Few corporate giants can boast such a warm reputation in their hometown as Bosch seems to in Stuttgart. But few corporate giants pay as much back into the community as it does. It's not simply that the company – along with motor giants Mercedes and Porsche -sustains the majority of local people’s livelihoods here (Bosch has its own cluster of factories on the outskirts of town). For a large, privately owned global corporation, Bosch is extremely unusual in that it is almost entirely (92%) owned by a charitable foundation, with a corresponding percentage of its profits bequeathed annually to the people of Stuttgart, elsewhere in Germany and abroad.
But it's not just Bosch's good deeds that keeps the local people of Stuttgart talking. This is possibly one of the very few cities where local residents have a working knowledge of patent rights and their importance to innovation. For the origin of Bosch is now common folklore and a salient example of the power of intellectual property (IP) in practice.
Sparking invention
Bosch is currently one of the world’s largest suppliers of automotive components, and an important producer of industrial technologies, consumer goods and building technologies. But it all started with the patent that Robert Bosch applied to register in 1897: to protect the practical magneto device that provided the spark that started most of the earliest internal combustion engines.
That one patent has since been replaced by many more. Bosch is now one of the world's major patent applicants, with 3,281 priority patent applications filed in 2007 alone. It is the biggest patent applicant in Germany; the third biggest at the European Patent Office, the biggest foreign applicant in Japan, and the third biggest in the US for automotive technologies.
This innovation is sustained by over 30,000 employees working in research and development (R&D) at Bosch – part of a global workforce of more than 271,000 and supported by an average reinvestment of 7.7% of the company’s annual revenue back into R&D. That's compared to an industry average of 4.7%.
'There is clearly a relationship between that and the number of patents we own,' says Bertram Huber, senior vice president and head of IP at the Bosch Group. But he is acutely aware of the need to distinguish patents of value and patents of vanity. 'Despite the huge number of filings, we are very discerning about what we register,' he says. 'We only choose to file applications on innovations that we deem to be of quality and strategically necessary. Every now and then you meet companies who have sizeable portfolios, but when you look properly, very little of that is of value. That is not the case with Bosch.'
Huber has been at Bosch HQ since 1995, when it took over a small telecommunications company that he had been working for since 1983, making 2008 his 25th year of service. That milestone, he says, pales in comparison to the centenary that Bosch celebrates this year: the formation of its IP division. 'The company started with a focus on innovation, so I suppose you could say that it has always understood the importance of IP,' he says. 'That's as true back then as it is today – we've just refined it quite a bit.’
This rich heritage has meant that Huber and his department rarely come up against the common conflicts and misunderstandings that frustrate many of their counterparts elsewhere in the industry. 'Senior stakeholders at Bosch understand the importance of linking IP with business. We don't need to educate them or inform them of the basics of IP. It's already part of our corporate culture,' he says.
To ensure it is kept that way, the relationship between Bosch's IP professionals and its business function is managed by a group of Strategic Patent Portfolio Managers (SPPMs) who provide the link in the chain between innovation and registration. 'The SPPMs are our eyes and ears, our means of obtaining information from the respective business units, R&D, sales and marketing, and to spot any associated opportunities for IP protection,' explains Huber.
'THE COMPANY STARTED WITH A FOCUS ON INNOVATION, SO I SUPPOSE YOU COULD SAY THAT IT HAS ALWAYS UNDERSTOOD THE IMPORTANCE OF IP' - BERTRAM HUBER
'They feed back into the IP team, which is itself organised into two sector-specific patent departments (mechanic and electronic), a licensing expert, a trademark specialist and an anti-counterfeiting team, which has its own network of brand protection experts in key sales locations around the world.' This latter role has been developed as a reaction to the growth in fake automotive and consumer goods, especially in the Far East, says Huber. 'We are not directly consumer-facing in many areas of our work, so the dangers of counterfeiting don't affect all of our product sectors,' he says. 'But those that it does affect can have serious consequences on the end consumer, so we have to do something to minimize that risk.'
In the driving seat
Bosch has played a huge role in making the automotive industry what it is today. The average large car uses around 50 electronic control units, which contain hundreds of Bosch inventions, many of which are connected via another Bosch invention: the controller area network (CAN), a sort of motor nervous system, that has contributed to a recent rash of awards for the company’s inventors and board members.
'We do not develop car seats or the interior covers,' says Huber, 'but we do the technical elements, the essential elements. From ignition to gasoline or diesel motor management systems, we've put on the road all types of safety systems like ABS [Anti-lock Breaking System] and ESP [Electronic Stability Programme]. Cars would work completely differently without these innovations. That’s what the various awards are celebrating.'
The company has also recently become a member of the Eco-Patents Commons, a global initiative to create a collection of patents on technology that directly or indirectly protect the environment, although Huber does not see this as a logical link to the company's philanthropic heritage. 'With such a sizeable patent portfolio, we should have something to give away,' he says. 'But, actually, I'm not convinced that it's a logical concept to give away patents for free in such instances – it's a public responsibility not a private one.
'Of course, companies should have a corporate social responsibility policy, but that's not the same thing. Bosch has its own self-set standards that we maintain everywhere we work.
'For example, we have also been putting resources into green technology for many years. We’ve invested resources into consumption reductions, emissions reductions, solar technology and many more. Of the €3.6bn we spent on R&D in 2007, about 40% was on R&D for protecting the environment,' he says.
But that's not to say that Huber isn't keen to share the company's IP with others, just on the right terms for Bosch and the market. 'We are a manufacturing company, so it's logical for us to register IP Rights to protect what we've developed and to exploit our patent position and know-how where it does not conflict with the primary aims of the business,' he says. 'But, ultimately, the IP that we protect has to be for our own purposes. We’ve used it to become a globally active company, we want to remain that way in the future.
'Filing a patent is a once-in-a-lifetime opportunity; if you miss your deadline you don't get another go,' he emphasises. 'And that means you need to look much further into the future than just tomorrow or the day after.'
For Huber that applies not only to a company's IP department, but also to the industry as a whole: 'The business community should be in discussion about the state and future of the sector,' he says. 'We should be talking about the good and bad that IP does for society, and listening to each other's arguments. There are too many fundamentalist crusades pushing for policy or legislative changes, yet refusing to hear the other side of the argument. This is getting us nowhere.'
Working together
Huber suggests that this and many other IP conflicts could be resolved if organisations simply adhered to a code of conduct for IP behaviour, particularly in cases of licensing and enforcement, but also when it comes to 'decency' in patent applications, where he says a lot of applicants are wasting companies a lot of time. ‘The number of patents out there is huge and finding your way through it can be difficult,' he explains. But he is optimistic about the progress that can be made. 'Companies should be working together to set up standards and practices. All of that will make a difference.’
Nonetheless, he is circumspect about progress being made on the backlogs themselves. 'We need more international patent harmonisation. Things are moving forward, but not quickly enough,' he adds. 'Progress in this area would make IP less cumbersome and more speedy to acquire.' But he does not believe the ideal system can be created overnight. ‘Not all countries have the same standards or understanding when it comes to IP,' he says. 'But offices should and can still move closer together, for example when it comes to uniformity in and accessibility to patent searching. We should all be working together to help the offices achieve that aim.'
This article first appeared in IP Review, issue 24. Dr Bertram Huber has since moved from Bosch to IP consultancy, IP*SEVA.
