Transcript IP Management in Open Innovation Scenarios

The Interconnection between Patents,
Trademarks, Designs and Domain names
Business Models & IP in Collaboration
Scenarios
Werner Fröhling
CONOPA Annual Conference
Copenhagen, 28-29 August 2008
2008-08-28 Fröhling
Volvo Technology Corporation
1
Some Basics
• IP or Intellectual Property: IP filed with & registered by
patent offices and unregistered IP of similar nature
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–
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–
–
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–
–
–
Patents & utility models
Designs
Integrated circuit topography protection
Plant protection
Trademarks, company names, domain names
Database protection
Copyright (software)
Confidential know-how
...
• Focus here: patents
2008-08-28 Fröhling
Volvo Technology Corporation
2
Some Basics
Business is based on (fair) competition & profit
Copying is one important element in competition; it is not only allowed but also wanted in
order to serve the needs of the market and of society in an optimal way unless it is
forbidden by law
Innovation is another important element in competition; it creates new products & new
services and is an important prerequisite for sustainable economical growth and societal
wealth
Knowledge is a prerequisite for innovation
- Reduction of knowledge to practice (”know-how”) creates said new &
innovative products & services which in turn might be based on concrete
inventions
- Technical inventions which are new, based on an inventive step &
susceptible of industrial application can be protected by patents*
Patents are negative monopolies which stimulate & foster innovation
- They encourage innovators & investors to invest in R&D
- They force 3rd parties to develop alternative (better) solutions (”work arounds”)
2008-08-28 Fröhling
Volvo Technology Corporation
3
* US patentability requirements: novelty, non-obviousness & usefulness; no patentability restrictions regarding technical character of inventions
Some Basics
•
The original “classical” role of a patent - as defined by law:
A Patent is a negative monopoly right
•
•
•
•
which the society grants to the patent holder in return for the disclosure of the invention forming the base for
said monopoly right to the public
which is limited in time and geographical coverage and
which gives the patent holder the right to forbid any third party to commercially use the subject matter
protected by that monopoly right
Further roles of patents - as developed in practice:
Patents are effective & multi-facetted business tools for setting up an appropriate business
model for the commercial exploitation of an innovation in a specific business environment; they are
•
•
•
•
•
•
•
•
•
•
a strong currency to get access to complementary technologies controlled and/or patent protected by third
parties (cross licenses)
a strong tool to increase the attractiveness of a technology or product concept for third parties
a strategic asset for co-operations, M&A, JV, and strategic alliances
an efficient tool for securing exclusivity on the market of brand-identifying features or other competitive
advantages of products & services
an official certificate of the innovator’s technological competence & leadership
an efficient tool for blocking competitors and controlling suppliers in their activities
a strategic asset increasing the innovator’s value for shareholders, investors, banks & rating companies
a strategic tool in connection with international standards
a prerequisite for an active licensing policy
...
2008-08-28 Fröhling
Volvo Technology Corporation
4
Some Basics
Accessible
Public
Know-How
-Publications
-Presentations ...
Market
Knowledge
Public
Free
Non-Proprietary
NonAccessible
Non-Retrievable
- Foreign Languages
- Oral only
...
Knowledge
Protected
Technical
Knowledge
Proprietary
Unregist’d
IP
Regist’d
IP
Business
Knowledge
SW Copyright
Database Prot.
...
IC mask works
Designs
...
