This document discusses predictive maintenance and intellectual property. It begins with figures showing the predicted economic impact of predictive maintenance. It then outlines the technical environment, players involved, and relevant legal issues. Two business models for general contractors are compared: a self-driven approach and consortium approach. The self-driven approach aims for differentiation while the consortium approach aims for lower costs. Finally, Porter's five forces framework is applied to analyze competition within predictive maintenance. Intellectual property can influence many of the five competitive forces.

1. Intellectual Property and Economic
aspects of a
Predictive Maintenance Service
By Alexandre POURRIER
MIPLM Research Project

2. Table Of Contents
1. Predictive Maintenance
2. The Technics
3. The Players
4. The Law
5. Market and Resource Perspective
6. General Contractor’s Business
Models Comparison

3. Predictive Maintenance: Few Figures
 McKinsey Global Institute estimates IIoT will bring an annual economic impact of $2.7 to
$6.2 trillion by 2025.
 Gartner estimates a replacement of 1 out of 3 knowledge workers by 2020 due to the
digital workforce and smart machines arising from the IIoT.
 GE estimates that the IIoT could add, over the next 15 years, a sizable $10 to $15 trillion to
global Gross Domestic Product (GDP), equivalent to the size of today’s U.S. economy.
 Predictive Maintenance will increased efficiency of an industrial plant by minimum 10%
and in some case as high as 25%
 saving up to 12 % over scheduled repairs,
 reducing overall maintenance costs up to 30 %, and
 eliminating breakdowns up to 70 %.
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 3

4. Predictive
Maintenance
Activities
• Not a very recent topic
• Already detailed in 1994
in the norm x60 010 (later
replaced by NF EN
13306)
• New trigger : the costs of
sensors have fallen
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 4
PREDICTION &
IDENTIFICATION
Fault diagnosisInspection
Condition monitoring
Compliance test
Function check-out
Maintenance schedule
Fault localization
ACTION
Improvement
Maintenance task preparation
Routine maintenance
Repair
Restoration
Temporary repair
Overhaul
Rebuilding
Modification

5. The Technical Environment
Sensor 1
PRODUCT
Sensor 2
Event 1
Event 2
Telecommunication
network
Data
Data
Data
Data
CPU
Storage
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 5

6. INDUSTRIAL
INTERNET OF THINGS
Sub-Prod. 1
Sub-Prod. 2
Operating System (OS)
Supplier 1’s app
Supplier 2’s app
General Contactor’s app
VALUE CHAIN MARKET
SUPPLIER 1
SUPPLIER 2
Sr 2
Sr 1
End-Product
Sub-Prod. 1
Sr 1
Sub-Prod. 2
Sr 2
Sr 3
Gal CONTRACTOR
End-Product
Sub-Prod. 1
Sr 1
Sub-Prod. 2
Sr 2
Sr 3
CLIENT
Data
OS Provider
Application
Provider 1
COMPLEMENTORS
Application
Provider 2
The Players
• New comers in
maintenance activities:
Digital companies.
• New breach in Client
confidentiality
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 6

7. Legal
Environment
• Efficient legal tools exist
• Harmonization efforts in
EU
• But still differences exist
between National and
Regional legislations
• Increase in transaction
cost and uncertainty
• Industrials urged in
global harmonization
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 7
INTELLECTUAL PROPERTY RIGHTS
Copyrights
- Data Sheets
- User Interface (UI)
Application in PM
Patents
- Product itself
- Sensor itself
- Sensor integration in
product
- Predictive Maintenance
process & Digital Twin
- Improved product
Know-How
- Manufacturing process
- Data processing models
- Data as such
Dsg. Patents
- Product aesthetic shape
- User Interface (UI)
Trademarks
- Service branding
- Product aesthetic
- User Interface (UI)
BUSINESS LAW
Competition
Law
- Collaboration
- Standard (FRAND)
Application in PM
Trade secrets
- Trade secrets
- Manufacturing
process
- Data processing
models
- Data as such
- Business plan
- Competition watch
Etc.

