Bill pontikakis ip strategy and open innovation policy

IP Strategy & Open Innovation PolicyInnovation & Entrepreneurship in Universities

Bill PontikakisBill Pontikakis © 2013

Why a Change in IP Philosophy?

Bill Pontikakis © 2013

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))

Place Your City on the Map of Top World Innovation Ecosystems

Top World Start-up Ecosystems 2012 [1]


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]

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 Aktiengesellschaftand 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]

Traditional Approach to IPEconomic 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]

Traditional Approach to IPStories 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

Traditional IP Strategy is FailingEven with the Most Successful, in License

Income, U.S. Universities

Source: Association of University Technology Managers (AUTM) survey, 1996-2008

$-

$2

$4

$6

$8

$10

$12$Billions

Top 10 U.S. Universities in Licensing Income vs. Research

Expenditures (1996-2008 Cumulative)

Licensing Income Research Expenditure

$33.3B


IP Licensing Creates High Revenue Not Really

Source: Association of University Technology Managers (AUTM) survey, 1996-2008

00.5

11.5

22.5

33.5

44.5

%Annual Average % Return

Annual Average IP Revenues Earned as a % of Research Expenditures

Top 10 U.S. Universities in terms of License Income (1996-2008) [4]


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]


The New PhilosophyOpen 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

Closed Innovation (CI) vs. Open Innovation (OI) [7]


IP as a Disabler or Enabler of Open Innovation [3]


How to Create Value withOpen 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

How to Create Value with OIIBM – 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 software-

development 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

How to Create Value with OIGlaxoSmithKline 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

How to Create Value with OIUniversity 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

How to Create Value with OIUniversity 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)

How to Create Value with OIUC 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

How to Create Value with OIUC BERKELEY – Collaborations [9]


Some collaborations with industry are structured to be quite open, with results

publicly available to everyone

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

How to Create Value with OIUC 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

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

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]

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]

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]

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)

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

References


[8] Nature Biotechnology, “No-fee university licenses spur biotech partnerships”, vol. 31, no. 5, p. 376, May 2013

[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

[6] Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press, 2003

[1] Cornell University, INSEAD, WIPO, “The Global Innovation Index 2013: The Local Dynamics of Innovation, 2013

[9] Henry Chesbrough, Principal Investigator, “Open Innovation: Implications for Japanese Innovation, Report to NEDO, March 2013

[5] CIC, Rights and Rents, Why Canada must harness its intellectual property resources, 2011

[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

[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

[2] John Palfrey, “Intellectual Property Strategy”, The MIT Press, 2011

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