IP Strategy & Open Innovation Policy
Innovation & Entrepreneurship in Universities

Bill Pontikakis © 2013

Bill Pontikaki...
Why a Change in IP Philosophy?

To position any educational ecosystem, as a
leader in Innovation & Entrepreneurship within...
Place Your City on the Map of Top
World Innovation Ecosystems
Top World Start-up Ecosystems 2012 [1]

Bill Pontikakis © 20...
The Traditional Approach to IP
Strategy

Control and exploit your
IP to the greatest extend
allowed by law at every
instan...
The “Medusa Effect” of the
Traditional IP Approach
“Medusa Effect” – through
excessive patenting, overly
stringent IP poli...
Traditional Approach to IP
Economic Consequences
99% of patent-licensing
revenue in the U.S. is
generated by companies
tha...
Traditional Approach to IP
Stories from the Educational System

Universities, by insisting
on owning the IP create a
major...
Traditional IP Strategy is Failing
Even with the Most Successful, in License
Income, U.S. Universities
Top 10 U.S. Univers...
IP Licensing Creates High Revenue
Not Really
Annual Average IP Revenues Earned as a % of Research Expenditures
Top 10 U.S....
Canadian Universities
The Trend is Worse
…and it Doesn’t Improve Over Time
IP Revenues Earned by U.S. and Canadian Univers...
The New Philosophy
Open Innovation (OI) Policy
Open Innovation
The company’s use of internal as
well as external ideas, an...
Closed Innovation (CI) vs.
Open Innovation (OI)
[7]

Bill Pontikakis © 2013
IP as a Disabler or Enabler of
Open Innovation
[3]

Bill Pontikakis © 2013
How to Create Value with
Open Innovation (OI)
Rather that use IP rights
to prevent others from
exploiting certain
technolo...
How to Create Value with OI
IBM – Eclipse Project

IBM in 2001 released to
public its Eclipse project,
a developer tool wo...
How to Create Value with OI
GlaxoSmithKline Pharma – Patent Pool
GlaxoSmithKline Pharma recently created a “patent
pool” o...
How to Create Value with OI
University of Glasgow - Easy Access IP [8]
Open Innovation provides
an alternative channel for...
How to Create Value with OI
University of Manitoba – IP Ownership [8]

Companies partnering with
U of Manitoba can gain
au...
How to Create Value with OI
UC BERKELEY – Industrial Alliance Office [9]

Existing office, Office of
Technology Licensing ...
How to Create Value with OI
UC BERKELEY – Collaborations

Some collaborations with
industry are structured to
be quite ope...
How to Create Value with OI
UC BERKELEY – Benefits of OI [9]
This new approach has allowed UC BERKELEY to increase
income ...
Discussions & Suggestions on OI
It has been suggested [9] that
corporations should consider
creating intermediate
organiza...
More Discussions & Suggestions on OI
The most vibrant University
Ecosystem will be the one
were students, faculty, and
ind...
Benefits of Open Innovation Adoption

A proper IP policy can
improve innovation-led
growth by strengthening
links within t...
Open IP Strategy – Value Creation

This new IP model will
create a stronger
BRAND for the
University that adopts
it, which...
Innovation and Incubation Centers
Recommendations for their IP Policy
Release any IP that has not
generated any licensing
...
Open IP Strategy – The Goal

The new creative IP
strategy will spur
INNOVATION and
ENTREPRENEURSHIP

The University will b...
References
[1] Cornell University, INSEAD, WIPO, “The Global Innovation Index 2013: The Local Dynamics of Innovation, 2013...
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Bill pontikakis ip strategy and open innovation policy