Patents
Utility Models
Non-Public
Proprietary
2008-08-28 Fröhling
Volvo Technology Corporation
Confidential
Know-How 5
Some Basics
Type
Patents
Non-Public
Public
Public
Proprietary
Non-Protected
Proprietary
Protected
Non-Proprietary
Non-Protected
Unpublished
Invention
Unpublished
Published
Published & Expired
Patent Application Patent Application Patent Application
(18 months)
or Patent
or Patent
Confidential
Know-How
Confidential
Know-How
Unpublished
Unpublished
Published
Time
2008-08-28 Fröhling
Volvo Technology Corporation
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Profitability & Growth
Caught in the Box
Does mainstream R&D within the
core business as any other actor in
that business
Files patent applications focused on
details/components of existing
products
Profitability
Core
Business
Mainstream
R&D
Growth
2008-08-28 Fröhling
Creates (i) profitability within the core
business at the expense of growth or
(ii) growth at the expense of
profitability, but creates usually only
little profitable growth (if any)
Volvo Technology Corporation
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Profitability & Growth
Breaking down the Walls
Creates innovations related to core
business
Innovations
Profitability
Files patent applications focused on
concepts of next generation products,
systems, technologies & new
materials
Core
Business
Expands the core business and
creates profitable growth in the
expansion area
Mainstream
R&D
Growth
Extended
Core Business
2008-08-28 Fröhling
Volvo Technology Corporation
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Profitable Growth
Break-Through New
Innovations
Business
Thinking outside the Box
Creates break-through innovations
focusing on customer needs (total
customer solutions) and connecting
core business with other businesses
Profitability
Files patent applications focused on
strategic new product and service
concepts and emerging technologies
Core
Business
Creates considerable profitable
growth in new businesses
Mainstream
R&D
Growth
Extended
Core Business
2008-08-28 Fröhling
Volvo Technology Corporation
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Make, Collaborate or Buy Strategy
High
Uniqueness of
Technology
Collaboration
with 3rd party
(e.g. technology
provider)
Buy as standard
component
(”off-the-shelf”)
Low
Low
2008-08-28 Fröhling
Company’s own
internal core
competence
Collaboration
with 3rd party
(e.g. supplier)
Uniqueness of
Product Feature
Volvo Technology Corporation
High
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Technology Access
Accessing Technology from the Outside*
20%
1900
10%
2000
1960
0%
2008-08-28 Fröhling
Time
Volvo Technology Corporation
* Taken from: EIRMA: Technology Access for Open Innovation – Summary of Working Group 63 Report; page
11
Players*
• Basic R&D – academic research
– Universities
• Operative R&D – reduce to practice
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Universities
Research institutes
Research companies
Companies
• Process development & up-scaling - industrialisation
– Research companies
– Companies
• Business – market penetration
– Companies
2008-08-28 Fröhling
Volvo Technology Corporation
* Taken from: EIRMA: Technology Access for Open Innovation – Summary of Working Group 63 Report; page 2
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Basic Innovation Concepts
•
Closed Innovation*
– Successful innovation requires the control of the innovation by the innovator in
order to create value for him
(Henry Chesbrough’s solid funnel)
•
Open Innovation*
– Successful innovation makes use of external & internal ideas, and internal &
external paths to market defined by an appropriate business model in order to
create value for the actors involved
(Henry Chesbrough’s porous funnel)
•
Public Innovation
– Given to the public without any restrictions
– Non-proprietary & free accessible to everybody
– Spirit of Humboldt (universities)
•
Hybrid Innovation Concepts
– Given to the public, but with restrictions
– Proprietary, but free accessible to everybody
– Example: Open Source community (software)
2008-08-28 Fröhling
Volvo Technology Corporation
* based on Henry Chesbrough: Open Innovation (Havard Business School Press, Boston, 2004, pages xx, xxiv)
13
Business Model
An attempt to approach the meaning of the term*
• Business Model definitions in literature:
– The definition of a business model is murky at best. Most often, it seems
to refer to a loose conception of how a company does business and
generates revenue. Yet simply having a business model is an exceedingly
low bar to set for building a company. Generating revenue is a far cry from
creating economic value, and no business model can be evaluated
independently of industry structure. The business model approach to
management becomes an invitation for faulty thinking and self-delusion
(Porter, 2001)
– The terms “business model” and “strategy” are among the most sloppily
used in business. People use them interchangeably to refer to everything –
so they mean nothing. But no organization can afford fuzzy thinking about
these fundamental concepts. A business model and a strategy are two
different animals. One explains who your customers are and how you plan
to make money by providing them with value; the other, how you’ll beat
competitors by being different (Magretta, 2002)
2008-08-28 Fröhling
Volvo Technology Corporation
* Taken from: Günter Gromeier: Business Models for Software Components in the Automotive Industry (ERTS 2004 Congress, Toulouse)
14
Business Model
Another approach to the meaning of the term
• Business models
are the outline of all transactions needed to make a profitable
business*
• Business models in collaborations between independent parties
are the outline of all transactions needed to make a profitable
business or to create benefits of similar nature for all parties
involved
2008-08-28 Fröhling
Volvo Technology Corporation
* Taken from: Günter Gromeier: Business Models for Software Components in the Automotive Industry (ERTS 2004 Congress, Toulouse)
15
Patent & Know-How Exploitation
• A patent or technology/know-how can be subject of many kind of
transactions as for instance sale, license, or donation, however, the
base for such transactions and their value are completely different
• The value of a patent is primarily based on its - negative –
monopoly
– A pure patent license for instance is principally nothing else but an
