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Project D2:
Patent Portfolio Management
- Public & Private Sector
GUAN KOK WUI (HT062976H)
TAN HAN MING (HT063243H)
R.KUMARAN (HT053252X)
NAE WIN AUNG (HT063043E)
ME ME HLAING (HT063138E)
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Patent Portfolio - Cost
Cost to file and maintain 100 patents per
year (US$1K per patent + $4K procecute
over 3 years):
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Patent Portfolio - Cost
IBM case study:
Collecting over $1.5 billion per year in
licensing revenue.
Annually in R&D spending $5 billion.
Generated over $30 billion worth of OEM
agreements.
Patent need to be able to pay for itself.
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Patent
Copyright
Legal
Process
Innovation
Management
Knowledge
Management
Knowledge & Intellectual Property Management
Knowledge Management = Raw resources that support production, other
processes, and decision making hence create value
Innovation Management = Processes, networks, and relations used to extract
value from knowledge resources
Intellectual Property Management = Rights to protect a competitive territory
used to maximize value
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Create Value: Knowledge Management
Extract Value: Innovation Management
Maximize Value: IP Management
Knowledge & Brainpower
New Products/Services
Competitive Tools
MARKET
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Value Creation
Methods:
Defend and Protect.
Develop and Drive.
Market and Commercialization.
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Value Creation
Defend and Protect:
Successfully defending their claims.
Exclusionary rights to block competition
prevent erosion of market share
more sales or higher margins
Suing competitors.
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Value Creation
Develop and Drive:
Build patents into their products or services to
achieve,
improve performances
improve efficiency, cost reductions, or better time
to market.
expanding or creating new products, services or
businesses
blocking competition
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Value Creation
Market and Commercialization:
Mainly for revenue generation and competitive
positioning.
Maximize value extraction and potential,
patents placement for maximum impact to
business,
licensing surplus or non-core patents for royalty.
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Value Creation
Other Methods:
Use patents as collateral for loans.
Work with other company to license its patents, and
take percentage of the royalties as their fees.
Buy non-strategic patents and aggregate these
patents to create bundles of patents for licensing to
other companies.
Placing universities technologies into small and
medium-sized technology firms that need an injection
of new technology to grow their business.
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Business Model
SBC Communications Inc.:
Fortune 500 company.
Business in voice, data, networking, e-
business, directory publishing and advertising.
Holds 60% ownership in Cingular Wireless;
serving over 46 million wireless customers.
Leading providers of Internet services.
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Business Model
SBC Knowledge Ventures:
Intellectual property unit of SBC Communications Inc.
Created to more effectively and strategically manage,
commercialize, grow and extract value from IP assets.
Effective innovative licensing program,
successful commercialization of a range of SBC patents,
software and trademarks.
greatly expand the SBCs IP portfolio,
created robust and valuable asset base for future
commercialization.
Named "Innovator of the Year for 2005" by the
National Knowledge and Intellectual Property
Management Taskforce.
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SBC Knowledge Ventures
Patent portfolio management model:
Market and Commercialize.
Adopted organizational approach to capture
the dynamics of patent licensing.
In the last two years, completed nearly 30
licensing transactions for patents, software
and trademarks.
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Organizational Approach
Key functional and
skill areas,
Portfolio management
Business development
Finance
Legal
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Organizational Approach
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Organizational Approach
Patent funnel stages and functional
involvement:
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Hitachis IP Strategy
IP portfolio goals for
2010:
Basic policy:
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Hitachis IP Strategy
Building world- class patent portfolio:
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Hitachis IP Strategy
Building world- class patent portfolio:
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Hitachis IP Strategy
Building world- class patent portfolio:
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Hitachis IP Strategy
Patent exploitation matched to business
strategy:
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Hitachis IP Strategy
Rewards system for employees invention:
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Hitachis IP Strategy
Fostering human resources:
Mental Model Shift
In the past: inventors novel spirit
Explore a breakthrough technology
File a patent to protect his intellectual property
At present: entrepreneurial spirit
Likely to commercialize his grand technology
Anticipate his seeds as thriving fruits
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Build up technology transfer capabilities
Dramatic increase in patenting
behavior of academic institutions
Source; http://www.thomsonderwent.com/
The increase in no. patent issued by academic institutions worldwide
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Dramatic increase in patenting behavior of uni
+ Federal law affecting university patenting
The Patent and Trademark Amendments of 1980; Bayh-Dole Act
gave uni, non-profit institute and small business the right
to retain the property rights to inventions; federally funded research