  1. 1. IP Strategy & Open Innovation Policy Innovation & Entrepreneurship in Universities Bill Pontikakis © 2013 Bill Pontikakis
  2. 2. Why a Change in IP Philosophy? To position any educational ecosystem, as a leader in Innovation & Entrepreneurship within the traditional University boundaries To aid the educational ecosystem to become a key contributor in the local and national economic development through the creation of new startups and through the completion of innovative projects as mandated by the industry (Both SMEs and larger corporations)) Bill Pontikakis © 2013
  3. 3. Place Your City on the Map of Top World Innovation Ecosystems Top World Start-up Ecosystems 2012 [1] Bill Pontikakis © 2013
  4. 4. The Traditional Approach to IP Strategy Control and exploit your IP to the greatest extend allowed by law at every instance [2] The traditional IP model is mostly used as a driver of revenues, both directly and indirectly, in the form of free cash flow [2] This traditional way of thinking about IP has a negative and limited impact, leading to shortsighted decisions [2] Bill Pontikakis © 2013
  5. 5. The “Medusa Effect” of the Traditional IP Approach “Medusa Effect” – through excessive patenting, overly stringent IP policies or the prohibiting of communication between company researchers and those outside, potentially productive collaborations will look elsewhere [3] Siemens Aktiengesellschaft and Procter & Gamble Co. recently reported that they use a mere 10% of their patents but pay millions in annual renewal fees to the remaining 90% [3] Their unused generated IP can create patent thickets that inhibit potential collaborations [3] Bill Pontikakis © 2013
  6. 6. Traditional Approach to IP Economic Consequences 99% of patent-licensing revenue in the U.S. is generated by companies that own 40% of ALL U.S. patents [3] The remaining 60% of the patent holders receive just 1% of the revenue [3] By insisting that IP may only leave a company if it is paid for, that company eliminates the possibilities for cooperating with others on those technologies and benefiting from related or 2nd generation innovations that may create [3] Bill Pontikakis © 2013
  7. 7. Traditional Approach to IP Stories from the Educational System Universities, by insisting on owning the IP create a major barrier to collaboration with the industry Rolls Royce plc [3] - Finds that it takes 18 months to negotiate a research collaboration agreement with a university partner Because of these delays, the company is considering whether to terminate its extensive network of university research centers Bill Pontikakis © 2013
  8. 8. Traditional IP Strategy is Failing Even with the Most Successful, in License Income, U.S. Universities Top 10 U.S. Universities in Licensing Income vs. Research Expenditures (1996-2008 Cumulative) $Billions Licensing Income $12 Research Expenditure $10 $8 $6 $4 $2 $33.3B $- Source: Association of University Technology Managers (AUTM) survey, 1996-2008 Bill Pontikakis © 2013
  9. 9. IP Licensing Creates High Revenue Not Really Annual Average IP Revenues Earned as a % of Research Expenditures Top 10 U.S. Universities in terms of License Income (1996-2008) [4] % Annual Average % Return 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Source: Association of University Technology Managers (AUTM) survey, 1996-2008 Bill Pontikakis © 2013
  10. 10. Canadian Universities The Trend is Worse …and it Doesn’t Improve Over Time IP Revenues Earned by U.S. and Canadian Universities 1991-2008 [5] Bill Pontikakis © 2013
  11. 11. The New Philosophy Open Innovation (OI) Policy Open Innovation The company’s use of internal as well as external ideas, and internal and external paths to market, as it looks to advance its technology [6] The “one-size-fits-all” approach to IP is generally unhelpful to OI GOAL of Open Innovation Policy To create an ecosystem around your IP or “a system of value” to multiple parties Bill Pontikakis © 2013
  12. 12. Closed Innovation (CI) vs. Open Innovation (OI) [7] Bill Pontikakis © 2013
  13. 13. IP as a Disabler or Enabler of Open Innovation [3] Bill Pontikakis © 2013
  14. 14. How to Create Value with Open Innovation (OI) Rather that use IP rights to prevent others from exploiting certain technologies, grant free access to large portion of your IP basis. IBM and Nokia have granted free access to large portions of their IP basis You are creating an Ecosystem, and parties who might join the ecosystem to use the open technology as a basis for their own products and services, will in so doing also increase the total value of the ecosystem for the original company or university You might give away a core technology and profit from the growth of ecosystems through complementary products and services Bill Pontikakis © 2013
  15. 15. How to Create Value with OI IBM – Eclipse Project IBM in 2001 released to public its Eclipse project, a developer tool worth some $40 million at that time Strategy: To replace other softwaredevelopment products, such as the ones supplied by Microsoft Corp, and Sun Microsystems Inc., with a standard framework into which might better integrate its Rational software product line Eclipse is now one of the world’s most widely used software development tools, actively supported by almost all the major players in the software industry Bill Pontikakis © 2013
  16. 16. How to Create Value with OI GlaxoSmithKline Pharma – Patent Pool GlaxoSmithKline Pharma recently created a “patent pool” of 800 of granted or pending patents that researchers can license freely in order to develop and produce new products and formulations to combat neglected tropical diseases in least developed countries [3] BENEFIT It generates public goodwill for GlaxoSmithKline Pharma BENEFIT Helps generate a network of potential collaborators with whom the corporation can license IP for profit Bill Pontikakis © 2013
  17. 17. How to Create Value with OI University of Glasgow - Easy Access IP [8] Open Innovation provides an alternative channel for commercializing IP Represents a philosophy of making better use of the results of research to stimulate innovation Under the scheme, IP and granting rights are provided free in a standard legal page legal agreement Most of the 25 licenses executed under Easy Access IP terms have been with SMEs which are known to find it difficult to interact with universities A preliminary piece of IP can add to the portfolio of a young company and help it attract investment Bill Pontikakis © 2013