undertaking of the patentee/licensor not to assert his patent monopoly
against the rightfully acting licensee
• The value of technology/know-how is primarily based on the positive - fact that knowledge has been successfully reduced to
practice
– A pure technology/know-how license for instance is principally nothing
else but an undertaking of the proprietor/licensor
• to provide the rightfully acting licensee with this (confidential and
proprietary) technology/know-how and
• to help him that he can reduce it successfully to practice, too
2008-08-28 Fröhling
Volvo Technology Corporation
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Evolution of Public Prior Art
Patent Exploitation Window
Inventiveness
Patent
Scope of Protection
Public Prior Art
Time
Patent Filing Date
2008-08-28 Fröhling
Patent Grant Date
Volvo Technology Corporation
Patent Expiry Date
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Technology Value vs Patent Value
X-Party System (2012)
A-Party Patent
Protected
Area
X-Party System (2007)
A-Party System (1997)
Public
Patent Expiration 2017
Free Development
Prior Art
X-Party System
(before 2007)
A-Party I X-Party
Technology/System Valuation
X-Party’s Use:
N
licensed Systems
Patent
Valuation
A-Party System
5 Years
(before 1997)
1997
2007
2012
2017
A-Party: Patentee & Licensor
X-Party: Licensee
2008-08-28 Fröhling
Volvo Technology Corporation
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Key Factors for Successful Collaborations
• Key factors for successful collaborations, in particular in Open
Innovation scenarios are
– Suitable business model
– Professional contract managment
– Covering the generation (R&D) phase & exploitation phase
2008-08-28 Fröhling
Volvo Technology Corporation
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The Core of Collaboration
Foreground & Background
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•
Foreground (”FG”): Knowledge generated within the frame of a collaboration between
parties
Background (”BG”): Knowledge generated outside the frame of the collaboration, but
necessary for the generation, use & exploitation of Foreground
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•
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Background I: generated before the collaboration start
Background II (”Sideground” or ”SG”): generated during the development phase, but
independent of the collaboration
Improvement: further development/enhancement of FG & BG after the end of the
development phase of the collaboration
Other Assets: Knowledge not necessary for the generation and exploitation of
Foreground
Knowledge: confidential know-how, copyrights (software), demonstrators, prototypes,
test results, data bases, inventions, patents, patent applications, designs, design
applications, etc.
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Demonstrators, prototypes and other tactile/visible realisations and results comprising
Foreground & Background of one, some or all collaboration parties – often in a severable form
Software programs comprising Foreground & Background of one, some or all collaboration
parties – often in an amalgamated & non-severable form
Patents, patent applications and other IP owned or controlled by one, some or all
collaboration parties – often dependent on each other
Data bases, test results and other collections of information of one, some or all
collaboration parties – often in an amalgamated & non-severable form
2008-08-28 Fröhling
Volvo Technology Corporation
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Puzzle & Lego
The Construction Principles Behind
• Puzzle - “Closed Construction“
– a selection of a limited number of different building elements
enables the construction of one single 2-dimensional object
• Lego - “Open Construction“
– a selection of a limited number of different but standardised
building elements enables the construction of numerous different
3-dimensional objects
• Standardised high quality building elements
• Standardised connection of building elements
• Different types of building elements
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Volvo Technology Corporation
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Management by Lego
The Virtuoso
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Volvo Technology Corporation
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Management by Lego
The Equilibrist
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Volvo Technology Corporation
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Management by Lego
The Cubist
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Volvo Technology Corporation
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Contract Management by Lego
Collaboration between Parties
Collaboration
(Party A Other Assets)
Party A Background II
(Sideground)
Party A
Background I
Party B
Background I
Innovation
(Foreground)
Generation
2008-08-28 Fröhling
Innovation
(Foreground)
Exploitation
Party B Background II
(Sideground)
(Party B Other Assets)
R&D Start
Party A BG
Improvements
FG Improvements
FG Improvements
Party B BG
Improvements
Exploitation Start
Volvo Technology Corporation
Time
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Phase 1: Preparing the Playground
The Collaboration & Exploitation Contract
Party A Sideground
Party A Background
Party B Sideground
Collaboration & Exploitation
Contract
Party A Other Assets
2008-08-28 Fröhling
Party B Background
Party B Other Assets
Volvo Technology Corporation
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Phase 2: Building the Lego-House
The R&D Phase
Party A Sideground
Party A Background
Party B Sideground
Generation of
Innovation
(Foreground)
Party A Other Assets
2008-08-28 Fröhling
Party B Background
Party B Other Assets
Volvo Technology Corporation
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Phase 3: Selling the Lego-House
The Exploitation Phase
Party A Sideground
Party A FG Improvements
Party B Sideground
Party A Background
Exploitation of
Innovation
(Foreground)
&
Further Developments
Party B Background
Party A BG/SG Impr’ts
Party B FG Improvements
Party B BG/SG Impr’ts
Party A Other Assets
2008-08-28 Fröhling
Party B Other Assets
Volvo Technology Corporation
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Business Model & Contract Management
At the Beginning
•
•
•
•
•
•
Confidentiality
Intentions of the parties
Business model
Exit/divorce/disputes
Applicable law (multinational R&D!)