+ Increase in organized university technology offices
dramatic increase in the scale and significance of patenting
and technology licensing function at uni
+ Increased industry funding of university research
tend to invest on uni as an option
Relative importance and generality
vs.
No. of patents
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Status of Academic institutions in the
technology context
O industries tend to invest and rely on uni
academic research
O likely to convey open innovation
Source; http://www.thomsonderwent.com/
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play in crucial role in the technology context
Regional Variation
Governmental context IP rights
Management of TTO
VC contribution
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US

O 21% growth
O Uni of Cal; manages technology transfer by TTO
O Uni Columbia New York; STV established in 1982
O MIT & Stanford Uni; in between
Source; http://www.thomsonderwent.com/
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RUSSIA

O 36% growth
O establish six technology transfer sectors by Ministry of Industrial Science in 2003
O Kuban State Uni; a complex of 16 branches & over 40 research centers
Source; http://www.thomsonderwent.com/
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EUROPE

O CNRS, the largest research organization in Europe
O Londons Imperial College
the first majority uni-owned TT company in 2006
trade on the AIM market of Londons Stock Exchange
Source; http://www.thomsonderwent.com/
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ASIA

O drastically increase in Asia; sharp rise of academic patents from China
O six out of top ten
O established the first national TTC at Qinghua Uni by MENETC in 2001
O later on, set up TTCs at Uni of Shanghai Jiaotong and Uni of Xian Jiaotong
Source; http://www.thomsonderwent.com/
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Driving Factors
the growth of patents lead to the commercialization
from the academic context to industrial context
innovation policies of respective regions
- Bayh-Dole Act
- researcher and universities rights upon patent in Denmark
- Employee inventions Act in Norway and Germany
- Universities owned the patent in Great Britain
- join the WTO in 2001
- enforce on IP rights
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Technology & Knowledge Transfer
In Academic Context
teaching; publications; students
From Academic to Commercial Context
licensing of intellectual property
spin-off or start-up companies
O Stanford University started licensing program since 1970
generated total income 35 million; operating budget 2.4 million in fiscal year 1999-2000
+ 4300 university start-ups since 1980
over 600 companies spun-off from Cal Tech
Acquisition, Management and Exploitation of IP are major differences btw US & the rest
Industrial collaboration
+ Uni & RI have mandate to commercialize after Bayh-Dole law
+ Uni & RI have to make sure enough resources to continue research
for students
+ Uni & RI have to respond to the needs of local, state economies and
nation as a whole
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Role of VC in Technological Commercialization
VC investment become a key indicator
+ The advent of globalization
+ the opening up of markets
+ the ability to trade freely
VC history
+ American Research and Development (ARD)
+ Designed to focus on technology-based spin-outs from MIT
+ To commercialize the wealth of military technologies developed in World War Ii
Trend of Uni & RI
+Venture capital-backed spin-outs as mechanism
+To commercialize early-stage technologies
+To produce the greatest returns for the instituion
Majority of today incumbents which started with VC
+Yahoo!, Google
+HP, SUN Microsystems, Cisco
+Netscape, Lycos
It thrives on opportunity!
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E-INK
The inventions that we are bringing to market are fundamental platform
technologies that will have far-reaching impact on how our society receives
its information.
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Background
+ A spin-off from MITs Media Lab in 1997
+ The display technology conceived by Joe Jacobson, a professor at the
Center for Bits and Atoms
+ Two students; J.D Albert and Barret Comiskey
+ E-ink technology protected by a number of broad patents
+ Original business plan foresaw $80 billion opportunity for radio paper which
is flexible, electronic display that could replace books, magazines and
newspapers
Controversial issue among senior management
+ Become a licensing company based on a breakthrough technology
+ A material supplier (supplying a layer of electronic ink)
+ A subassembly supplier (offering display modules)
+ A product supplier (offering e-books or similar products)
+ Original business plan foresaw $80 billion opportunity for radio paper
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Threats & Opportunities
Competing display technologies
+ Liquid crystal display (LCD)
+ Microdisplay
+ Organic light emitting display (OLEDs)
+ Field emission displays (FEDs)
+ Plasma display (PDPs)
Two biggest technical challenges for E-ink
+ The displays initially worked in only two colors;
blue and white
+ The pixel could not be updated quickly enough
for full-motion video
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Industry First Round
Media
Round
Phillips Round Toppan Round
Toppan Round
#2
Recapitalization Intel Capital Round
$16M-1998 $40M-1999 $7M-2000 $5M-2001 $25M-2002 $11M-2004 $(N/A)-2004
Media Hearst Hearst
LEspresso
McClatchy
Universal-
Vivendi
Gannett The
Interpublic
Group (TIG)
Creavis
GMBH
Hearst
LEspresso
McClatchy
Universal-Vivendi
Gannett
TIG
Creavis GMBH
Hearst
LEspresso
McClatchy
Universal-Vivendi
Gannett
TIG
Creavis GMBH
Hearst
LEspresso
McClatchy
Universal-Vivendi
Gannett
TIG
Creavis GMBH
Hearst
LEspresso
McClatchy
Universal-Vivendi
Gannett
TIG
Creavis GMBH
Hearst
LEspresso
McClatchy
Universal-Vivendi
Gannett
TIG
Creavis GMBH
Electronics Motorola Motorola
Lucent
Motorola Lucent Motorola Lucent Motorola Lucent Motorola Lucent Motorola Lucent
Chemicals Degussa-
Huls
Degussa-Huls
Cabot
Degussa-Huls
Cabot Air
Product
Degussa-Huls
Cabot Air
Product
Degussa-Huls
Cabot Air Product
Degussa-Huls
Cabot Air
Product
Degussa-Huls Cabot
Air Product
Display Philips Philips
Toppan
Philips
Toppan
Philips
Toppan
Philips
Toppan
Financial Atlas
Applied
Solstice
Atlas Applied
Solstice
Atlas Applied
Solstice
Atlas Applied
Solstice
Atlas Applied
Solstice
Atlas Applied
Solstice
Atlas Applied Solstice
Source: E-Ink company documents
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VC Involvement