  18. 18. How to Create Value with OI University of Manitoba – IP Ownership [8] Companies partnering with U of Manitoba can gain automatic ownership of IP arising from collaborations Financial returns in the form of royalties on resulting products only after a patent starts generating revenues for the industrial partner Major objective To allow the university to increase its contribution to local economy Secondary objective To increase the funding of research programs through the industrial collaborations (Currently 80% of research funding comes from the government) Bill Pontikakis © 2013
  19. 19. How to Create Value with OI UC BERKELEY – Industrial Alliance Office [9] Existing office, Office of Technology Licensing (OTL) focuses on the licensing of University owned patents New Office of Industry Alliances Office (IAO) was created to enhance collaborations OTL is a “push” effort, pushing out University patents for licensing in industry IAO is a “pull” effort, trying to bring the private sector to the University Bill Pontikakis © 2013
  20. 20. How to Create Value with OI UC BERKELEY – Collaborations Some collaborations with industry are structured to be quite open, with results publicly available to everyone [9] Other collaborations are organized as consortia, with participating firms having preferential access to data and IP, compared to firms that do not participate Other collaborations are managed quite selectively, with only one industry partner. These are Sponsored Research Projects Bill Pontikakis © 2013
  21. 21. How to Create Value with OI UC BERKELEY – Benefits of OI [9] This new approach has allowed UC BERKELEY to increase income from $10 million / year from patent licensing to more than $70 million / year through grants and other outside funding By NOT focusing too much on patents and establishing IP rights for the university, UC Berkeley has succeeded in attracting over 600 collaborative partners Bill Pontikakis © 2013
  22. 22. Discussions & Suggestions on OI It has been suggested [9] that corporations should consider creating intermediate organizational structures to accommodate the differences between universities and companies’ cultures The suggested model works well with large corporations that have the resources, however SMEs are lacking such resources Thus, Universities should create intermediate organizational structures to assist the collaboration between industry and universities Innovation and Incubation centers, are functioning as such intermediate organizations Bill Pontikakis © 2013
  23. 23. More Discussions & Suggestions on OI The most vibrant University Ecosystem will be the one were students, faculty, and industry don’t just “consume” University products (courses, research results, and IP in the form of licensing) but in fact volunteer their services and donate money to help innovate with and alongside the University [2] Innovation and incubation systems are created for the purpose of enhancing competitiveness The innovation and incubation systems will shape the complex process of how some ideas initiated by faculty, graduate, and undergraduate students, alumni, or external corporations find their way to the marketplace [2] Bill Pontikakis © 2013
  24. 24. Benefits of Open Innovation Adoption A proper IP policy can improve innovation-led growth by strengthening links within the innovation ecosystem The new IP policy will provide mechanisms that create: - New partnerships of interaction - Market knowledge - Incentives that motivate new entrepreneurship The idea is to build a regional economic prosperity in the society, not just institutional advantage to the university [2] Bill Pontikakis © 2013
  25. 25. Open IP Strategy – Value Creation This new IP model will create a stronger BRAND for the University that adopts it, which is itself an important form of IP [2] The BRAND value of the University strengthens when [2] People to use its IP, even at no charge This in turn raises the University’s profile Will attract higher quality faculty and students Will increase future government grants Will increase private & corporate donations An open IP policy - Might decrease revenues from licensing - Will increase revenues from tuition, research grants, alumni donations [2] Bill Pontikakis © 2013
  26. 26. Innovation and Incubation Centers Recommendations for their IP Policy Release any IP that has not generated any licensing income for the last 3 years to the incubation center Any new IP should have the same grace period of at least 3 years, after which, if it has not generated any income, it should be released to the Incubation Center The Incubation Center will use that IP as a leverage to attract collaboration with SMEs or to assist new startups with fund raising Any new IP generated from the collaboration, if successfully commercialized, can generate income for the University (from licensing fees or any other form of monetization) Bill Pontikakis © 2013
  27. 27. Open IP Strategy – The Goal The new creative IP strategy will spur INNOVATION and ENTREPRENEURSHIP The University will be at the center of the new innovative Ecosystem The University will be a key contributor in putting their city on the map of the top world innovative ecosystems Bill Pontikakis © 2013
  28. 28. References [1] Cornell University, INSEAD, WIPO, “The Global Innovation Index 2013: The Local Dynamics of Innovation, 2013 [2] John Palfrey, “Intellectual Property Strategy”, The MIT Press, 2011 [3] O. Alexy, P. Criscuolo, A. Salter, “Does IP Strategy Have to Cripple Open Innovation?”, MIT Sloan Management Review, vol. 51, no.1, Fall 2009 [4] The Kauffman Task Force on Law, Innovation, and Growth, “Rules for Growth: Promoting Innovation and Growth Through Legal Reform”, Ewing Marion Kauffman Foundation, 2011 [5] CIC, Rights and Rents, Why Canada must harness its intellectual property resources, 2011 [6] Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press, 2003 [7] F. Wippich, “Leadership in Open Innovation: Examining the Influences of Open Innovation on Competencies, Control, and Behavior in R&D Environments”, Open Innovation in Firms and Public Administrations, pp. 97-125, IGI Global, 2012 [8] Nature Biotechnology, “No-fee university licenses spur biotech partnerships”, vol. 31, no. 5, p. 376, May 2013 [9] Henry Chesbrough, Principal Investigator, “Open Innovation: Implications for Japanese Innovation, Report to NEDO, March 2013 Bill Pontikakis © 2013

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