Contractual main bullet points
2008-08-28 Fröhling
Volvo Technology Corporation
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Business Model & Contract Management
General Collaboration Contract Structure
• Split of the collaboration into various consecutive phases with
corresponding agreements & exit/divorce plans
• Before the start of substantive discussions & negotiations regarding
a potential collaboration: Non-Disclosure Agreement (”NDA”)
• Optional: Frame Agreement (umbrella contract) covering the
general aspects, objectives, goals and intentions of the collaboration
• Specific agreements for the various collaboration phases,
as for instance:
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–
–
–
–
–
–
Phase 1: Non-Disclosure Agreement
Phase 2: Feasibility Study Agreement
Phase 3: Prototype Development Agreement
Phase 4: Product Development Agreement
Phase 5: Product Industrialisation Agreement
Phase 6: Serial Production & Exploitation Agreement
...
2008-08-28 Fröhling
Volvo Technology Corporation
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Business Model & Contract Management
Major Contract Modules
•
•
•
•
Parties
Preamble (intentions of the parties)
Objectives & scope (project description)
R&D collaboration plan
–
•
Contributions
–
–
–
•
•
Ownership
Access rights (licenses)
Excluded assets & other limitations
Exploitation plan
–
•
•
•
Financial contributions
Personnel
Other contributions
Confidentiality
Foreground & Background
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–
•
Organisation, structure, milestones, ...
Allocation of profits & other benefits
Exit/divorce plan (premature termination)
Warranties & liabilities
Applicable law & dispute regulation
2008-08-28 Fröhling
Volvo Technology Corporation
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Business Model & Contract Management
Contract Modules regarding Foreground & Background
Define & agree on suitable models for each of the contract modules, e.g.:
•
Ownership
–
–
–
–
–
–
Foreground
Background I & Background II (Sideground)
Improvements
Special provisions for demonstrators, prototypes, …
Special provisions for software programs, data bases, …
Limitations & other encumbrances regarding Ownership
•
•
Access Rights (licenses)
–
–
–
–
–
–
Foreground
Background I & Background II (Sideground)
Improvements
Special provisions for demonstrators, prototypes, …
Special provisions for software programs, data bases, …
Limitations in Access Rights
•
•
•
•
•
Remuneration for patentable inventions of employees
Necessary 3rd party consents
Legitimate own interest
Right to grant sublicenses, have made rights, access rights for affiliates and associated companies …
Exclusions from Background & further limitations
....
