Kenneth Horton Main: (801) 832-2600Associate Professor, Intellectual Property Law & Strategy Cell: (801) 809-0310MBA Technology Management Program Direct: (801) 212-2056Gore School of Business, Westminster College Khorton@Westminstercollege.edu1840 South 1300 East http://www.linkedin.com/in/HortonIPSalt Lake City, UT 84105 THE IP STRATEGY MINUTE Q4 2012: RUNNING AN IP COMMITTEEOne of the key systems to have in place to implement an IP strategy within your company is the IP committee. Thiscommittee often serves as a foundation for the IP decision-making process regardless of the size of the company. Thereexist several key components in operating an effective committee: getting the right people (membership), making thecorrect decisions about strategy, implementing the correct strategy when considering each new product or invention,and effectively using the available tools to handle the information flow.A. MembershipThe IP Committee should contain people with diverse skills and competencies. It goes without saying that the IPcommittee should involve at least one individual from the IP Department, preferably one with the requisite ability tocounsel the other members of the committee and recommend a final course of action. As well, the committee shouldcontain technical and business personnel from the business unit in which the committee is located. Finally, thecommittee should contain an executive holding the necessary decision-making ability. In some committees—butcertainly not all—the executive and the IP representative are one in the same. Some companies will involve the actualinventors in their meetings, while other companies choose not to do so.The chair of the committee plays a crucial role in the committee meetings. Sometimes this role is held by the IPrepresentative and other times it is held by the business unit executive. In either case, the chair must retain ownershipof the decision making process, as well as the execution of the decisions reached by the committee.B. Setting Strategy (Macro Considerations)The first job of the committee is to make sure that they understand the business objectives of the organization. Withthat information, they need to decide on the most appropriate IP strategy that aligns with these business objectives.In setting the IP strategy, the committee should consider the following inputs into their decision making and thefollowing deliverables that flow from their decisions.
IP COMMITTEEThe last of these deliverables is typically the one that is most visible to the business unit and therefore, the majority ofthe committee’s time is spent on perfecting that deliverable.C. Strategy Implementation (Invention Analysis)There are typically two components to analyzing a specific invention or a specific technology underlying a new product:rating the invention and then deciding on what to do with that invention (i.e., whether to file for any formal type of IPprotection). This decision is then incorporated into the decisions made on a portfolio level.1. Rating the Invention. Generally, the invention will be rated on the following criteria: § technical significance; § commercial significance; § intention to practice the technology; § viability of protecting the technology as a trade secret; § competitive advantage lost if excluded from practicing the technology; § competitive advantage gained by excluding competitors from practicing the technology; and § whether the technology has been reduced to practice.The following specific questions, among others, can often be answered and used to help analyze these seven criteria: • Is the technology a system or a component of the system? • Is the technology a breakthrough or merely a variation on existing technology? • How, where, and by whom is the end product expected to be used?
• What is the status of the technology: a concept, design engineering, prototype working model, test market sample, or in commercial use • What are the results of any patent search that has been conducted? • What is the expected scope of the claims? • Have the inventors published any articles or presented any papers (or other prior art) to describe the technology? • Have there been any sales or sales offer? • What are the technical, economic and/or market forecasts for the technology? • What additional technical research, design, engineering modeling needs to be done before the technology can be considered feasible? What are the estimated times and costs for these actions? • What is the primary objective for the invention: funding for further research, to enter a joint research effort or strategic alliance, to license the technology, to create a new business venture to exploit the invention, or to introduce a new product? • Is this considered a priority technology for the business? • Are there any prior commitments to outside firms that know about the invention or technology? • Are there any potential claims of infringement against the technology? • What information has been developed about the advantages of the technology, disadvantages, market size, competitive technologies, suppliers, sales potential, economics, etc.? • Has any work been done to estimate the economic advantages of the technology? If so, has there been any estimate of potential sales price (or licensing fee)? • Are there any technical or other critical personnel needed to commercialize the technology? • What are the costs of engineering, manufacturing, marketing, delivering or using and product? Are there any critical materials, components, processes, handling, shipping, storage, etc. that could cause major problems with development? • What is the potential lifecycle for the product? • What potential future improvements and modifications have been contemplated? • What will happen if the potential market does not appear to be attractive as originally believed? • What problem does the invention solve? • How does the technology improve over existing solutions? • Is the invention easy to design around? • Is it easy to detect infringement? • Does the technology offer differentiation in the market? • Does it offer a licensing opportunity to third parties who are likely to use the invention? • Does it relate to an operating or potential industry standard? • Does the invention align with the filing targets? • If protection is required, in which counties is it required? • What is the likely return on the investment? • How would the invention add value to the business?Of course, not all of these questions will be applicable in all instances. And this list is not exclusive to all of the questionsthat might need to be asked for every invention.One objective tool that can be easily used is to give these questions a numerical rank (i.e., 1 to 10) and then combine thesores to give the invention a total ranking. A weighting system for the questions can be used when needed.2. Filing DecisionsOnce the invention has been rated, the IP committee is then tasked on how best to protect the invention. During thatprocess, they will take the following actions:
• verify that the inventorship and the ownership of the invention are correct; • evaluate the invention disclosure form and determine whether it should be submitted as patent application; • decide on the foreign filing strategy (in which countries to file); • prepare and file a defensive publication that discloses the invention; • inactivate the disclosure; • request more information from the inventors; • keep the invention as a trade secret; and • set budgets for protecting the invention. The basic costs would U.S. filing and prosecution costs. Additional costs would include foreign filing and prosecution costs on a country by country basis.It is important that the decision making process of the IP committee be consistent and transparent. Once the decisionhas been reached of whether to file a patent application, it is important for the patent committee to set forth thereasons why the decision was made to file or not. This would include the criteria (rating/scoring) used and anyassumptions made. This information is important since if the criteria used or assumptions underlying the filing decisionchange, it is easy to change how to handle the asset.3. Maintenance DecisionsOnce the invention has been filed as an application or patent, the IP committee is tasked on how best to maintain thatprotection within the broader portfolio. During that process, they will take the following actions: • review existing patents due for renewal/annuity fees; • reviewing existing applications for further prosecution (i.e., continue or abandon) as well as whether additional applications (continuation, divisional, etc.) need to be filed for the invention; and • consider maintenance costs, enforcement costs, and other transactional costs that might be needed.D. Information & ToolsAll members of the committee should add value and contribute to the meeting. The best way to make sure that they allcontribute is to provide them with the best information and tools for them to contribute with their unique perspective.Most decisions about a particular technology or invention will evolve around the invention disclosure form, whichincludes: • Summary of the invention, including information on the advantages or benefits provided (useful for non- technical members); • Prior art search results and analysis; • Opinions of technical experts; • Patentability analysis results; • Ease of detecting infringement; • Filing targets (how the invention helps achieve the set filing targets, if such targets exist); • Rating of the case (if a rating or scoring system is in use); and • Guidance on how such a patented invention would add value to the business.Because most decisions about the portfolio are complex, they are often aided using portfolio management tools (ofwhich they are many and beyond the scope of this newsletter).