- First round of financing ($16 M in 1998)
+ Moved aggressively towards protecting IP
+ Acquired, licensed and filed 26 patents
- Media round ($40 M in 1999)
- Phillips round ($7 M in 2000)
- Toppan round #1 ($5 M in 2001)
- Toppan round #2 ($25 M in 2002)
- Recapitalization ($11 M in 2004)
- Intel Capital round ($NA in 2004)
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Successful Milestones
Launched Sony Reader into the market on 1 Nov 2006
applied E-ink display technology
Polymer Vision; the Most Innovative Technology Award at the
GSM Associations 2007
utilized E-inks high resolution flexible electrophoretic imaging film
Motofone F3 GSM; the Best Ultra Low Cost Handset Award
powered by E-ink segmented display
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Strength in IP Strength in IP Portfolio
Ranked as the most third innovative company in the
electronics and instrument industry by the Patent Board
Scorecard
O Granted more than 1000 patents
O Pending for inventions based on E Inks electronic paper
displays
O Broad applicability in fields like organic electronics and
semicom:
O Recently awarded claims on techniques to print semiconductor
O Practicle films, pattern organic semiconductors and produce
organic dielectric films at low temperatures
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Insights
+ Patents can not be performed into a successful innovation per se
+ Two crucial factors to be successful commercialization
Significant financial investment
Nurturing the technology
+ Build patents portfolio with strategic management
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Academia
Science
" Valley Death "
Products
Industry
Collaboration / Commercialization
Effective Patent Portfolio Management
+Maximize value of IP assets
+Protect core technologies
+Create barriers to entry
+Create bargaining chips for cross-licenses,
counter-suits or other business transactions
+In reality its difficult to achieve good PP. Eg:
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Intangible
Benefit
cause-and-
effect
relationship
Temasek Laboratories
Patent portfolio
Effective Patent Portfolio Management
1
st
level filter
2
nd
level filter
3
rd
level
filter
Low-value patents in low-
potential areas
Sell
Donate / Abandon
Low-value patents in high-
potential areas
Cross-license
Sell
High-value patents in high-
potential areas
Patent Licensing / Sale
Commercialize
Infringement relief
Patent portfolio
50 55 %
patents
40 45 %
patents
3 5 %
patents
Effective IP Management
.Preventing premature disclosures
Assuring proper ownership and
inventorship of inventions
Filing priority patent applications to meet
the legal requirements for disclosure
_Attractive as possible to potential license
Involvement and diligence by the
technology transfer office and the
inventors
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NDA
TTO & inventor
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Academia
Knowledge
Education
Research
Service
Academic Freedom
Industry
Knowledge for Profit
R&D
Marketing
Sales
Confidentiality and
Trade Secrets
IP STRATEGIES IP STRATEGIES
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Academic
Community
Commercial
World
IP System
as a bridge
Decide what research
Motivated by curiosity
Attract acclaim of peers
Prompt publication
Collaboration
Profitable products
Find new markets
Win competition
Initial secrecy
Knowledge
R&D Funding
Funding
Equipment Donations
Student and professorial employ
Consulting
Shared Knowledge
Competitive Advantage
Source of Employees
Long Term
Short Term
Research Results
Ext of tech competencies
Cutting edge research
University-Industry Partnerships
Commercialization
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Commercialization
University
Industry
License
Fee/Information
Flow
Practical
Application / R&D
Information Flow
/Acquisition of
Patent
Commercialization
Researc
h
Acquisition of
Patent for R&D/
Practical
Application
Patent Licensing
(Technology
Transfer)
Temasek Laboratories
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UNI(me) and SMEs(they) -
UNI(me) and SMEs(they) -
Myths
Myths
They are perceive to know everything.
They will steal my technology.
They wont take me seriously.
Big companies are impossible to deal with.
They do not have respect for confidentiality.
They buy or steal what they need.
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University Concern University Concern
Concerns that University-Industry Partnerships can
Negatively impact a culture of Open Science
Reduce the quantity and quality of basic research
Lead academics to spend less time on teaching and
service
Reality
Industry and Universities researchers rarely
collaborated
Patents from funded research were generally held
by Governmentand not used
Companies attracted University Graduates but did
not fund much University Research
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Technology Transfer in U.S.
Research Universities
+Mission of University Technology Transfer/Licensing
Offices
+To transfer research results to commercial application for
public use and benefit
+The Biggest Myth to dispel is that university engage
in technology transfer for the money for the money
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Dispelling Common Myths
+MYTH #1
The new emphasis on technology transfer is
diverting universities from their main mission of
education and research.
+In reality
Historically transferred technology through the
traditional methods of publication, the training of
students and extension programs
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+MYTH #2
Technology Transfer is a major source of
revenue for universities
Source: AUTM U.S. Licensing Survey, FY 2005
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+MYTH #3
Universities are doing too much patenting.
REALITY
Source: AUTM U.S. Licensing Survey, FY 2005
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+MYTH #4
Collaboration with industry invariably creates
financial conflicts of interest for academics
+Reality
Universities conflict of interest policies ensure
that the personal financial interests of faculty
do not improperly affect the content, quality or
timely release of research
Propose Business Model
- Capturing value from technology
Technology
(patent)
current
business
licensing
Spin
Off
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Business model vs. IP
Business model Core product Core competencies
Intangible asset
tangible asset
IP
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Different business models