2008-08-28 Fröhling
Volvo Technology Corporation
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And now something completely different …
(Monty Python)
• Let’s talk about …
2008-08-28 Fröhling
Volvo Technology Corporation
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The End
2008-08-28 Fröhling
Volvo Technology Corporation
34
Thank you for your attention
Contact:
Dr. Werner Fröhling
Volvo
Technology Corporation
Corporate Patents 06820, M1.7
S – 405 08 Gothenburg
Sweden
Phone: +46-31-3223810
Fax: +46-31-828040
E-mail: [email protected]
2008-08-28 Fröhling
Volvo Technology Corporation
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Appendices
... good to know
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Volvo Technology Corporation
36
Patent First Filing Strategies
SE
+
US
Prov
+
PCT
SE
SE
12 M
EP
US
PCT
US
PCT International Phase
BR
CN
JP
18 M
SE
SE
SE, if needed, at any time
EP
PCT
30 M
0
2008-08-28 Fröhling
SE
US
BR
CN
JP
PCT International Phase
PCT
DE
FR
GB
IT
DE
FR
GB
IT
30 M
Volvo Technology Corporation
37
PCT First Filing
BR
International Phase 2.5 Years
CN
JP
US
PCT
Patent Office: Patentability Assessment
• Novelty Search
• Written Opinion (WO) on Patentability
• Preliminary Examination (optional)
(for instance if WO negative)
EP
DE
…
FR
…
GB
Geographical Protection
Decision deferred by 2.5 Years & based on
• Patentability Assessment
• Technology Assessment
• Business Impact Assessment
2008-08-28 Fröhling
Volvo Technology Corporation
IT
SE
…
38
PCT First Filing (PCT FF) Strategy
•
One PCT application includes automatically option for patent protection in 139 PCT countries
•
Decision regarding geographical coverage of patent protection
–
–
–
–
•
PCT first filing replaces the traditional domestic (national) Swedish first filing
–
•
Extending the maximum life time of patent protection by one year (important for pharmaceutical industry)
Amending the subject matter of claimed invention during priority year claiming priority of first application
Extending patent protection to a state belonging to the Paris Convention but not to the PCT system
PCT application drafted in English (official language of EPO, USPTO & even PRV)
–
–
•
However, in case it is needed, a domestic Swedish application can be branched off from the PCT application
at any point in time during the international phase
Priority system according to Paris Convention is no longer a “standard” process by default for
establishing protection in foreign countries, but rather an “option” for special cases only
–
–
–
•
Is deferred by 30 months to the end of the international phase
Is, regarding patentability of the claimed invention, based on the results of an international search & a written
opinion, and (optional) an additional International preliminary examination of the patent office
Is based on a more reliable assessment of patentability, technology & business aspects of claimed invention
Includes Option to retroactively include patent protection for emerging strategic markets
No translation of the application during the international phase and the national/ regional phase before
USPTO/EPO (further relief due to London Agreement when validating European patent for SE)
No need anymore to file a US provisional application in parallel with PCT application since the PCT filing date
(= priority date) is automatically the earliest possible effective early fling date (“102e Date”) for any US
application derived from the PCT application in the national phase
Considerable cost & handling time savings during the international phase
2008-08-28 Fröhling
Volvo Technology Corporation
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PCT First Filing vs SE First Filing
Estimated Acc Cost (at Entry Nat Phase)
250
200
Sum
Pat Off
Pat Att
Serv P
Inv/Mgr
150
Cost [ kSEK ]
100
50
0
SE FF
PCT FF
First Filing Strategy
2008-08-28 Fröhling
Volvo Technology Corporation
40
PCT First Filing
Patent
Lifetime:
20 Years
(max)
as of
Filing
Date
International Phase (2.5 Years)
Novelty Search &
Patentability Ass.
Preliminary Examination
(optional)
National Phase (17.5 Years max)
BR
CN
JP
US
PCT
Priority Year
Patent Grant
EP
DE
…
FR
…
GB
IT
SE
PCT: one international application
for more than 130 countries
2008-08-28 Fröhling
EP: central patent granting process
for more than 30 European countries
Volvo Technology Corporation
…
41
PCT First & PCT Subsequent Filing
(Optional)
Patent
Lifetime:
(max)
20 Years
As of
Filing
Date
International Phase (2.5 Years)
Novelty Search &
Patentability Ass.
National Phase (1 + 17.5 Years max)
BR
PCT 1 Abandoned
CN
JP
US
PCT 1
Preliminary Examination
(optional)
Priority Year
EP
DE
…
FR
…
GB
IT
PCT 2
SE
Addition of Improvements
of the invention
2008-08-28 Fröhling
Novelty Search &
Patentability Ass.
Patent Grant
Volvo Technology Corporation
…
42
PCT First & PCT Subsequent Filing
(Optional)
Patent
Lifetime:
20 years
(max)
as of
Filing
Date
International Phase (2.5 Years)
Novelty Search &
Patentability Ass.
Preliminary Examination
(optional)
National Phase (17.5 Years max)
BR
CN
JP
US
PCT 1
Preliminary Examination
(optional)
Priority Year
EP
DE
…
FR
…
GB
IT
SE
PCT 2
Improvements of the
Invention added to PCT 2
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…
PCT 2 Derived Patent Lifetime:
Max 20 Y as of PCT 2 Filing Date
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