IP Corporate Strategy - A glimpse into the future

The Managing IP Corporate Strategy Summit took place on September 12 in London and covered a broad range of issues, including AI, the automotive sector and IP as a cost centre or revenue stream.

The keynote address, delivered by Neal Rubin, senior vice-president of operations at RPX, focused on how to minimise IP risk. One of the first points made by Rubin is that the best IP lawyers always understand the fact that IP risk is married to PR risk. When companies embark on litigation, they need to be mindful of how the case will be reported in the press and the ramifications of this reporting on the company's reputation.

Another consideration Rubin mentioned is that the way "companies take on risk and resolve risk is based, at least in part, on accounting principles." He went on to say that when assessing the financial impact of a patent infringement claim, a company has to ask whether the expense will come out of the overall accounting of the treasury or whether it will come out of the particular department accused of taking the risk. If the expense is going to be assigned to one particular business unit, it is important to have conversations with the manager of the area, who might ask you to explain the situation to their CEO. Rubin noted that this approach often "drives results".

A particular area of focus in Rubin's address was how companies can use data to make decisions about IP. By assessing data from previous years relating to the number of litigations and costs, in-house lawyers can reach a verdict on whether the company's risk is manageable and whether they need to seek insurance or not. Rubin noted that if companies "scrupulously keep all data, they can build an actuarial model around it." He also observed that, by analysing data, companies can obtain a sense of how litigation is likely to play out. He stated that, while figures concerning litigation were previously more shrouded in China, there is now available data from the jurisdiction.

The first panel discussion was about the management of business risk.

Panel member Mario Bitter, head of IP at Siemens, asserted that installing risk and control systems can help manage IP risk. He also noted that in a big organisation it is essential that everyone in the company knows about the IP department. He stressed that it is imperative that all IP questions end up with the correct people and that all the relevant parties are aware of the rules and procedures that have been set up for managing risk.

The panellists mostly worked for companies where IP insurance had not been taken out from external companies, though a few members of the panel stated that their organisations had discussions about this topic and reviewed the issue at intervals. Another point raised during the conversation was ensuring that when engaging with suppliers, designers and other parties, it is clear who owns IP.

The final panel discussion before the morning coffee break was about prioritising policy and regulation updates for the management of your business.

Emma Stopford, trade mark counsel, legal and external affairs, at British American Tobacco, commented on the widespread changes affecting branding in the tobacco field. However, she noted that similar rules could start applying to other areas, saying: "The health agenda is making its way into other fields which will have an effect on IP." Some of these potential areas are sugar and alcohol and she therefore commented that those concerned about how these changes could affect IP rights should become involved in lobbying.

Adam Williams, director at the International Policy Directorate, UK Intellectual Property Office, shared some tips for practitioners on how to affect the direction and shape of policy and regulation. One key point he made is that "economic evidence plays an important role when it comes to policy." He added that politicians and policy makers take such evidence very seriously.

Some of the advice he shared included the following:

• Ensure you know your counterparts in government – in this case, the relevant minister and their team.

• Think about the best people to do the lobbying. Use senior people when necessary so that they are taken seriously/can give a strategic view.

He imparted particular advice for SMEs, encouraging them to use industry associations to help them convey their message and access industry associations' government relations contacts.

After the break, a panel discussed dispute resolution, M&A and due diligence.

Mark Hodgin, chief counsel, trade marks at Mondelez International, mentioned the importance during transactions of the IP team being aligned with the deal team. In acquisitions, IP lawyers can play a vital role in a number of different ways. For example, they need to consider the value drivers. Hodgin noted the importance of analysing the strength of brands and their enforceability as well as what activity the company has been taking to protect assets and the prosecution history of the brands. This is an effort to assess the value of the brand before it is acquired. He also observed that in divestitures, companies need to understand how their IP rights are used across brands and products to fully manage the sale process.

Richard Vary from Bird & Bird discussed litigation, offering some tips. These included:

• When companies sue large organisations for patent infringement, they have to make sure that their assertion stands out and will capture the attention of the company.

• Vary also said: "For every four or five patents you assert you are going to lose on most of them." In order to increase success, he suggested being exceptionally careful on the patents chosen in a patent litigation. He advised counsel to ask patent agents to conduct prior art searches. He also recommended checking that all the formalities for rights have been fulfilled.

• Counsel should limit patents upfront rather than later on, during proceedings.

• Companies should select the court carefully according to what they want, for example, to reach trial before your counterparty if they are likely to sue you in response.

• Choose external counsel wisely and then trust them to run the case in the best way for their local court. Do not assume your way of presenting a case will work in a foreign court.

