National Task Force Tackles Intellectual Property Management Issues
Washington, DC: An ad hoc task force comprised of industry, academic and government leaders convened at the National Academy of Sciences on August 26, 1998, to refine its research to improve the intellectual property (IP) management practices in the competitive enterprise. Working from a draft summary on the qualitative phase of the project, the task force reported the ability to create, protect and exploit intellectual property is essential to sustain the viability of the competitive enterprise in the information age.
"IP is the genesis of new wealth, and IP management has already become one of the critical strategic competencies for the global competitor," according to Bob Shearer, Task Force coordinator. The task force is chaired by Dr. Claudine Simson, Vice President of Global External Research and IP at Northern Telecom in Ottawa, Canada and led by a number of America's prestigious organizations.
The project was initiated by the Center for Advanced Electronic Imaging in Dallas, Texas and the National Center for Manufacturing Sciences in Ann Arbor, Michigan in the Spring of 1997. The task force now includes representatives from the Council on Competitiveness, International Electronics Security Group, National Association of Manufacturers, Association of University Technology Managers, the Internet Content Coalition, MIT, Stanford, Ericsson, Inc., Williams Communications, Kodak, Sematech, Texas A&M University, Coalition for Intelligent Manufacturing Systems, Adobe Systems, Intel, Texas Instruments and Sun Microsystems. KM World is represented on the task force by Publishing President, Bruce Taylor.
The task force reviewed the results of its phase one research developed from focus groups conducted around the nation over the past year and secondary sources and individual interviews. Among the more notable issues identified:
IP's Impact on Competitiveness:
A corporation's ability to manage its intellectual property (IP) has a direct and increasing effect on its market position and share holder value. Nearly 76% of the $4.6 trillion value of Standard & Poor 500 stock index is reflected in intangible assets. This number suggests the importance of the capital markets' perception of a corporation's ability to innovate and remain economically competitive in the future as stock prices reflect expectations perhaps more that past earnings. The ability to create new assets and protect them in a world increasingly vulnerable to theft and infringement is a major factor to be considered when evaluating a stock or a corporate capability to exploit its technology, products and/or market position.
Surprisingly, however, old perceptions of IP management prevail in many organizations where the fear of infringement overrides the confidence in the company's ability to exploit its products. Forty percent (40%) of the contemporary business leaders managing IP (attorneys, academicians, business and technical people) will not allow a customer to evaluate existing IP for new business applications according to the research.
This resistance suggests business is missing some significant opportunities to increase its revenues through new markets and product opportunities. This behavior is the result of fear, or in the best case a lack of confidence in the corporation's ability to safely and effectively commercialize its intangible assets. This behavior has an hidden impact on the company's growth and shareholder value. The new management imperative for 21st Century competitor is: to innovate faster, protect and exploit its new IP is absolutely essential to sustainable commercial enterprise.
IP management is a business necessity, not a legal function:
IP is concentrated in the legal departments of most sophisticated organizations. That concentration has grown out of traditional organizational designs that are functionally responsible to the executive office. Contemporary opinion suggests the multi-disciplinary team may be a far more effective organizational design to create, protect and exploit intellectual property. In the enterprise where information is considered to be power, IP is even more powerful and can be mismanaged to create winners and losers.
In this context, IP can be an emotional issue in which ownership of an idea is immediately equated to exclusive wealth and rights regardless of the processes required to create any product or revenues. An emotionally charged atmosphere is borne out of ignorance and fear of the players who perceive themselves at risk in the transaction. Fear will kill a deal even in sophisticated organizations if left in the hands of untrained and inexperienced personnel. Learning among non-legal personnel is one process that can improve the IP management and innovative capabilities of the corporation, but the knowledge and skills required to effectively manage IP today requires legal leadership and intervention in the project at an early stage.
Knowledge management systems means improved competitiveness:
IP creation and protection draws on the technical and business knowledge of the employee. The employee's knowledge of the prior art, and the competitors' products and technology provide the framework for efficient creativity. The critical challenge to management is to find better ways to support the individual's creativity and more easily integrate information flow among enterprise users. The information infrastructure that can put new IP opportunities (disclosures) in the company's new asset pipeline in a more seamless manner will provide an advantage to the agile innovator.
