Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Managing Intellectual Property Assets Dr John Turner Managing Director Flinders Technologies Pty Ltd

Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 “IP is the Oil of the 21 st Century” “ ” “ Intellectual Property is the oil of the 21 st century. Look at the richest men a hundred years ago : they all made their money extracting natural resources or moving them around. All today’s richest men have made their money out of intellectual property ” Mark Getty – The Economist, March 4, 2000Mark Getty – The Economist, March 4, 2000 (Grandson of John Paul Getty & son of John Paul Getty Jnr)

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Managing Intellectual Property Assets - a commercial rather than legal view Issues to be discussed -IP assets as a foundation for modern business -Values of IP asset (high across industry sectors - not just ‘high tech’) -Innovation cycle as a guide for IP asset management -Some suggestions for IP asset management

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Market Cap (US$bil) Est.Value IP (US$bil) % MarketCap 1 Coca-Cola Company Microsoft Abbott Laboratories Yahoo ResMed At 22nd October 2003 Market Cap (US$bil) Est.Value IP (US$bil) % MarketCap 1 Coca-Cola Company Microsoft Abbott Laboratories Yahoo ResMed IP is a Foundation of Modern Business (1) Calculated from IP asset = Market Cap. less [Goodwill & Net Tangible Assets]

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 At 22nd October 2003 USA Pat’s : TM’s Est.Value IP US$ (bil) 1 Ave. Value Each IP (mil) Coca-Cola Company 800 : Microsoft2837 : Abbott Laboratories 2656 : Yahoo16 : ResMed92 : Management of Valuable IP Assets is Important (1) Calculated from IP asset = Market Cap. less [Goodwill & Net Tangible Assets]

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Managing IP Assets is Difficult IP comprises a class of assets that is not well understood by non- specialists (need to educate employees, investors etc)IP comprises a class of assets that is not well understood by non- specialists (need to educate employees, investors etc) Requires understanding and management of the innovation cycle (easy to say, but in difficult in practice)Requires understanding and management of the innovation cycle (easy to say, but in difficult in practice) –Briefly, each stage of the innovation cycle must be managed in order to extract value from investments in IP creation & acquisition & to minimize risks The following slides provide more details

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 IP assets exist by virtue of protection by lawIP assets exist by virtue of protection by law To have value, IP assets must be :To have value, IP assets must be : – –Identifiable from other assets of a business – –Able to produce on-going benefits for the business – –Protected and not free in the public domain – –Transferable from a seller to a buyer An audit of an organisation’s IP is the starting point for creating an IP asset management plan Properties of IP Assets

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Initial Action Audit of Existing IP Assets & Capabilities Organizations should first conduct an audit of existing IP and the capabilities to manage & create IP (recall properties of IP assets) :Organizations should first conduct an audit of existing IP and the capabilities to manage & create IP (recall properties of IP assets) : GoalsGoals –to identify any important IP assets of the organization, eg patents and patentable inventions, copyrights, trademarks, domain names, trade secrets –Analyze IP assets : e.g. ownership, value, opportunities, risks –Identify key people (e.g. inventors) needed to optimize returns on these assets –Construct plans to maximize the benefits from existing and new IP assets

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Innovation Cycle (Simplified View) : Implications for IP Management Implications for IP Management Investment : Policy, Process, Corporate Plan IP creation / acquisition : Policy & Process - Records, Disclosure, Protection, Risk - Records, Disclosure, Protection, Risk Commercialization: Corp. plan - manufacture, license etc Innovation : Market oriented strategy, allocation of resources for IP Development Copyright © J V Turner 2003

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Investment Stage: Policy, Process, Corporate Plan Investment is necessary for the creation or acquisition of new IP Like any investment the return must be worth the riskInvestment is necessary for the creation or acquisition of new IP Like any investment the return must be worth the risk Organizations should have IP policies and processes for investment that are consistent with their corporate planOrganizations should have IP policies and processes for investment that are consistent with their corporate plan Consider an organization’s policies and procedures for creating or acquiring tangible assets : intangible assets need prudent management too !Consider an organization’s policies and procedures for creating or acquiring tangible assets : intangible assets need prudent management too ! Policies & procedure for investment are organization specific (difficult to generalize)Policies & procedure for investment are organization specific (difficult to generalize)

