Beyond The Good Old Patent System: Make Sure To Share, Innovator Recommends 06/12/2015 by Monika Ermert for Intellectual Property Watch Leave a Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)The habit of patenting innovative products is being challenged by ever faster innovation cycles, the growing need for collaboration and co-invention, and what some classical patentees see as a “virus” of open source licensing. The tenth edition of the IP Summit, hosted in Berlin this year, heard some interesting stories from the smart home and smart car business. “We are in a new era,” said Gilles Babinet, entrepreneur and board member of EY Strategic Council, in a keynote given via video. “Big innovators say ‘we don’t care about IP. We give our IP away in exchange for your data.’” The IP Summit 2015 took place on 3-4 December in Berlin. Even traditional companies like General Motors followed the trend, announcing they were happy to give their patents to those who would use their platforms. “It has become more important to interact with users,” Babinet said. Anyway innovation cycles are so accelerated that owning IP for 20 years is of less importance now. Big Innovators Not So Interested in Fast-Aging Patents The really big innovators nowadays – including the “GAFAs” (Google-Amazon-Facebook-Apple) – “don’t relay so much on IP anymore. Data is more important to them, and interaction with stakeholders,” said Babinet. There is also a change in the way to develop innovation, Babinet described, as it is much more open. “As soon as innovation is there it is published,” he noted. Horizontal structures instead of classical hierarchies and an attempt to channel innovation up from those facing the customers are new trends. Will these new trends also affect more traditional companies? Babinet thinks they will and points to General Electric and others as examples. The big challenge to blue chip companies was that they had to adapt to a situation where innovation would be coming from everywhere and where “very small companies can threaten your business in a very short time.” The future, according to Babinet, will see companies like Google or drone producer Parrot partnering with a lot of independent, smaller innovators to deliver leading edge technology. Infectious Open Source The new subsidiary of renowned “white goods”-turned-smart home appliance producer Bosch, BSH, makes an effort to smartly navigate the new landscape, reported Thomas Buchholz, responsible for corporate innovation and intellectual property at BSH. Patenting its innovations has been important part of the IP strategy, and the ban of software patents has been no problem for smart home products, he said, because there is always a piece of hardware connected to software. But another trend creates headaches for the IP lawyers. “We often take known internet technology and deploy it to a different domain,” Buchholz said, “and there we have a problem with the inventive step rule.” Even bigger is the spread of open source and cooperative developments, especially in consortia. “We often take existing software components, a lot of open source and recently we have also begun to use open hardware,” he explained, adding that the attractiveness of OSS is irresistible. “We use it, because it is simple to use, it is cheap, a lot of components have a high quality and many of them have been tested by the community for years.” The wealth of protocols to choose from also allows the company to stay in competition with the more IT-oriented big patentee competitors like Samsung or LG. Yet for the patent lawyer there is a clear downside with open source: “We get that infection,” Buchholz sighed, that infection being the commitment that comes with the open source software to licence under the same terms and royalty free. The company is still investing a lot in research and development to transform the software to create the smart home appliances, he said, “but we cannot protect it.” Depending on which of the OSS licence variant has to be used, the infection could be a simple cold or a virus that once in the chain of product development would spread and stay with the company like a highly infectious disease. “We don’t want to do that and we cannot charge,” he said. Tinkering over Licensing Schemes and Royalties Similarly, new industry consortia in the hot field of the internet of things (IoT) push cooperative innovation work. But they, too, rule out the classical patenting and licensing schemes. Once a company joins the IoT consortium, it has to give away its patents, he said. Similar developments can be seen also in the b2b market. Everybody has a refrigerator, but not everybody has a big plant, said Martin Ahlfeld, general counsel at Weidmuller Holding AG. There, too, the role of software would increase and the long chains of stakeholders involved up to individualised configurations of products being manufactured in the smart factory would result in a rising complexity of IP issues. Massive data exchange would be the rule and a problem of data leakage would become a problem. “Data ownership,” said Ahlfeld, will become a more and more important and tricky issue with co-creation, co-innovation and joint IP ownership developing. In the end, the patent experts believe that with co-ownership of IP there will be even increased litigation. Car manufacturers and the suppliers of parts for cars face the similar issues, Berg reported. Comparing different strategies, he explained, that US premium electrical vehicle producer Tesla is exchanging its technology for data “in the spirit of the open source movement” for free. It is not asserting its patents against anybody “acting in good faith,” where good faith means refraining from outright copying the Tesla products and from counter-asserting one’s patents against Tesla. “For suppliers of car parts, this is not helpful,” said Peter Berg, chief IP counsel Dräxelmaier Group, an international automotive supplier, as they risk that their customers engage in activities violating good faith with regard to the third party IP rights in their products. Toyota, on the other hand, chose to use royalty-free licences subject to reciprocity. Berg, too, warned that he expects only more litigation. “There are issues ahead. And it will be royalty-free versus FRAND (fair, reasonable, non-discriminatory) licensing.” Standard Essential Patents Still Dealt with Differently The international standardisation bodies – IEEE (Institute for Electrical and Electronics Engineers), ITU (UN International Telecommunication Union), ISO (International Standards Organisation) and others – sources of standard essential patents (SEPs), deal differently with the issues at hand, said Knut Blind, who presented empirical studies of the Fraunhofer Focus Institute on standard essential patents (SEPs). Working towards standards that seek broad implementation, standards organisations follow different policies with regard to what licence has to be granted. While transparency with regard to upfront disclosure of IP is standard, albeit not implemented to the satisfaction of all parties in some cases, obligations on the licensing policies requested differ from clear royalty-free regimes over FRAND to a more complex regime as adopted recently by IEEE. Despite many differences there is a trend toward consolidation, said Blind. But he also said that a recent change in the IP policies at the IEEE went in a different direction. This could be seen as an attempt to differentiate itself from other standardisation bodies as these bodies were also competitors, he said. Despite all the new developments, the patent system will still be around for at least a decade, concluded Babinet. But his recommendation was: “Don’t protect your innovation or at least make sure that you share it. It should be a stock not a stream.” Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Monika Ermert may be reached at email@example.com."Beyond The Good Old Patent System: Make Sure To Share, Innovator Recommends" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.