Grenoble oct 19

IMPLEMENTING INFRASTRUCTURESOF THE NEW IP ECONOMY

The beginning…

Why CDC ?

Caisse des dépôts (CDC) is a public-owned holding company that makes long-term investments in pursuit of public policy objectives, economic

general interest and to foster economic development eg CDC invest mostly in economic and social infrastructures.

Since 2000 CDC take several initiatives to support competitiveness and innovation: venture capital fund of funds, digital infrastructure, industrial competitive cluster, carbon energy (bluenext market with Euronext), alternative energy…

Grenoble oct 19

Initial evidence

Official report underlined, January 2007, the insufficiency of public research monetization.

Rapport de l’Inspection des Finances de janvier 2007 : « En dépit des mesures prises depuis la loi sur l’innovation et la recherche de 1999, la valorisation de la recherche ne progresse pas en France depuis quinze ans. Les revenus de propriété intellectuelle sont en baisse sur les dernières années autour de 1% de la dépense de recherche…alors qu’ils représentent selon les années, entre 3% et 5% du budget de la recherche aux Etats-Unis.».

CDC has chosen to support University modernisation in the frame of a new governmental policy (autonomy, U cluster…)

At the same time IP economy show deep transformations: auctions, IP funds, trolls, Ocean Tomo, Intellectual venture…

Grenoble oct 19

Drive to a broader diagnostic

The failure of the on going IP market : opacity, asymetry, uncertainty… “anti commons” situation

And the losses for the entire economy : No synergy between inventions coming from different sources or different domains, while invention sources multiply and innovative products require bundling of inventions. Duplication of scare resources; premature abort; high proportion of unused patents.The core of innovation, university, SMEs, have paradoxically the greatest difficulty to access to the exchange (A large proportion of SMEs don’t succeed to license their patents or to be licensed and 25% of innovative SMEs are involved in IP litigation (Oséo french study)

Big companies haven’t, with exception, patent diffusion practice, even when they are unused.Loss of externalities and costly leakages

Grenoble oct 19

And a larger program for CDC

Objectives

Give Europe a primary role in knowledge marketIncrease circulation of inventions and diffusion of technologies; provide clusters of patentsEnlarge IP monetization access to Universities, PRO and SMEsand increase financial resources for researchEnable a new division of labor between those that innovate and those that industrially exploit innovationBring security and predictability, cut down transaction costs, bring price transparency, standardization of contracts, insurance possibilitiesImprove patent quality through marketResult in the necessity to build an IP market situation

Grenoble oct 19

FUNCTIONS AND PRINCIPLESof an IP market economy

Match supply and demandInvest directly in IPHedge against risks related to IP

Accessibility (SMEs, PRO and Universities)Transparency (price, transaction conditions)Security (legal, quality)

Grenoble oct 19

Grenoble oct 19

A set of initiatives is required to create markets for IP economy

Market places and market mechanisms

Reliable intermediaries

Technical and financial tools

European dimension

CDC will invest in these infrastuctures

IP ECONOMY COMPONENTS

Grenoble oct 19

IP FUND PRIORITYThe reasons

Patents are a vehicle : from protection to transaction

A market is an active mechanism : select, bundle, control, identify…

Experiences of simple passive market places as internet platform were non conclusive

Patent Fund seems the appropriate form of a market for IP and to have the greatest leverage effect on the entire economy

But an experiment is required

Grenoble oct 19

Grenoble oct 19

IP Fund mechanisms

Organize circulation of invention between producers and users and matching of supply / demand Fabricate cluster of patents Critical size : thousand patent familiesInvest in valuation, marketing and commercialization (the reason why it is called a “fund”)Diffuse information, offer secure instruments, provide validated tools (“leverage effects”)Focus on PRO, Universities and SMEsReduce team working with a network of public (PRO, Universities) and private expertsSupport costs, share revenues. Economic model

P. Terroir june 2011

IP Fund : an active market mechanism

Patents

licensing

Start up

TTO

Clustering /pooling

One public lab

PATENT INVESTMENT FUND

Seed fund /venture

licensing

licensing

licensing

patent

IP WORLD MARKET

Various public + private labs

licensing

licensing

IP Fund : economic model

Acquisition of IPR : proxy, license, purchase (low costs)

Investment in commercialization : control, bundling, marketing, selling (most of the costs)

License selling (mostly non exclusive)

Revenues sharing : 50/50 or 30/70

10% of the family patents are licensed for 250 K€/y

ROE: 10% Grenoble oct 19

Expected benefitsof a « market-fund »

Research institutionsMonetise their research through an open, responsible mechanismPossibility to partner on multi-year programsEffective vector for technologies to reach SMEs / CorporatesPotentially access to a wider pool of Technology / IP for their own researchAccess to financing / partnering from users of their IP

SMEsAccess to large, diversified pool of IP/technologies which would not be available

otherwise. Give SMEs a tool to acquire the IP rights they need at reasonable transaction costs

to consolidate their freedom to operate (especially required when they export or subcontract with corporates)