8. Customer benefit
Willingness to pay
among markets/
clients
Value creation
architecture
Differentiation
potential /
USP
Key resources /
Core
competencies
Market access /
Market position
Resource perspective
Cost effect
Market perspective
Income effect
Crucial value
creation partners:
 OS & Application
Providers
 PMR Sub-Product
Suppliers
Key resources:
 Hardware
o Sensors
o CPU
o Network
 Software
o OS & Apps
o Prediction
Model
Core competencies:
 Prediction model
development
 Integration
 Maintenance
 Logistic
 Modif/improv of
product
Unique selling position:
 Efficiency/Revenues
increase by 10 to 25%
 Support for failure
identification
 Anticipated delivery
of spare part / no
need for storage
 Product modif/improv
based on data
Target Group:
 Every Clients for:
o New product
acquisition
o Old product
upgrade
Customer Relationship:
 % of add. benefit
 Maintenance aid
based on data
Sales Channels:
 Direct delivery
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 8

9. General Contractor’s Business Models Comparison
General Contractor Self-driven approach Consortium approach
Business Model Value-Added Monopoly Hub Monopoly
Positioning Differentiation Low cost
Returns
% of the additional earning % of the additional earning
Maximized Shared
Failure Risk High Shared
Norms and Standards No Yes
Needs of clients
Good position to retrieve information Good position to retrieve information
Confidential Knowledge Shared knowledge
Knowledge on usage of the End-
Product by the client
Potentially accessible through data
retrieval
Knowledge accessible through data
retrieval
Potential reluctance from the client
to data retrieval
Client more confident with data
retrieval due to standard supervising
ownership, usage and security of the
data
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 9

10. General Contractor’s Business Models Comparison
General Contractor Self-driven approach Consortium approach
Predictive Maintenance
development
High costs Shared costs
Freedom of development Constraining by standard
Applicable for other clients Applicable for other clients
Complex Integration Better integration thanks to standards
Rapid Slowed by consortium negotiations
Cost for migration to a different OS Migration easier thanks to standards
IPR on Predictive Maintenance
process and PMR End-Product
Sole owner Shared
Protection & Blocking function Licensing function
Differentiation Low Cost
Increase brand equity/loyalty
By providing distinguishing End-
Products with less inoperable times
Diluted due to access to technology
Competitors’ technology Infringement risk Accessible via licensing
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 10

11. General Contractor’s Business Models Comparison
General Contractor Self-driven approach Consortium approach
Knowledge on the sub-
product
Potentially accessible through data
retrieval
Directly accessible through the consortium
IPR on “Predictive
Maintenance Ready” sub-
product
Yes, by supporting the development cost
of the suppliers
Generally reserved to the supplier
Sub-product, OS & Apps Premium prices due to IPR
Lower prices due to technology access
through the consortium
Sub-product, OS & Apps
competitors’ technology
Infringement risk / Hold harmless clause Accessible via licensing
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 11

12. Conclusions
 No best business model
 But adapted ones according to
 investment capacities,
 bargaining power with clients and suppliers,
 internal resources and competencies available, and
 risk appetite.
 In any case, it seems the right moment to get involved in Predictive Maintenance
Activities.
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 12

13. Thank You
Alexandre POURRIER
Master of Intellectual Property Law and Management - 2017
Master Committee: Prof. Alexander J. WURZER
Thibaud LELONG
“Now is the time. Not five years before and not in two years. Start now.
Join forces. Don’t wait until you’re pushed back one, two or three
positions in the supply chain.”
Thomas Weber, Director, Bosch Software Innovations

