On 28 March, Marshall Phelps united some of the biggest names in IP at the Fuqua School of Business, Duke University, to discuss how best to integrate IP management into business strategy. These were their findings

WHAT ROLE DOES IP TAKE IN YOUR BUSINESS?

Robert Armitage, senior vice-president and general counsel, Eli Lilly and Company: Unlike many other industries, the pharmaceutical industry is heavily dependent on patent rights. It is this protection that allows us to justify the investment in R&D. In my field of work, copyright or trademarks have very little value in comparison. However, the industry is changing. Sixty years ago, a patent right automatically protected a drug from copying for the life cycle of the patent; but today’s patent-protected drugs are no longer safe from imitation. The biggest challenge facing the pharmaceutical industry is how to protect the branded drug’s market share from cheaper, generic versions – whether this is through litigation, or preferably technology transfer or partnerships within the industry. It’s important to keep an eye on what others are doing in your industry and to take a view on whether it’s better to manage internally, collaborate or license in. You’ve got to fi nd a way to mitigate risk. Managed properly IP can make all the difference to a company’s bottom line.

Chuck Fish, vice-president and chief patent counsel, Time Warner Inc: Patents function differently in Time Warner’s marketplace. In the media industry, they are primarily used to support technological collaboration; however, I do view them in a different light from Bob – the patent system doesn’t exist to limit competition! Patents function as a somewhat effective license to sue people, but they don’t guarantee exclusivity. For Time Warner, their value can be found in their use for prompting others to collaborate with us. Our industry needs technical inter-operability between products to succeed, our patent rights are used as a type of currency to promote this exchange. It also ensures that we’re involved in the technology of the future. For example, Warner Brothers was one of the first companies to work on the DVD. We own 10 of the 400 patents in the patent pool; since 1997, the worth of these patents has grown to $400 million, but it has also helped us to build relationships for the licensing of other forms of IP.

Chip Lutton, chief patent counsel, Apple Computer: IT is a fast-moving and self-generating industry and innovation is its life blood. Unlike the pharmaceutical industry where one patent can equate to one product, the number of patents in the IT industry is immense. Ours is a component-based product line and product contains literally tens and thousands of discrete ideas. All of these are protected as patents – some we license in, some we purchase, some we own ourselves; some are owned by companies we’re yet to hear from. We also require inter-operability between productions and as technologies become increasingly standardised to meet the user’s needs, we also see less distinction between products, which is where the brand comes into play. IP is often an afterthought for start-ups; however, for mature companies, IP is more instrumental to the business strategy. It’s finding the right IP strategy that is key.

Hiring your own patent attorney can reap huge dividends. Companies need their own figurehead to push the knowledge of IP into the company as a whole.

HOW SHOULD CEOS MANAGE CORPORATE IP?

Robert A: Once you’re big and stable enough, hire yourself in-house patent counsel. They will get to know you better than third-party firms and work with R&D to help protect your products. You also need to think globally. You need a global patent strategy that doesn’t just represent where you stand in your own territory, but also where you could grow to in the future.

Chuck: I agree with Bob on that. Hiring your own patent attorney can reap huge dividends. All companies need their own figurehead to push the knowledge of IP into the company as a whole. You also need to think about how your market will change and how this will impact on the IP you have registered. Ultimately, you get what you inspect, not what you expect, so keep monitoring your IP.

Chip: You need to inventorise where you stand and where your competitors stand. Only then can you build your strategy. Don’t limit yourself to what you own. You also need to look at what you can register now to use for trade to enter into new market areas. Kareem Saad, CEO, Gulfstream Bioinformatics: From a small company perspective, IP is all about cost. The money spent on lawsuits, on patent filing and so on can be so prohibitive to a start-up; however, IP is far beyond that. In our industry at least, IP touches everything that we do. Our business is to identify gaps in technology fields and then work to represent that information in a way that can be patented and then positioned in the marketplace. For this, collaboration is key. You have to make a call on when it’s best to buy and when it’s best to build; but you also need to make sure that the appropriate IP protection is assigned for any collaborations.

Robert Blackburn Principal, DNAlex, former vice president and chief patent counsel, Chiron Corporation: You need to get the non-patent decision-makers to understand the importance of IP. You need to organise internal IP training programmes for R&D, marketing and business development aspects of the business. They have to understand that IP is an asset and that it needs to be protected accordingly.

IS THE CURRENT IP SYSTEM WORKING?

Bowman Lehman, deputy director, Center for IP Studies, Chalmers University, Sweden: The main problem is that we don’t know what we’re doing. We don’t know how to value IP, so we can’t create a system of valuation that others outside our industry understand. That’s partly because we’re still indoctrinated by the ‘industrialised’ way of working, and in that light, IP is very badly understood – badly branded even. For example, what do we mean to be ‘open’? It doesn’t mean that it’s free, it just means that it’s accessible.

Dave Jones, counsel, Senate Judiciary Committee: Patent rights exist to allow companies to patent minor improvements to promote the movement of innovation; however, problems are being caused by the way that patents are being issued and enforced today.

Bruce Lehman, president and CEO, IIPI and former assistant secretary of commerce and commissioner of the Office of Patents and Trademarks: If patent protection is weakened, it will have huge repercussions for business, but also for public safety and national economies. The pharmaceutical industry wouldn’t be able to afford its R&D, so the safety of drugs and the creation of new drugs would suffer, but that’s true for almost all industries. Without patent protection, business innovation would be reduced calling the growth of our national economies into question as well.

Bowman: Economies need a legal system. Most companies are now global, so they need IP to work on an international stage. However, practices are different in each jurisdiction. Europe, in particular, is very industrial-thinking in its approach to IP, whereas the US system is very legislative. Neither is a very positive or long-term strategy.


This article first appeared in IP Review, issue 18

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