Xerox 3Com Adobe Metaphor
Market segment

Corporate and
government market
Corporate PC market PC, MAC, and laser
printer market
Knowledge workers
in corporations
Value Proposition High-quality copies at
a low monthly lease
rate
Establishes file and
printer sharing
between IBM PCs
Enables output of
richer document types
Enables nontechnical
queries of corporate
databases
Elements of Value
Chain
Developed entire
copier system,
including supplies,
sold through a direct
sales force
Focused on Ethernet
protocol and add-on
boards
Focused on supplying
fonts to laser printer
manufacturers and
software firms
Developed and sold
entire systems, from
hardware to software
to distribution
Defined Cost and
Margins
Modest profit on
equipment, high profit
on supplies, of per
click
High volume, low unit
cost
Very high fixed cost,
very low variable cost
High fixed costs, high
margin, low unit
volume
Positioned in Value
Network
First mover in dry-
copy process; did not
require or pursue
partners
Set the IEEE 802
standard; utilized PC
distribution channel
Defined the PostScript
standard for scale
fonts
No third parties of
complementors
utilized
Formulated
Competitive Strategy
Competed on
technical product
quality, product
capability
Compete on standard,
new channels
Strong network
externalities, high
switching costs
Compete on superior
technology, usability

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What D2 is!
A start-up
Relatively disruptive
technologies
Potential for radical
innovation
Potential for disruptive
innovation
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D2s business model
Value proposition
Market segment
Value chain
Cost structure
Value network
Competitive strategy
Best solution; high performance; best quality
High-end
Focus on core product; outsource the rest
Modest profit from core product; licensing as another
payment mechanism
Pave the way for complementary products on the supply side
Switching from the high-end to low-end market
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D2s business model
Value proposition
Market segment
Value chain
Cost structure
Value network
Competitive strategy
Good enough solution; inferior performance
Low-end
Focus on core product; outsource the rest
Small profit from core product;
Pave the way for complementary products on the supply side
Disruptive to the high-end by low-end market
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Game 1
Complementors
(Small or big firms)
Customers
(High-end)
Suppliers
(Outsourcing)
D2
Start-up
Competitors
(Incumbents)
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Game 2
Complementors
(Small or big firms)
Customers
(Low-end)
Suppliers
(Outsourcing)
D2
Start-up
Competitors
(Incumbents)
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D2s exercises
O Analyze patents which have potentials that relatively
disruptive to current innovation
O offer buying or selling those potential patents
Engineering
IP
MOT
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