14. Annex
Porter’s five forces applied to the
General Contractor

15. Porter’s five forces
Competitive rivalry within the
industry
Bargaining
power of
suppliers
Bargaining power of customers
Threats of new
entrants
Threats of substitute products
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16. Competitive rivalry within the
industry
Bargaining
power of
suppliers
Bargaining power of clients
Threats of new
entrants
Threats of substitute products
Competitive rivalry within the industry
Influencing
factors
Impact of IP
Number of
competitors
IP regarding PM Process could enable GC to obtain
a unique market position and limit the number of
competitors
Diversity of
competitors
GC could impose a relevant UI as dominant design,
hence decrease the diversity of competitors
Brand equity Trademarks regarding the Cie and the PM service
combined with the efficiency increase brought by
PM, and Design Patents regarding the UI could
enable GC to establish brand equity
Level of
advertising
expenses
Trademarks, Design Rights & Reputation bring by
efficiency increase could reinforced one another
and create market advantage
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 16

17. Competitive rivalry within the
industry
Bargaining
power of
suppliers
Bargaining power of clients
Threats of new
entrants
Threats of substitute products
Bargaining power of customer
Influencing factors Impact of IP
Customer concentration
to seller concentration
ratio
- IP regarding the PM Process, end-product and PMR end-product could be used to block competitors
and therefore affect the concentration of seller industries
- IP regarding Client needs in PM could help GC to set the condition within the Client industry
Relative customer
switching
A potential dominant design regarding the UI and the potential incompatibility between different OSs
could increase customer switching costs
Ability to integrate
backwards
IP regarding the PM Process, end-product and PMR end-product could complexify the ability of the
client to integrate backward and therefore increase the bargaining power of GC
Availability of existing
substitutes
IP regarding the PM Process and UI could create a monopoly position or at least enable GC to
temporarily lower prices in order to make the end-product more attractive compared to substitutes
Customer price sensitive Trademarks regarding the “PM Ready” product could make the PM segment more sophisticated
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 17

18. Competitive rivalry within the
industry
Bargaining
power of
suppliers or
complementors
Bargaining power of customers
Threats of new
entrants
Threats of substitute products
Bargaining power of suppliers or
complementors
Influencing
factors
Impact of IP
Supplier
switching costs
relative to buyer
switching costs
IP regarding PM process and
the possible incompatibility
between OS could increase
supplier switching costs
Supplier
concentration
to buyer
concentration
ratio
- IP regarding PM process
could affect the
concentration of buyer
industries
- IP regarding PMR sub-
product help GC to set
conditions within the
Supplier industry
Threat of
forward
integration by
suppliers relative
IP regarding the PM Process,
end-product and PMR end-
product could complexify the
ability of the Supplier to
integrate forward and
therefore increase the
bargaining power of GC
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 18

19. Competitive rivalry within the
industry
Bargaining
power of
suppliers
Bargaining power of customers
Threats of new
entrants
Threats of substitute products
Threats of new entrants
Influencing factors Impact of IP
The existence of
barriers to entry
IP regarding PM process
and the possible
incompatibility between
OS could create barriers
to entry
Brand equity Trademarks, Design Rights
& Reputation bring by
efficiency increase could
reinforced one another
and help to establish
brand equity
Access to
distribution channels
IP can help control
distribution channels
Absolute cost
advantages
- IP regarding PM
process could affect
the concentration of
buyer industries, and
- IP regarding PMR 1sub-
product help GC to set
conditions within the
Supplier industry
Thereby increasing
bargaining power
towards suppliers and
lower costs
Université de Strasbourg - CEIPI - Master of Intellectual Property Law and Management (2017) - Alexandre POURRIER 19

20. Competitive rivalry within the
industry
Bargaining
power of
suppliers
Bargaining power of customers
Threats of new
entrants
Threats of substitute products
Threats of substitute products
Influencing factors Impact of IP
Relative price performance of
substitutes
IP regarding the PM Process and UI could create a monopoly position or at least enable GC to
temporarily lower prices, and therefore be used in order to keep competition out
Buyer switching costs IP regarding PM process and the possible incompatibility between OS could increase buyer
switching costs
Perceived level of product
differentiation
Trademarks, Design Rights & Reputation bring by efficiency increase could reinforced one
another and influence the perceived level of product differentiation
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