The 2004 European Intellectual Property Survey, conducted by market researchers TNS, reported that only 52% of large European businesses had a documented IP strategic plan; an “alarming” statistic according to the Financial Times. Ian Harvey, former chief executive officer of BTG and chairman of the UK Government’s IP advisory committee, in his foreword to the report, strongly stressed the need for such planning and recommended that boards should be actively involved in the planning process. He said: “Companies that do IP planning well are usually the global leaders in their fields. Getting the IP message is not a guarantee of success. But failing to start down the road of using IP corporate strategy is to miss a major opportunity for growth, profitability and, indeed, survival.”
Three years later, the report’s findings appear to have had little effect, and this may be due to a number of factors. Firstly, financial performance is often assessed by reference to the total profit — not to the underlying individual assets generating such profits such as the IP assets.
IP issues are often relegated to the ‘techies’ who create the IP. This team frequently works independently of the sales team that actually markets the products, in some cases disregarding the registered brands. Secondly, although the commercial team is mandated to generate profits by exploitation of the IP, this is often limited to granting licences to competitors which will generate profit margins of 7%-15%, but increases market shares of their competitors. The licensing team often works independently of the corporate team, which is mandated to find more profitable routes, such as special purpose vehicles or joint ventures which can generate profit margins of 30%-50%.
Simply creating a useful liaison between these various teams can increase a business’ profitability. Involving the board can also generate profits. Boards can hinder IP creation, and exploitation, severely by budget cut-backs, or reversing decisions made by their chief brand officer, or chief IP officer, without consideration of the impact on the planned strategies of the teams involved. Dr Frederick Mostert, chief IP counsel at Richemont Group, which includes Montblanc, Chloe and Cartier, recently published a book entitled ‘From Edison to iPod: Protect your Ideas and Make Money’. On page 46, he sets out a number of critical questions which boards and businesses need to consider, including:
- do they know what IP they own?
- have they examined areas of crossover, for example, trademarking a design?
- do they know if their key assets are registered?
- do all their commercial agreements properly define their IP rights?
- do they monitor the activities of their competitors?
- could their competitors hinder their own work? and
- do they have a warning system or a system to find potential infringers?
His key final question was: “Do you have good legal counsel who can guide you through all the above?”
Even if the business decides to prepare a documented strategic IP plan, finding a specialist IP lawyer in
General licensing lawyers are not necessarily global strategists. Furthermore, many European IP lawyers choose not to be involved with strategic planning, concluding it involves provision of ‘business or commercial advice’ rather than ‘legal advice’. They raise concerns about professional liability for the results, and insurance coverage. But these concerns are unjustified. IP strategists are, in effect, IP ‘project’ managers, save that the ‘project’ is proactive and not reactive. Such project managers are of particular importance to advanced and developing technologies in the life sciences and healthcare sectors.
Clients in the life sciences and healthcare sectors require advice on a variety of matters. IP lawyers who help these clients successfully develop and implement a strategic IP plan provide advice in a cohesive, strategic way, using a combination of legal and non-legal skills.
In terms of legal skills, these IP lawyers need to:
- understand the clients’ business strategies and goals and to tailor client-specific strategies to address and achieve their commercial goals;
- adopt a multidisciplinary approach, leveraging their team’s scientific technical backgrounds, with their legal expertise in IP, corporate, litigation, tax, international trade, regulatory and other related practices;
- help assess the validity, value, scope and strength of a company’s IP and potential threats posed by the IP of their competitors;
- project-manage corporate transactions where IP is of paramount importance. Life sciences and healthcare companies often turn to M&A, divestitures and joint ventures to achieve growth, diversify, enhance the drug pipeline and to optimise development of promising technologies. Such transactions can be standalone or include ancillary licensing (in-licensing, out-licensing) or collaboration arrangements;
- ensure that advice is available on financing opportunities, including investments by clients or third parties, or the underwriting of newly formed companies through the ‘spin-offs’; and
- offer dispute resolution skills with a special sensitivity to the clients’ underlying strategic and financial goals. Hands-on experience in managing or supervising large and complex international IP litigations, as well as arbitrations and mediations, is helpful.
In addition, these lawyers need to have non-legal skills. As ‘project’ managers, they need to be lateral thinkers, able to get along with and understand the tensions within the board and between the equity investors and scientists. They must help businesses set a budget for the plan in stages, and to set milestones and encourage the businesses to monitor their progress. They need to know how to re-educate the businesses, if necessary, by removing a specialist, but blinkered, approach to IP commercialisation opportunities.
The successful strategic planners almost make themselves redundant once the business effectively implements the plan. These IP strategists are not exceeding their mandates as lawyers by assisting businesses in this way. Their work involves normal project management, which requires a plethora of skills, and the ability to identify key issues and opportunities and help with sourcing experts. This is the same blend of legal/commercial advice that is a natural consequence of being an intellectual property lawyer.
Solving problems once they arise is important, but preventing problems and minimising risk in the first instance is better. The constant focus is the bottom line, namely obtaining the best result for the client; the result which is consistent with the client’s agreed strategic plan and long-term commercial goals.
Businesses which develop and implement a corporate-wide strategic plan for their IP assets often increase their market shares or profits without making any major change in direction or reorganisation. Such planning can, as Ian Harvey suggested, help to ensure their very survival.
Marija Danilunas is a partner and head of intellectual property at Dewey & LeBoeuf in
