valuing ip for the c-level suite - presentation: bruce schelkopf / melissa bitting, ingersoll rand -...
DESCRIPTION
For more information: [email protected] J. Bruce Schelkopf who is the Vice President, Deputy General Counsel and Chief IP Officer, from Ingersoll Rand and Melissa Bitting, Senior Corporate Counsel, Intellectual Property, at Ingersoll Rand delivered their presentation at the marcus evans IP Law Summit held in Las Vegas, NV March 20-22, 2014. Join the 2015 Summit along with top IP Law executives and service providers in an intimate environment for a focused discussion of key new drivers shaping the legal industry today. For more information: [email protected]TRANSCRIPT
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Valuing IP for the C-Level SuiteCapturing Value from Idea to Income (IP Value Chain)
March 2014 IP Law Summit, Red Rock
J. Bruce Schelkopf
& Melissa Bitting
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C-Level IP Metrics
• C-Suite’s Interest is Typically:
– Return on Investment
– Competitive Positioning & Asset Leverage
– Risk Mitigation
– Speed to Market
– Income
• Perception of IP Function’s Interest is Typically:
– Protection of the Patents
– Expense Line Item with Assets for Future
– Handle the Legal/Technical Issues and Some Education
• Clear Gap Exists in Capturing Business Value
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Definition of Value Can Be Complicated
• Google was concerned about Freedom to Operate issues with Android Platform
– Why? Android clawed away nearly 44 percent of the market from Apple.
• Google Paid $12.5B for over 17,000 patents, but only likely needed a very few
• Core patents have been with Motorola since 1994, and were the heart of three Motorola lawsuits against Apple. This set of patents cover technology essential to the mobile device industry including location services, antenna designs, e-mail transmission, touchscreen motions, software-application management and third-generation wireless.
• In the purchase, there were 7,500 patents still pending (2012)
$760K / patent?
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Value Algorithms Vary Widely
• Google Buys Nest for $3.2 Billion (A Thermostat Company) (2014)
– Why?
– Nest provides Google an ideal platform for stretching the power of its own intelligent machines beyond the web and into the internet of things
� Capturing data of users when they are not ‘actively’ on the web
� Part of a ‘connected home’ approach
� “Google wants to be the connective tissue for all the devices and all the services in our lives,” said Jan Dawson, an analyst for Jackdaw Research (Time, Jan 14, 2014)
• Nest filed 200 applications, worldwide (2013)
• Nest is being sued for patent infringement by Honeywell (2013)
• Nest obtained patent licensing deal with Intellectual Ventures (2013).
$16M / application?
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Patent Litigation is the ‘Sport of Kings’
Exposure
• Exposure is on the Rise
• Costs to Be Involved are Increasing
• Exposure in Increasing Globally
• Traditional Plaintiffs are Less Traditional
Case May Span Years
Numerous or Few Defendants
Judgments Usually in Tens of Millions And/Or Injunction
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And Trolls are Front and Center
http://patentrolls.org
http://www.ipwatchdog.com/2012/08/26/here-they-go-again-this-time-with-the-patent-shield-
act/id=27476/
www.aipla.org
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Successful IP Strategies Achieve IP Wealth
Value Creation
Wealth
VC VE
RM
IP:
Value Extraction
Risk Mitigation
Obtain a High Return on
Investment (ROI) Through Early
IP Activities and Actions Aligned
with Innovation & Strategy
Pursuits that Grow the Company
Value of Each Attribute is Company and Culture Unique
But “Wealth” is Aligned with “Growth”
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Identify Your IP Operational ValueDirectly Related to Company’s IP Approach
The IP Value Hierarchy Concept helps
provide alignment of Company Expectations
with measured IP Functional Performance
Defensive Level Includes:
� Stakes Claims and Builds Shields
� IP viewed as legal asset
Integrated Includes:
� IP present in daily activities
� Focus on Process, not just
assets with IP -leading others
� IP is strategic, embedded, and
has organizational focus across
technology and legal
Cost-Center Level Includes:
� Reducing Costs & Maintaining
Core Assets
� IP likely legal asset
Growth-Driven Level Includes:
� Assets Aligned to Growth Plans
� Possible Monetization & Licensing
� IP may be business asset
Visionary Includes:
� Positioned for technological
revolution and growing
Company future market-share
� IP priorities broadened and
aligned with Company-wide
pursuits with value extraction
� IP Functional Excellence
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Establish a Clear Line of Sight for IP’s Strategic Impact & Involvement
Strategy IProtect
Intangibles
Strategy IILimit
Competitors
Strategy IIIEstablish Income Stream
Strategy IVLeverage
Full Potential
• State of the Art
• Freedom to Operate
• Right to Use
• Design-Around
• Clearance
• Competitive IP Assessment
• Patentability& Asset Development
• Problem Solving – Internal, Customer, etc.
