Australasian Biotechnology (backfiles) AusBiotech ISSN: 1036-7128 Vol. 10, Num. 4, 2000, pp. 28-29

Australasian Biotechnology, Vol. 10 No. 4, 2000, pp. 28-29

INTELLECTUAL PROPERTY

BETTER MANAGEMENT OF INTELLECTUAL PROPERTY

Karen Sinclair

Watermark Patent & Trade Mark Attorneys, Melbourne, Sydney, Perth

Code Number: au00045

Intellectual Property (IP) management is taking an active interest in the creation, identification, maintenance and exploitation of IP assets. It need not be a separate function in a business, nor should it be handled entirely externally of a business. One solution might be to place it together with the responsibilities of technical direction or even quality control. IP assets might arise from R&D, product development, technical services, production, the management team, sales and marketing, accounts and purchasing, legal, warehousing and logistics, engineering and maintenance and so on. In other words, every aspect of a business may conceivably contribute to the IP assets of the company.

The most crucial step in effective IP management is the formation of an IP policy or strategy. This sets out the metes and bounds of an organisation’s endeavours in IP. Every organisation needs to create its own policy, and whilst it might be suitable to adopt aspects of known policies, ownership of the policy, and consequently adherence to the policy, can best be achieved by originality.

The best IP management strategies are those that are consistent with the business strategy and needs of an organisation. In fact, if the IP management strategy of an organisation does not dovetail with its business plan, it is doomed to failure, or at least irrelevancy. The IP management strategy must be communicated across the business to all employees from technical assistants to sales and marketing personnel. Clearly this is essential because of the strong human component to creation, use and misuse of IP.

The following list of policy aspects is intended to provide a starting point for the development of a policy suited to the individual needs of a business. It is not intended to be exhaustive!

1. What information do we have that constitutes IP?

The only information useful as the basis for an IP portfolio is that which is proprietary to the business. This section might define those aspects of the business from which there is a positive intention to identify and collect IP, and what the nature of that IP is likely to be.

2. What for us is valuable IP?

Essential IP is that which provides a competitive edge to the business. This section might define the characteristics of the marketplace within which the business operates, and accordingly, the characteristics of IP most likely to be valuable to the business. For example, it might define the margins required on a species of product for adequate profit, and consequently, the market share and penetration that a product might putatively have before patenting is considered economically viable. It could also identify the potential to fill a market gap as a critical indicator of IP value for instance. This section needs to identify what is essential IP and what is inessential IP.

3. Who is responsible for IP management in our business?

IP management need not only consist of the implementation of the policy, but should also include responsibility for

• the collection of newly generated IP (e.g. inventor disclosure statements);
• review of the identified potential assets and prioritisation for action;
• keeping tabs on external IP procedures either directly or through an IP adviser;
• payment of debts created in relation to the IP (e.g. by local subsidiary or by parent company overseas);
• review of the IP portfolio for continuing relevancy.

All the above duties can be conducted by an individual or by a team.

4. From whence does our IP arise and what do we do with it?

There are many models for the collection of new intellectual information in a business including, for example, the use of brainstorming sessions, inventor disclosure statements, continual review of the state of the art scientific and patent literature, competitor surveillance, market surveillance etc. Ideally, a combination of these avenues for pursuit of new ideas should be adopted.

Modern management theory supports the use of team-based structures to achieve desired ends. The most effective innovation teams are those with cross-disciplinary input from the technical angle, from the marketplace, from customers in particular and from management.

What a business decides to do with its IP will very much depend on the nature of the IP generated and the type of market it operates in. Some intellectual information might be best published via scientific publications. Other types might be best suited to formal IP protection and still others might be best suited to maintenance as a secret. A company might adopt one of these strategies for all of its IP, or alternatively decide upon a mix. For example, a market in which there is a rapid turnover in technology such as diagnostics or IT there is limited value in formal IP protection except in the case of platform technologies.

This section might also define whether the company is concerned to license-in technology or to license-out technology, and might also identify those markets in which the company is interested in having IP rights, is concerned to retain IP rights, to share IP rights or have no interest in IP rights at all.

5. Who will own the IP and what benefits will inure to the authors?

Ownership of IP is always a vexed issue, as is the issue of what benefit, if any, is returned to the author. In general, where an employee is employed to be creative and to generate IP, the rule is that any IP generated is owned by the employer. In most cases, this arrangement is codified in an employment agreement. Where an employee’s role does not involve creativity, some other arrangement needs to be set in place to ensure ownership rests with the preferred body. This may involve assignment of rights for quantitative or qualitative gain.

It is also useful to codify in advance what arrangements are preferred should an organisation find itself collaborating in the generation of new ideas with an external organisation. To have a pre-existing policy on this issue may save time, angst and confusion at the point of negotiating arrangements with a collaborator.