Allow SMEs to valorise their IP in others fields than their ownOpen the possibility to provide SMEs with IPR they lack in case of litigationFund acts as a virtual cluster, enabling SMEs to partner with other SMEs research

institutions or corporate;

The leverage effect : the Fund create components of an open and secure IP economy

Tools & Functioning

Tools & Functioning

DemandAnalysisDemandAnalysis

Supply AnalysisSupply Analysis

Mapping patent sources (list of major patents -public, private-ownersConfirmation from big private portfolioIdentification of innovative SMEsContract with public research organizationObjective : 15K family patents

Implementation Implementation

Identify potential markets & applicationsCartography of innovative SMEsusing or in needs of patentConfirmation from big companiesEuropean potentialInternational potential

Patent quality ratingLicensing pricing informationClusterization process Matching supply / demand toolStandard licensing contractsInsurance possibilities

Team Experts and commercial networkcommunication

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Grenoble oct 19

CDC INITIATIVES

Grenoble oct 19 16

CDC PROPRIETE INTELLECTUELLE

Created in July 2009100 % CDC subsidiary Objectives: create IP economic infrastructures

Activities : patent market, investment fund, technical and financial tools and actors, european cooperation…

Grenoble oct 19

FRANCE BREVETS

Patents investment Fund (CDC/ French State) 100M€Created : march 2011, One year experimental period Active market tool : Acquire and cluster patents from

- SATT (gathering of Universities TTO) - PRO - Corporate - SMEs

License to French and European SMEs or monetize on international market

RELATIONSHIP BETWEEN FRANCE BREVETS AND PRO & UNIVERSITIES

Complementarities : Proximity versus international market

Specificity versus clustering patents from various origins (private, public, different sectors)

Capabilities : financial, experts network, defense

Preserve PRO & Universities IP ownership : Fund is entitled through license or proxy

Transparency and partnership; information and consultation

Permanent contract and supplementary revenues

Grenoble oct 19

Grenoble oct 19

Work in progress

Acquisition and license of a 600 patents portfolio

Recovery system for portfolio of bankruptcy SME

Contract with SATT and PRO on going

Patent rating system under construction

IP insurance system under study

European patent licensing Fund extension

P. Terroir june 2011

France support creation of European patent fund

French Prime Minister stress the importance “to create an european patent fund, at a worldwide dimension, which is a necessary tool to boost innovation economy”

Grenoble oct 19

Knowledge Transfer Strategic Partnership

Signed in Rome - 16 June 2010

Creation of joint Working Group between:EIF/EIBCaisse des Dépôts et Consignations (CDC – France)Cassa depositi et Prestiti (CDP – Italy)Centro para el Desarrollo Tecnológico e Industrial (CDTI - Spain)Innovationsbron (Sweden)KfW-Bankengruppe (Germany)Veraventures (Finland)

Aim of like-minded Partners with Long Term perspective is to:Support the emergence of European and national Knowledge Transfer InfrastructuresAccelerate transfer of European research and technology to the marketFacilitate a well functioning Knowledge Transfer and Intellectual Property economyEncourage more open and transparent marketplaces for Intellectual PropertyExchange best practices and potentially to analyse investment opportunities jointly

P. Terroir june 2011

Europe Flagship Initiative Innovation Union 2020

COMMUNICATION FROM THE COMMISSION october 2010It is therefore more important than ever to deliver the so-called "fifth

freedom", which is not only the free movement of researchers butalso the free movement of innovative ideas…A key issue is how to increase the flows of, and therefore benefits from, IntellectualProperty Rights.

The markets for trading IPRs need to become less opaque and fragmented so that IPR buyers and sellers can find each other efficiently, financial investments are made in IPR assets, and transactions take place on fair terms Although a number of initiatives are emerging both at Member State level and internationally[1], they should be developed on a European scale for maximum efficiency and to take advantage of economies of scale and scope

[1] Such as the intellectual property market place of the Danish Patent Office and the initiative of the French Caisse des Dépôts

P. Terroir june 2011

Innovation 2020 proposal

22. By the end of 2011, working closely with Member States and stakeholders, the Commission will make proposals to develop a European knowledge market for patents and licensing. This should build on Member State experience in trading platforms that match supply and demand, market places to enable financial investments in intangible assets, and other ideas for breathing new life into neglected intellectual property, such as patent pools and innovation brokering.

P. Terroir june 2011

Creating a financial market for intellectual property rights in Europe

Study submit to tender in 2010 by EC

St Gallen Fraunhofer

Conclusions in December 2011

P. Terroir june 2011

European Council 4th february

Europe needs a unified research area to attract talent and investment. Remaining gaps must therefore be addressed rapidly and the European Research Area completed by 2014 to create a genuine single market for knowledge, research and innovation

Private investment in innovative products and services should beencouraged, in particular by improving framework conditions :

explore options for setting up an intellectual property rights valorisation instrument at the European level, in particular to ease SMEs' access to the knowledge market and to report back to the Council by the end of

2011.