Because the ultimate remedy to theft or infringement of IP rights is enforcement and adjudicated in the courts, IP management must be guided by legal counsel. But to make IP an exclusively legal body of knowledge denies the contributions of other non-legal personnel to recognize, submit disclosures, or protect existing IP. The concentration of IP in the legal department constricts information flow. The rapidly emerging constructs, principles, practices and tools of knowledge management when appropriately integrated with learning systems offer an information technology (IT) solution to enable management to dramatically improve its information flow, IP capture and creation while increasing the level and quality of support to the legal function.
Corporate leadership in the information age:
The General Counsel's (GC) role is changing to include a corporate responsibility to strategically guide or direct the revenue flow from the company's IP portfolio. Increased knowledge and information about markets and technological advantages become more important in a business planning context. The GC can best manage this by working more closely with non-legal personnel; perhaps even formalizing a multi-disciplinary team to provide better, more complete and timely information to support IP strategy. The organizational design considerations of the General Counsel would best view IP management as an enterprise wide system to achieve the improvements in innovation and competitiveness as well as asset creation and protection.
The university & government roles:
IP is creating a new dynamic in the university-industry relationship. As the university advances its strategy to own and control the commercialization as well as the creation of IP, it has introduced a "wedge issue" between itself and industry. The university's interests in creating a powerful IP portfolio to ensure its place in the world's R&D community has created concern among industry leaders that such a policy might put the university in a pre-emptive posture to protect its strategic position at the expense of industry. This same emphasis on the strategic IP portfolio creation and commercialization suggests to some, that the university is re-defining its mission at the expense of its classic role of advancing the body of knowledge through research and education.
The industry-academic relationship is further complicated by the researcher who may own or have a big part in the decision process regarding the use of the IP for further research and/or commercial purposes. A pre-emptive position by a professor can slow or block access to existing IP that is critical to new research and applications. Still another concern is the growing awareness that access to America's technological infrastructure is most easily gained by foreign based multi-national corporations seeking a slice of the global markets through expanding its university relationships.
Clearly, the university-industry relationship is changing. Industry must find ways to adapt to the changes while working to define a more appropriate relationship that can meet the common R&D goals that have created the technological model of the 20th Century. Phase 1 suggests this model may not be adequate to the challenge of 21st Century global competitiveness. A National resource was created through the collaboration among industry, academe and government. That resource model is changing and the university's strategic interests in IP management invite a review with industry and government partners who collectively have created the world's leading technological infrastructure.
Task Force Action:
Dr. Tom Moss, Executive Director of the National Academy, who hosted the meeting noted the report's attention to a growing contention between industry and academe over ownership of IP assets. Dr. Moss suggested the concept of ownership should be replaced with a more realistic approach that reflected the myriad of resources to create, and ultimately realize commercial value from IP. That approach, according to Dr. Moss is the stewardship of intellectual property. "We need to look at the broader issue of the industry-university relationship, not try to squeeze every penny out of every new idea that is developed. If we took a portfolio approach that sought to optimize the portfolio over time and included endowments and other industry support, we would find IP much easier to manage and realize a resulting decrease in costs of IP creation while increasing the benefits to everyone."
The task force will continue its research project by benchmarking corporate practices to best meet the needs of the competitive enterprise in the 21st Century. Those areas of investigation include the use of knowledge management and learning systems principles to support the creation, protection and exploitation of intellectual property to improve the capability of the competitive enterprise to create new wealth and shareholder value. Participation on the task force and or participation in the project may be obtained from, project manager, Bob Shearer at the Center for Advanced Electronic Imaging (214/746-4666); or E-mail: firstname.lastname@example.org.
A symposium is planned for March 30-31, 1999 in Washington DC. Information on the symposium and for more detail about the research contact the CAEI website: www.CAEI.org.