Consideration in this aspect of the policy should extend to sole ownership, joint ownership, ownership by local subsidiaries or by international parent companies.

6. Where will we seek formal IP protection?

This is a relatively minor issue in the overall management of an IP portfolio, however it can be the cause of recurring headaches if not addressed on a policy level. Formal IP rights should only be sought in countries where:

• manufacturing is taking, or will take place;
• copying is a real threat;
• export and sale can take place because of a favourable trade environment, or because of existing or easily created distribution channels; and
• policing of the rights is possible.

7. How will the IP be recorded and where?

Particularly when dealing with a variety of IP types, some central record system is essential for the purposes of valuation, review and ease of reference. By making an inventory of IP assets, complementary assets can be identified, resources can be allocated by predetermined criteria and critical deadlines can be appreciated in the context of the portfolio. These days the physical mechanisms of recording IP are simply adapted to individual needs. However, especially where a company is the owner of vast quantities of formal IP rights, it may be more cost effective that the records pertaining to these be kept by a foreign parent, or even by an external IP adviser. In both instances it would be advisable to arrange direct access to these records, for example, via the internet (bearing in mind security considerations).

8. How will we defend our IP?

There is no value in having IP if no action is taken to defend it or to enforce it against breaches or infringement. Notwithstanding this general statement, defending and enforcing IP in a court of law is an outrageously expensive commitment in terms of finances, time and human resources. It is therefore critical to determine in advance the steps that will be taken in the event of a breach or infringement, and to determine how far the company is prepared to go in any particular instance. This last decision is better made in the cool environment of a policy-making session than in the pressure cooker environment of a real live dispute. Similarly, proprietary information must be protected from unwanted disclosure by employing proper physical and legal safeguards. This includes controlling copies of confidential information, appropriate annotation thereof and tracking of property within an organisation and outside an organisation if it leaves the premises either temporarily or permanently.

9. How do we value our IP?

Valuing IP assets can be very complex and it is beyond the scope of this paper to discuss the various models that exist. Suffice to say, even in the absence of a convoluted accounting model it is possible to broadly infer the value of IP. Generally speaking, IP only has value when it is productively used in a business. Critically, especially a formal IP right should not be viewed as an end in itself; it is only a means to a better business outcome. Again, however, it is easier to make a policy decision about the manner in which the intangible assets of the business will be valued than to have to do so under the circumstances of a hostile takeover or management buyout.

10. When and how do we review our IP portfolio?

An IP portfolio has fluctuating value depending on the needs of a business. A portfolio full of dead wood is only taking up valuable resources. Defunct IP can be identified by recognising links between IP and core products and services. IP with a questionable link to the business is a cost without a benefit. Other determining factors for maintaining or abandoning IP can include determining whether the IP:

• is of value to competitors. If so it should be maintained or sold at the very least;
• is underused or has been superseded;
• represents a viable alternative to successful technology in which case it should be maintained; or
• is of no commercial value for in-house use or sale.

In the case of patent rights, in most jurisdictions, an annual fee is required to maintain the proprietary right. Accordingly, it is appropriate that this part of the portfolio at least be reviewed annually. In the case of Trade Marks, care should be taken to ensure that rights are not abandoned precipitously. Trade Marks, because they are the reservoir of goodwill and reputation have a life span that can extend beyond their shelf life to new products or to revitalised products. Contrary to popular accounting methodology, Trade Marks have an indefinite life if properly maintained, and an increasing value.

CONCLUSION

Excellent IP management is an important component of successful competition by Australian business and is only now being recognised as a core competency. Many aspects of good IP management are based on sound common sense and an appreciation of the nature and types of intellectual property protection available. Any company which recognises that it competes in a marketplace should also recognise the value of strong, well managed intellectual property.

Karen Sinclair is a Principal of Watermark, Patent & Trade Mark Attorneys

 

BIOTECHNOLOGY AUSTRALIA’S IP MANAGEMENT SEMINAR SERIES - NOW THE VIDEO The Australian Biotechnology Intellectual Property Management Seminars were held during the period 16-23 May 2000. A video is now available of the keynote presentations. Some very interesting and essential information is provided which makes this video essential viewing for all research biotechnologists who are developing intellectual property and are seriously thinking of commercialising. The keynote speaker is Stephen A. Bent of Foley & Lardner, Washington who shares some of his first hand experience speaking to the topic ‘Creating and Realising Asset Value in Biotechnology: A U.S. Perspective’. Stephen is joined by guest speaker Brigitte Smith of Rothschild Bioscience Managers. Brigitte talks about ‘Intellectual Property Valuation’. Dr John Raff of Starpharma presents a case study on IP management within several start-up companies in the pharmaceutical and agriculture industry. Some key points are made by Stephen and Brigitte in the video interviews.

Copyright 2000 - Australiasian Biotechnology