• Ensure that multiple press releases are prepared for the possible different outcomes of litigation.

The following session debated whether IP is a cost centre or revenue stream.

Josue Ortiz, director of ClearViewIP, noted that even if IP is a cost centre, it does not necessarily mean it is a burden for an organisation because some cost centres are indispensable and valuable to companies.

Mairi Gibbs, head of operations at Oxford University Innovation, observed that licensing commercialises a university's protected intellectual property. She said that IP transactions are a mechanism to enable university research outputs to have a greater societal impact and have the capacity in some cases to generate significant financial returns. Furthermore, the university is able to use the money from IP transactions as it wishes. She also noted that IP commercialisation can enhance the university's reputation and thus help to attract worldwide talent.

The panellists also talked about formal valuation of IP. Charles Clark, director of intellectual property at Centrica, said that valuing IP is very difficult as it changes with business sectors and with time. However, he has been involved in the valuation of IP during the course of his career. He mentioned methods for valuing IP: "If we didn't own the patents that we do own and they belonged to somebody else, how much is that going to cost us to license that technology – that's one way of doing it, but there are so many other ways. There needs to be a consistent way of valuing intangibles but at the moment I can't see it." Other panellists were not convinced that formal IP valuation was effective.

The talk after lunch was about the impact of artificial intelligence (AI) on IP strategy.

Steve Harris, CTO at Aistemos, talked about how AI can help in the IP world. He said: "AI is particularly suited to making very complex but not strategic decisions." As a result, it can provide answers about, for example, what patents relate to.

Erich Spangenberg CEO of IPwe, said that AI tools can reveal who owns a patent, regardless of the name of the subsidiary on the cover of the patent. He stated that prices will fall and everyone will be using this technology in the next few years. He added that this will "massively increase productivity" and informed the audience that the result will be that "people other than IP experts will begin asking about metrics". He later observed that AI will lead to transparency as there will be "so much information sitting on the cover of a patent".

Nigel Swycher, CEO of Aistemos, who was moderating the panel stressed the importance of transparency. He said it was essential that the wider world understood this asset class. He also suggested that members of the audience read a paper published by WIPO encompassing the views of various national offices about what AI could do for them.

Aistemos recently published an IP Strategy Report, which offered insights into factors that could disrupt IP in a range of industry sectors. Its survey asked about technologies that will cause disruption, with a broad range of technologies given. AI (75.8%) leads, then the Internet of Things (IoT) (44.2%), closely followed by blockchain (42.4%).

The report explained: "What is reinforced by the sector studies is how universally applicable these technologies will be. Using AI and machine learning as an example, it has a broad application. For example in fintech, it is being deployed in the back-office (risk assessment) and on the front line interacting with customers. Both automotive and A&D are investing in AI for autonomy on land, air and sea. Other sectors embracing AI include healthcare (the primary focus for IBM Watson), retail (recommendation engine) and social media (face recognition)."

The talk before the final coffee break was about new ways to exploit IP assets.

Gibbs of Oxford University Innovation noted that establishing new companies is an important strategy for the university, in situations where perhaps such a method is the best opportunity to take a technology to many different marketplaces. She said that such companies operate as licensees and their financial performance is monitored as licensees.

Kate Reid, design and engineering legal team head at BBC, talked about the challenges faced by the organisation, such as the ownership of IP in supplier agreements for digital services.

The penultimate panel discussion covered IP, IoT and the automotive sector.

Matt Hervey, director of Gowling, raised some interesting points. He observed that it is not only automotive companies that are players in the automotive field. There are a number of new entrants, such as tech companies. He also noted that there is a growing emphasis on copyright in this sphere, which can protect computer programs and AI. Trade secrets are another way to shield AI and have already been litigated in the US. He mentioned the importance of designs and branding in this sector and talked about IP in the context of commercial realities, noting that interoperability is a consideration. He used the example of Tesla, which allowed anyone to use its patents because it wanted to grow the infrastructure of charging stations. He referred to the fact that litigation in the automotive space is expected to rise.

The day ended with a panel conversation about building the IP department of the future.

One issue raised by the panel was recruitment. Lucy Wojcik from Ocado Group observed that recruitment is a challenge. Calum Smyth, global head of intellectual property at Barclays, commented that upcoming generations are facing a world where they may not earn as much as their parents and so it is possible they feel forced to take a pragmatic view, perhaps considering remuneration a higher priority than before. If true, it will be a continuing challenge for in-house IP counsel to both recruit and retain talent in such an environment.

Wojcik stressed the importance of having an integrated culture, where IP is not partitioned off from the rest of the business.