1. IP Strategies to Improve Innovation and Reduce Risk Patricia Folkins Product Development and Management Association January 28, 2009

2. The Dilemma  IP departments must become more efficient and reduce costs, but not at the expense of the competitive advantage their business derives from its IP portfolio

4. Disaster or opportunity?  Inject efficiency into IP management  Are opportunities opening up in the market place due to market changes?

5. Intellectual Property  Currency for controlling access to innovation  Innovation relates to the commercialization of new ideas  Invention is the generation of a new idea to solve a specific problem  Not all inventions result in innovation

6. Components of IP  Inventions, patentable and not patentable  Know-how  Trade Marks  Copyright

7. IP Management and Business Strategy  IP management cannot exist in isolation, must be part of overall business strategy  Driving force is economic - objective is to maximize value creation through IP, not merely to grow an IP portfolio  Value of creations depends on their value in improving competitive position

8. Essentials for Success  Strategic vision  Organizational development  “People Power”

9. Objectives  Mine existing knowledge to facilitate product innovation, product development and cost control  Protect inventions appropriately-neither too much nor too little

10. Three Stage Process  Assessment of IP Assets - “IP Audit”  Create IP Management Plan  Implement Plan

11. Stage 1: Assessment  IP Audit: identify all current IP assets (including existing patents, patent applications, Know-How, Trade Marks, Copyrights)

12. Determination of Business Goals  Understand business goals to ensure that the IP Audit will be useful to overall business strategy  Value of IP is dependent on its successful integration with business strategy

13. Identification of IP Assets  Catalog all IP wherever located  Determine status of IP  Determine relative value of IP to company’s strategic interests  Create catalog, and keep it up to date

14. Patent/Know How Catalog  Will help to recognize existing assets  Identify strengths and weaknesses  Compare IP position with that of competitors  Determine value of patents/know how to company

15. Valuation of IP  Quality, not quantity is important  Assess the relationship between each IP component and business strategy  Does the IP protect present and future business opportunities?  Does the IP help create new opportunities?  Are key markets covered?

16. Stage 2: Create Plan  “Top Down” approach: determine goals, determine what is necessary to achieve goals  “Bottom Up” approach: assess existing assets, see if such assets can be mined to create new opportunities  The two approaches are not necessarily mutually exclusive

17. Create Management Team  Team is responsible for development and management of the IP Plan  Team should include technical, legal, business and marketing personnel under supervision of a senior executive  Management Team could evolve into patent committee at later stage of process

18. Align IP Plan with Overall Strategy  Determine which IP is key, and should be kept exclusive to company  Determine whether any of the company’s IP is licensable to third parties without giving access of company’s technology to competitors  Determine which IP is no longer important and can be abandoned

19. Competitor Analysis  Establish procedure for keeping informed of activities of both competitors and research organizations wherever located  Useful knowledge is not necessarily restricted to company’s core business: might exist in non-competitive fields  Patent searching can be done in-house, and information made available throughout the company

20. Stage 3: Implementation  Motivating internal development of IP  Education  Incentives

21. Patent Committee  Could be same personnel as IP Management Committee  Should meet regularly, e.g. quarterly  Prioritize inventions for patenting, discard applications/patents that no longer are of strategic importance  Be aware of competitors’ IP positions to avoid conflicts

22. IP Management  Consider an IP Coordinator to interface between in-house inventors/scientists/engineers and outside counsel,  Create in-house filing systems for managing and tracking IP assets irrespective where they are created  Establish a central, accurate database of all IP assets and keep the database up to date.

23. IP Management Tasks  Motivate internal IP development  Pool existing Know-How  Determine strategies for managing the protection of new IP irrespective where it originates  Consider extension of existing IP to other markets  Prune existing IP that has little or no commercial importance

24. Challenges  Ensure that IP Assets help company to remain a leader in the development, manufacture and distribution of its products  Ensure a proper balance between protection of IP world-wide and cost  Ensure that the company does not become liable for infringement of third party IP rights

25. Strategic Considerations - Market Dynamics  How will your market change in the face of this unprecedented financial crisis?  Will product lines change or be pared down?  Can you invent into that new market space and patent it?  Can you create new product synergies and patent the combinations and connections?

26. Strategic Considerations - Product/Service Portfolio  Has the economic downturn caused any of your product lines or key customers to become vulnerable to competitors?  Can you combine product packages and services to counter vulnerability? Can these combinations be patented?

27. Strategic Considerations - Business relationships  Keep an eye on suppliers, licensees, business collaborators - are they in distress?  Opportunity to buy but also risk to your business

28. Reducing Costs  First reaction is to scale back on IP protection, e.g. patent filings  Must continue to make long-term decisions for creating a strong IP portfolio that is ready for the “upturn”

29. Use P.O. Delays  Many patent offices have processing delays for initiating examination  Use U.S. Provisionals  Use PCT

30. Watch Claim Scope  Broad claims are likely to be most difficult to obtain and expensive to prosecute  Pursue narrower claims targeted to company’s business (those that cover specific products or that are licensable)  Broader claims may be pursued later in some countries

31. …and numbers  Excess claim fees in many countries  EP: claims in excess of 15 cost 200 Euro each (effective April 9, 2009, claims in excess of 50 will cost 500 Euro each)  US: claims in excess of 20 cost US$52 each, each multiply dependent claim costs US$390 and each independent claim over 3 costs US$220 each

32. Small Entity Status  In US  Individual, small business concern or non-profit  50% reduction in certain fees  Must be under no obligation to assign, grant, convey, or license any part of invention to large entity

33. Better Invention Disclosure Reports  Clearly written comprehensive  Include materials, drawings, descriptions, models  How is the invention distinguishable over the prior art?  What areas do not fall within scope? Include failed experiments  Specify critical parts that make invention operable  Provide in electronic format

34. Communication with outside counsel  Consider SOP  Talk with them about how to reduce costs  What to report?  Keep them up to date on go/no go decisions

35. Case Study

36. Unomedical*  Taken from EPO Website: http://www.epo.org/topics/innovation-and- economy/sme-case- studies/unomedical.html

37. Unomedical  Located in Denmark  Develops and sells single-use medical devices  4000 employees  Sales in 2004: 241 million Euro

38. Unomedical  In 2002 added an IP department  Hired a Group IP Manager  Linked IP department with research and development procedures  “IP plays in everyday decision making”

39. Unomedical  IP issues considered at an “early stage” - before prototype of new product is ready  IP department checks for conflicting patents  If conflicting patents exist may still file to block others

40. Unomedical  Danish Patent Office runs novelty and/or Freedom to Operate searches  Danish Patent Office searches competitor filings 4 times a year  Patent drafting outsourced

41. Unomedical  20 new patent applications filed per year compared to “just a couple” prior to restructuring of IP department  Threatened to sue potential infringer - infringing company pulled product and paid settlement fee

42. 12 Key Recommendations from EPO Survey of SME’s  Develop an IP Strategy  Get Professional Help  Choose the right patent attorney/agent  Do not underestimate the cost  Demand information  Adapt your filing strategy to your real business needs

43. 12 Key Recommendations from EPO Survey of SME’s  Do not view licensing as failure  Revise your patent portfolio continuously  Start a technology and competitor watch process  Communicate pro-actively  Keep in touch with your licensees  Be sure of your case (for lawsuits)

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