• Portfolio Development
• Standards and Pooling
• Assertion Practice
• IP Appetite/Risk: Low, Medium, High
• Etc.
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Consider an Integrated IP Growth Strategy
– Alignment with business strategy and not just products or asset creation
– Culturally Instilling an IP mindset
– Competitively Assessing IP opportunities/risks
– Knowing what to protect, where to invest, and how to leverage protection timing
– Defining Core IP processes, resources and priorities with Reduced Cycle Time & Improved Efficiencies
– ReDefine and Topgrade the “Patent Guy”
– Constant Value Creation and Opportunity Leverage through IP
Technology / Marketing Strategy
Business Strategy
IP Strategy
Tax Strategy
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Show How IP Contributes& Measures / Reports Value
• Align Value to IP Team’s Activities– The Work is Aligned to Strategic Focus of Company
� Strategic Strength of Services & Assets; Dashboards
• Raise Awareness Level of IP Impact– Involvement at Core and Income Opportunities
• Demonstrate Impact Beyond Legal Function– Education, Income, Competition, etc.
• Go beyond:– Cost Avoidance
– Cost Savings
– Portfolio Strength and Innovation
• Idea to Income Value Chain
Speed & Savings
Portfolio Alignment
Accessible Processes
Align Targets with
Company Culture
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SI 1
Strategic
Initiatives
Common
Critical InitiativesIP Team Projects & Activities
3P Performance Metric Alignment
Enterprise
Objectives
SI 2
SI 3
SI 4
SI 5
SI 6
OB 1
OB 2
OB 3
CCI 1 CCI 2
CCI 3 CCI 4
CCI 5 CCI 6
CCI 7 CCI 8
CCI 9 CCI 10
CCI 11 CCI 12
IPT 1 IPT 2
IPT 5 IPT 6
IPT 9 IPT 10
IPT 13 IPT 14
IPT 17 IPT 18
IPT 21 IPT 22
IPT 3 IPT 4
IPT 7 IPT 8
IPT 11 IPT 12
IPT 15 IPT 16
IPT 19 IPT 20
IPT 23 IPT 24
SBU
Reporting
SBU 1
SBU 2
SBU 3
SBU 4
SBU 5
SBU 6
SBU 7
SBU 8
SBU 9
SBU 10
SBU 11
CTO, CFO
& GC
Reporting
CTO 1
GCR 3
CEO
Reporting
CEO 1
Establish & Align People, Processes & Priorities with Performance Metrics
Acquire Data for Analysis to Know Performance and Status for Growth via Analytics
Increase the “IP Intensity” Value Metric For the Company Every Year
CFO 2
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Establish Key Metrics with Growth Vision
1. Develop IRC procedures and processes to streamline invention disclosurereviews to less than XX days/disclosure-to-decision on average, representing aXX% reduction over 2013, and a XX% over 2012.
2. Improve diversity of member participation for each IRC, and install Hi/P SMEleaders in at least XX Core Strategic Revenue Technologies.
3. Improve average patent filing timelines by BU to have applications preparedand filed in less than XX days on average per application, (representing a XX%reduction over 2013, and a XX% over 2012) and at an average preparation feenot exceeding $XXXX / application.
4. Increase #Disclosures Submitted for Top AA Technology Focus Areas byXX% while achieving a YY% reduction of average disclosure cost as f($R&D).
