IP Rockstar Says: IP In Business Is No Longer “Dessert,” More Like “Wine”

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Bulging portfolios, lucrative licensing fees, and record patent sales, the booming business of intellectual property strengthens calls from business leaders to accelerate the harmonisation of the global patent system. Participants in a recent private-sector intellectual property conference said that redundancies in international processes “creates waste” which could be better used to invest in new business.

The Pan-European Intellectual Property Summit gave business leaders, IP practitioners, and government authorities an opportunity to exchange perspectives on intellectual property based business strategies, key policies, and gaps in the system over four days (6-7 and 10-11 December) and two cities (Brussels and Alicante).

Related Intellectual Property Watch articles on the event here and here.

Introduced as “the man who brought rock ‘n roll to the patent business” at the patents conference in Brussels, John Veschi, chief executive officer of the Rockstar Consortium, is credited with sparking a new era of patent business for his role in the $4.5 billion sale of Nortel’s patent portfolio in 2011.

“Pre-Nortel, IP was more like a dessert,” Veschi said during his intervention. “Now, IP is becoming more like the wine, that you are looking at your business plan, you’re looking at your IP strategy and how your IP strategy integrates into your business plan. I think that companies that are going to be around sustainably are the ones that think of IP as critical to the success of their business.”

With a portfolio weighing in at 30,000 patents worldwide, the value of intellectual property assets has long been incorporated into Ericsson’s business strategy. The global telecommunications company spent €3.8 billion in research and development last year alone, an investment in part funded through its patent portfolio earnings.

“The revenue that we receive from licensing our patents goes back to R&D so we continue to be at the cutting edge of the leading technology all the time,” Kasim Alfalahi, senior vice president and chief intellectual property officer at Ericsson, told Intellectual Property Watch.

Burdensome Filing Procedures

As intellectual property becomes central to growth, companies are calling on policymakers to accelerate efforts to streamline the global IP system. Jürgen Koch, head of Corporate Intellectual Property at the Bosch Group, said that system redundancies and administrative requirements are burdensome for business today.

“We are in a situation where we have to decide monthly, weekly, or even daily, in which countries we want to validate a patent and we have to apply many different practices in the administration, using different forms, and so on and so forth. There is a lot of waste created – resources which could be used much better in creative work, patent work, drafting work,” Koch said.

“From that perspective, it’s really a luxury that we have so many, sometimes only slightly different, patent systems, making users stumble over formalities. My plea would really be, go ahead, as quickly as possible with the harmonisation both of formal but also of substantive law,” he said.

Harmonisation Priorities

Although it might not be as quick as IP professionals would like, heads of the European and US patent offices assured users that harmonisation efforts are advancing. Mark Guetlich, director of Patent Policy and External Affairs at the USPTO, pointed to work being carried out by the “IP5” countries (the European Patent Office, Japan, Korea, China, US) as “what’s next” in harmonisation.

Comprised of the heads of the world’s five biggest IP offices, the IP5 met with industry representatives last June to discuss ways of improving the quality and efficiency in patent examination, as well as harmonisation efforts (IPW, European Policy, 6 June 2012).

According to Guetlich, the group is focussing on a single electronically accessible application platform. “We see the global dossier being the core of what the offices work on toward commonality in practice to build an infrastructure around which all of these work-sharing opportunities can take place and beyond,” he said.

A taskforce for the development of the global dossier will meet in The Hague, Netherlands, in the beginning of 2013, according to the patent office heads.

For Margot Fröhlinger, principal director of the European Patent Office (EPO), the reform of the Patent Cooperation Treaty (PCT), a work-sharking framework overseen by WIPO, is a “top priority” for her office.

“We have made a number of proposals in the working group of the PCT and there are also proposals put forward by the USPTO and the UK office. We need more involvement from the users. We need your feedback on these proposals,” she said.

Additionally, the EPO director highlighted international fact-finding and comparative analysis of key harmonisation issues, which has been led by the so-called Tegernsee Group. Formed in July 2011, the group is comprised of heads of the EPO, Danish, French, German, Japanese, and US patent offices.

Their most recent meeting was in October 2012, during which they took note of four expert studies on the grace period, 18-month publication, treatment of conflicting applications, and prior use rights, available here. In the coming weeks, stakeholders will be able to contribute their feedback to the studies through global online consultations.

Grace, Please?

If one good turn deserves another, it seems as if the US is waiting for Europe to take the next step in substantive patent law harmonisation. Indeed, the America Invents Act (AIA), which goes into effect on 16 March 2013, moves the US patent system from a first-to-invent system to a first-inventor-to-file system, meaning that the patent should be awarded to the first inventor to file an application, which is more in line with international proceedings (IPW, US Policy, 13 September 2012).

One of the focuses of the Tegernsee Group, the grace period has been identified as one of the next areas of potential reform. In Europe, if an invention becomes publically available before the patent application was filed, it becomes prior art and will be rejected. This includes if the applicant make the invention available through publications, presentations, or showing it to an investor. In the US, a one-year grace period is provided to allow for such circumstances.

Albert Tramposch, deputy director for international and regulatory affairs at American Intellectual Property Law Association (AIPLA), argued that it’s up to the EU to make the next move.

“Now that the US has adopted the international harmonised system in its general outline, I think that it’s incumbent on Europe to consider also joining the harmonised system, which would involve them adopting a 12-month grace period,” Tramposch told Intellectual Property Watch.

For Jonathan Zuck, president of the Association for Competitive Technology (ACT), it’s an important safety net that makes good business sense. “I don’t think that it should be treated as the preferred order of things. If you have your act together, and you can go and you get a patent filed, that’s the best thing to do. That would be my advice to a start-up. But there are valid extenuating circumstances.”

“If you are an SME [small-or-medium-sized enterprise] and you are pre-funding, disclosure becomes part of your funding round. There are going to be instances in which pre-disclosure is essential, or at the very least, useful. It shouldn’t count as prior art against yourself – that’s what it really boils down to,” Zuck told Intellectual Property Watch.

Pirating The Conference

Lars Christian Engström, member of the European Parliament and deputy chairman of the Swedish Pirate Party, gave some pushback to a very pro-IP event. In his keynote address in Brussels, he reminded participants of a growing political voice speaking out against intellectual property protection generally.

Engström said that there are “serious problems with copyrights and patents,” focussing in particular on copyright enforcement on the internet, which he says infringes on information freedom and privacy rights.

He said suggested that in the internet age, “copyright should only regulate commercial activity, non-commercial activity should be free. Then we could live with it.”

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Rachel Marusak Hermann may be reached at info@ip-watch.org.

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