A Holistic Approach To Intellectual Property Management
(as published in Law360
; co-written with Husky's Richard J. Musgrave)
Several years ago, Husky Injection Molding Systems Ltd. needed to cut its legal costs — without discouraging innovation or increasing risk. This is a challenge that many companies face, particularly those with legal teams scattered throughout the world.
We at Husky sought out industry best practices, and benchmarked the IP approaches used by some leading high-tech companies. We also sought input from our outside IP law firms, including Wolf Greenfield & Sacks PC.
The solution we came to was a holistic intellectual property strategy driven by processes that lead to formula-based decisions made with the knowledge, expertise and input of cross-functional teams from a range of different corporate departments. We developed tools for implementing a consistent approach that places more value on innovation than on a particular, single invention, recognizing that not all innovations warrant the same level of protection and investment. We also developed tools to help us assess risk posed by third-party intellectual property. By creating ways to quantify the relationship between innovation, risk and business objectives, decisions concerning intellectual property investment can be carefully made.
Using this creative and forward-thinking strategy1
has proven key to our IP management success. Not only are we now reaping hundreds of thousands of dollars a year in cost savings, but we have achieved the elusive goal of having consistent patent policies across legal teams and jurisdictions. As a result, we are easily able to align our IP strategy with our overall business goals.
Though our approach has been “molded” to fit Husky’s specific goals and needs, this strategy is not applicable only to us, or just to our particular industry. Any large global enterprise that faces an array of complex intellectual property matters can benefit by implementing a similar system.
In this article, we touch on several aspects of a holistic approach to IP management. The figure below shows the various facets of this approach, including the human resources, unique tools and forms, and focused processes that accompany each category.
On the procurement side, the process should begin before an invention is even conceived. Members of the IP team should routinely present to various engineering departments, encouraging submission of invention disclosures no matter how great an impact an inventor expects his or her innovation to have. A cross-functional “patent review committee” populated with representatives from engineering, marketing and IP legal departments should review new innovations, consider the technology advance in light of current and future projects within the company, and decide whether patent protection is warranted. The committee must be sensitive to innovations that can have an immediate impact on current technology, yet also on the alert for forward-thinking advances that can have an impact on the business and the industry in the years to come. The committee can also be charged with reviewing pending applications and granted patents in an effort to prune nonvalue added assets should the commercial value decrease over time. This is a dynamic and cost-conscious approach that continually evaluates the commercial value of the intellectual property, from inception to use to end of patent life.
To provide systemic and consistent decision-making, the committee can utilize an “innovation scorecard” that assigns various ratings to broad categories, allowing the committee to reach good business decisions.
Within the committee scheme, a filing strategy that places a value on the “innovation” rather than on the single “invention” can prove very effective. The innovation scorecard should consider several methodologies when deciding how best to protect the innovation (i.e., at what investment level) in a way that aligns the strategy with the business objective, including cost control, blanket, leap frog/roadblocking, cluster, offensive/deterrent, and acquisition. Each of these strategies suggests a different investment level. For example, if an innovation score suggests cost control as the preferred strategy, then the patent filing decision may be limited to a specific embodiment or implementation that reduces the patent drafting and prosecution costs. If the innovation score is higher, such as in the case of a blanket strategy, then the patent filing may be broader, where the innovation is described with numerous embodiments across many components. Thus, a high innovation score would warrant a greater investment in preparing a broad and deep patent specification and claim set, which can provide fertile ground to mine the patent in the future utilizing patent continuation practice. In this way, protection for product changes that may take place can be sought, and an offensive and defensive arsenal against competitive positions can be built. This strategy can also be useful in industries where out-licensing opportunities exist. Other scores would inform other strategies.
To aid with determining the score at the outset, an innovation benefits matrix can be used to weigh various business and technical factors relevant to the industry. In the injection molding industry, those factors may include cycle time reduction, cost savings, product distinctiveness, part quality improvement, lead time reduction, down time reduction, functional improvement and user friendliness. Innovations scoring higher in these categories might suggest a more aggressive filing strategy. Other industries would consider other or similar factors.
Risk Avoidance and Assessment
To assess risk related to offering new technologies, it may be important to routinely monitor competitor patents and proactively review current and new product releases. An effective IP strategy requires the IP team to sign off for clearance/freedom-to-operate studies on any new product release, preferably early on in the product development cycle. That way, any potential roadblocks can be avoided by appropriate design-arounds or by pursuing other legal avenues.
In-house teams can offer the first line of assessment of IP risks before engaging outside counsel. In some circumstances, it is helpful to utilize an “opinion tool” to identify lower-risk issues to reduce legal costs. When warranted, however, in-house teams should turn to their trusted advisors to obtain legal opinions of non-infringement or invalidity to stem liability. Information obtained through the analysis can also be used against broad patents through post-grant reviews, inter partes reviews, and oppositions outside the United States.
Also as part of the risk assessment process, in-house teams can benefit from requiring their outside counsel to formally present the basis of their opinion. This is in addition to any written opinions provided. In this way, these “report-outs” provide the in-house teams with the opportunity to question certain assumptions, determine the level of outside counsel’s product/technology understanding, and challenge their conclusions, all in an effort to test the robustness of the legal opinion and ensure that a well-grounded opinion consistent with the company’s philosophies is obtained.
Even armed with an opinion and witnessing firsthand the analysis through a report-out presentation, in-house teams can benefit by implementing a “risk assessment tool” that provides a quantitative assessment of the potential risk level. Examples of factors considered could include the strength of the opinion, the level of financial exposure based on a potential damages calculation that takes into account lost profits and/or reasonable royalties, and the likelihood of being targeted. These factors are weighed to paint a complete picture of the legal and business risk factors, allowing management to make informed and consistent decisions as to whether to continue with the product, redesign, seek a license, or challenge the validity of the patent.
Continuing Education and Improvement
Finally, advancing the skill set of the team is important. Recognizing the challenges of keeping current with changes in the law and being exposed to “best practices,” it is important for companies and in-house legal departments to invest in opportunities to advance their legal knowledge, whether through outside courses or in-house seminars. These informative sessions should touch on case law updates, best practices for patent drafting and prosecution, best practices for clearance and invalidity analyses, post-grant review tactics, recent changes to U.S. and foreign IP laws, and international patent filing strategies. In-house legal teams can benefit from peer review, where colleagues can review each other’s work product. Checklists can also be an important tool to improve the robustness of a patent application and its prosecution.
A holistic approach to IP management is critical for leading IP-centric companies. Quantitative, formula-based, and consistent decisions can be made utilizing custom tools resulting in IP management success. These processes also yield tangible cost savings while aligning the company’s IP strategy with its overall business goals.
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