5. Increase Annual Licensing Revenue on Y Core Technologies by XX%
6. Achieve at least $XXM in cost avoidance benefit and $XXM in cost savingsthrough implementation of effective and efficient IP strategies, processes andtactics
Be Careful What You Measure…
For that may be the Best You Achieve
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Consider Updating Traditional Metrics
• # Patent Counsel / $B in revenue vs. #Patent Counsel / $M R&D
• # Patents in Product Portfolio [f(t)] / increase product revenue over time
• Average Patent Life Cycle Costs of Core Portfolio as f(internal labor costsover Avg. Patent Life Cycle)
• % Foreign Assets aligned with Co.’s annual geographic revenue
• Average National O/C Preparation Costs are with X% of any provider(independent of technology and geography) and average prosecution caseperformance is within X% of corporate-defined performance objectives asf(spend and time).
• # technologists, by region, IP educated and certified at Level 1, 2, 3 (multi-program training) as f(total innovation community)
• Etc.
Premier Performance in an IP-savvy Culture
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Reduce Process Complexity
And Improve AccessibilityExecuting across clients and non-IP groups…
• Assess Improvements via- Value, time, savings, cost avoidance, operational excellence
• Identify and Report Savings via a Dashboard
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Improve Internal Consistency of Decision Making
• Developing and Educating on a Common and Consistent Means to score:
– Technical Impact
– Commercial Relevance
– Detectability
– Anticipated Claim Coverage
Technology
Not in Plan Adjacency Project
Planned
Funded
Project
Exists
Core Funded
Project
Exists
Strategic
LRP / MGP
Plans
0 0 0 0 0 2
0 0 0 0 2 4
0 0 0 2 4 6
0 0 2 4 6 8
0 2 4 6 8 10
2 4 6 8 10 12Tranformational
Revolutionary
Core Concept
Evolutionary
Customary
Other
• Utilize Common Tools for standard work
• Build Common practices for Consistent results
• Add Rigor for Feedback and Improvement
– Refine the process
– Incorporate strategic aims
� Key program
� Key Market Pursuits
� Etc.
– Remove Emotion from technical Decisions
Example: Disclosures & Filing Decisions
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Visualize Patent Mapping to Products & Markets
www.ipcg.com
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Know Your Assets… and Your Competitors’
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Intensify Competitive Monitoring
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Patent Life Cycle with Post-Grant Challenges under AIANot all available post-grant proceedings may occur for a given patent
Patent
Application
Filed
Patent Suit
RestartsPossible
Post-Grant Review
Process & Appeal
Potential
Inter Partes
Review
or Ex Parte
Reexam
Patent
Issues
SEC. 18
Petition
Filed
Motion
to Stay
(Note 1)
Petition Process
Ends;
Appeal begins
Potential Section 18
Proceeding for BMPs
Appeal
Ends
Patentee
Files
SuitPatent
ExpiresPossible additional
Ex Parte Reexams,
Inter Partes Reviews
and SEC. 18 Processes
Potential
Inter Partes
Review
or Ex Parte
Reexam
Note 1: There is an immediate right to interlocutory appeal to CAFC from
district court decision on Motion to Stay for a Section 18 proceeding.
Note 2: There is a range of possible pendencies for a Section 18
proceeding: shorter if the USPTO can meet the statutory deadlines,
and longer if not. This may depend on the USPTO receiving sufficient
funding to properly carry out Section 18 proceedings.
(See Note 2)
Note 3: Completion date depends upon pendencies in the Section 18
proceeding.
(See Note 3)
0 1 2 43 5 6 7 8 9 10 11 1312 14 15 16 17 18 19 20
No USPTO proceeding pending
USPTO proceeding pending
Enforcement stayed
Communicate a Competitive Prosecution Strategy for Growth
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� Capture Business Value through IP
� Bring IP to the C-Level Suite as a Strategic Business Asset and Operation
� Resource & Align IP Operations with Your Business Strategy
� Highlight Process Alignment & Functional Excellence
� Establish, Align & Execute on Performance Metrics for Growth
� Optimize Your Disclosure, Patent & TM Processes for Speed & Quality
� Provide IP Scorecard Metrics Across Organization & Externally
� Improve your IP Intensity
� Deliver Results for Growth; Create Premier Peforming Teams; Topgrade Now
� Educate Your Organization on Your Revised Strategies & Policies; Active Engagement.
Next Steps – Show “Idea to Income”
Is Your CEO Ready to Talk “IP”?
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Questions?
Invest. Invent. Innovate.
J. Bruce Schelkopf | [email protected]
Melissa Bitting|[email protected]