innovation Ltd, Ewert House, Ewert Place, Summertown, Oxford OX2 7SG

T 01865 280830 F 01865 280831 E [email protected]

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Thank You!

For more information on events in this series visit

www.um.edu.mt/knowledgetransfer

or email [email protected]

Operational Programme II – Cohesion Policy 2007-2013

Empowering People for more Jobs and a Better Quality of Life

Event part-financed by the European Union

European Social Fund (ESF)

Co-financing rate: 85% EU Funds; 15% National Funds

Investing in your future

http://www.um.edu.mt/knowledgetransfer

mailto:[email protected]

protection, mistakes and your yellow brick roadin learning, teaching and research • today - most...

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