Tuesday, 16 June 2015

IPBC Global 2015: Conference report VI

"IP market 2.0" was the title of the second plenary session in this morning's IPBC Global 2015 conference. The theme of this session is that both the courts and legislators have had a significant impact on the development of the IP market in recent years. With scrutiny of IP business models and deal making more intense than ever, there is no doubt that further change is on the way. So how will things look in 2020 and who will still be standing?

This session was moderated by David Brown (Managing director, IP Solutions, Thomson Reuters), with panellists Kasim Alfalahi, Chief IP officer, Ericsson Erich Andersen (Vice president and deputy general counsel, IP group, Microsoft), Peter D Holden (President, ipCreate), Grant Philpott (Principal director, information and communications technology, European Patent Office), Laura G Quatela (Executive vice president of intellectual property, office of the CEO, Alcatel-Lucent) and Boris Teksler (CEO, Unwired Planet).
US 2014 patent filing figures
The panellists were first asked about their outlook for 2020. Starting with patent filing figures, the recent US 2014 dip might be no more than a blip, since foreign and Patent Cooperation Treaty US filings seem to be coming along well. The market may also be relying more on other options, such as secrecy, so the outlook is far from bleak so patent offices should be busily recruiting and training ahead of the likely increased flow. In China, while quality has been an issue, things are improving and there are large numbers of filings by SMEs. 

In business terms, open licensing and increasing flexibility in licensing policy will be likely to increase competitiveness and the extraction of total value from patents, both for standard-essential patents (SEPs) and others. It's not always known at the outset whether a patent will belong to a standard or not, and strategies for commercial exploitations depend on decisions made before standards are set.  The looseness of definitions and misunderstandings of what FRAND licensing means has been the cause of uncertainty, but this too is likely to improve -- by 2020 if not before. 

On the pricing front, current patent pricing is the subject of substantial volatility. This is not the sort of thing that granting offices can directly affect, though they can provide pricing databases -- which may assist. The convergence of the computer industry and the telecoms sector has caused problems too, as different pricing and licensing models come into conflict with one another and regulators, particularly in Asia, are taking a closer interest in SEPs. 

As the world rotates ever faster (metaphorically speaking), what implications will this have for first-mover advantages?  Speed is now key, not just because of first-to-file but because of capricious and insistent consumer demand, with which innovator companies must keep up.  In Asia, there is still some hostility to patents but, for example, in China, there are now vast numbers of domestic applications and this means that local attitudes have been changing fundamentally -- and in a positive way.

In terms of IP management, education of corporate board members -- which has been going on for years -- remains important. First it was necessary to explain what IP was; now, the education has stepped up a gear, dealing with IP's strategic significance and what to do with it.  IP monetisation can be hampered by wider  "business considerations" that miss the point. While things differ between companies and between sectors, there are always tensions between long-term and short-term policies, and this can be quite divisive at board level.  IP considerations tend to favour the development of long-term strategies. People are at last getting much more sophisticated in their appreciation of deals that are structured around IP.

Which IP monetisation business models (of which there are now many) are likely to thrive into the 2020s?  Things do change. Twenty years ago, everyone was talking about technology transfer and spin-offs from military research, subjects that are scarcely mentioned now.  Instead we see businesses based on both active and defensive patent aggregation, patent rent collection, outsourcing of invention and other services, attempts to create new markets for commoditised IP rights, among other things.  Some business activities are not actually new models, but merely bad behaviour as applied to old ones. 

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