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 IP Creation / Acquisition Stage Ownership, Records, Disclosure, Protection, Risk Organizations need to ensure they own IP created by employees in the course of their employment (Law & employment contracts; take care with consultants)Organizations need to ensure they own IP created by employees in the course of their employment (Law & employment contracts; take care with consultants) Employees must keep proper records of IP creation (eg dated, signed & witnessed note books)Employees must keep proper records of IP creation (eg dated, signed & witnessed note books) Employees must make IP disclosures to management (eg invention disclosure form: must make IP disclosures to management (eg invention disclosure form: Management should take steps to protect potentially valuable IP (educate employees about IP, e.g. non-disclosure, protection )Management should take steps to protect potentially valuable IP (educate employees about IP, e.g. non-disclosure, protection ) Management of risk (eg premature disclosure, infringement) is a key aspect of policies & processes (to avoid lost opportunities, IP disputes etc)Management of risk (eg premature disclosure, infringement) is a key aspect of policies & processes (to avoid lost opportunities, IP disputes etc)

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 IP Development and Innovation Stage: allocation & management of resources GOALS Add value to the IP consistent with market for product/processesAdd value to the IP consistent with market for product/processes - Technical value adding - Commercial value adding Reduce RiskReduce Risk - Substantiate technical viability - Substantiate technical viability - Show commercial diligence Some helpful management strategies - harmonise technical and commercial objectives - regular meetings with R&D team : agreement on goals - secure IPR - beware of compromising own IP and infringing other’s IP - refine plans for commercialization $ $ $

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Commercialization Stage Sales of products : opportunity to create more IP (aim to build brands i.e. trade marks - value increases with time !)Sales of products : opportunity to create more IP (aim to build brands i.e. trade marks - value increases with time !) IPR licensed out when markets are difficult / expensive to accessIPR licensed out when markets are difficult / expensive to access Monitor the market for third party products that infringe IP rights (sales & marketing and distributors should be alert and report back)Monitor the market for third party products that infringe IP rights (sales & marketing and distributors should be alert and report back) Enforce IP rights (easier said than done : complex, time consuming & expensive )Enforce IP rights (easier said than done : complex, time consuming & expensive ) Commercialization generates earning that should in part be invested in managing the creation of new valuable IP for the organization in accord with the business plan : this continues the innovation cycle

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 Copyright © J V Turner 2003 INVENTION BY RESEARCHER INVENTION DISCLOSURE FORM FROM FT IS COMPLETED SIGNATURES OF RESEARCHER & FACULTY HEAD THAT THE DISCLOSURE IS DILIGENT & HONEST DISCLOSURE SUBMITTED TO FT FOR ASSESSMENT UNIVERSITY EXECUTIVE (RESEARCH) IS ADVISED WITHIN 60 DAYS FT DECIDES ABOUT PROCEEDING NO YES ASSIGNMENT OF IP RIGHTS TO FT PROTECTION OF IP e.g. FT FILES PATENT FT LIAISES WITH RESEARCHERS, REVIEWS COMMERCIAL STRATEGY FT MAY INVESTS IN PROJECT, AIMS IS TO ADD VALUE & REDUCE RISK FT NEGOTIATES WITH INTERESTED PARTIES LICENSE DEAL ASSIGNMENT OF IP & TECHNOLOGY NEW COMPANY UNIV. DEALS WITH IP UNIV. OFFERS IP TO RESEARCHER RESEARCHER DEALS WITH IP RESEARCHER MAY MAKE DISCLOSURE R&D COLLABORATION SUMMARY OF FT’s IP MANAGEMENT PROCESS

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia Have IP management policies and processes supported by employees 2Audit IP assets 3Invest to create/acquire IPR consistent with corporate plan 4Manage IP creation (R&D) and protect potentially valuable IP 5Develop IP to add value & reduce risk – innovation process 6Commercialize IP directly through products/services (develop TMs) 7Capitalize on IP asset value through licensing 8Monitor infringement and enforce IP rights 9 Re-invest to create more IP Summary Suggestions for IP asset management

Flinders Technologies Pty Ltd Copyright © 2003 J V Turner Managing IP Assets : WIPO & IPD Malaysia 2003 On--going Management of IP Assets is Required: Local and Global Challenges Adelaide Geneva Kuala Lumpur o o o o * * * * * * Thanks for Listening !