Episode 7 of PatSnap's Innovation Capital podcast
IP in a network effect and AI driven future, featuring Donal O’Connell
About Innovation Capital
Inspired by the words of U.S. inventor Charles Kettering, “if you have always done it that way, it’s probably wrong,” Innovation Capital, presented by PatSnap, was born out of a desire to go where no other innovation podcast has gone. Just as the world’s top innovators have pushed the boundaries of what’s familiar and accepted, host Ray Chohan takes a completely fresh and unfiltered look at some of the biggest topics shaping innovation today. From the key drivers of innovation, to its role in the economic value chain and groundbreaking outputs, Innovation Capital leaves no question unanswered. When it comes to innovation, we are your capital; your mecca for daring discussion and the fuel for your growth and scalability. Welcome to Innovation Capital.
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In this episode of Innovation Capital
We explore the standards emerging in the area of intellectual property management and how it is impacting the innovation process.
- The way we train and educate people on IP needs to be changed dramatically
- We need to be much better at explaining what role IP plays
- The most valuable company in the world doesn’t make most of their own components, software, and products. That is the value of intangible
- Some companies are appointing a Chief of IP role, which is really smart
- All forms of IP are going through a change
- Do you allow AI to become an inventor?
- Connect with Donal O'Connell
- Get our #1 Amazon bestselling eBook, The Definitive Guide to Connected Innovation Intelligence (CII). In this white paper, we explore what CII is, who it’s for, and how the world’s disruptors are using it to win in hyper-competitive markets. Download your FREE copy.
Senior Lecturer in Intellectual Property Law at Brunel University, London
Donal O’Connell is the Managing Director of Chawton Innovation Services Limited, which offers consultancy in the areas of innovation and intellectual property management.
Donal is a former VP of R&D and Director of IP at Nokia. In the US he was manager of Nokia R&D in Texas from 1997 to 2003, growing the site from scratch by recruiting and developing more than 600 engineers and developing and launching many successful products. More recently, from 2003 to 2009, Donal was a Director of IP at Nokia and was the leader of Nokia’s Patent Creation team. During this time period he successfully managed several major change projects. Alongside the creation of new patents, the team was also responsible for third-party patent risk mitigation, IP Agent network management, and IP processes, systems and tools.
Donal has been a member of the Executive Board of the Eco Patent Commons initiative and Chair of the CPA Global Memotech IUG.
Donal has written two books: “Inside the Patent Factory” and, most recently, “Harvesting External Innovation,” on the subject of collaborative innovation and IP, published by Gower in June, 2011.
Donal is an Adjunct Professor at Imperial College, London.
Founder West & VP New Ventures, PatSnap
Ray is Founder West & VP New Ventures and the founding member of PatSnap in Europe. He started the London operation from his living room in 2012, growing the team to 70+ by 2015. Prior to PatSnap, Ray was BD Director at Datamonitor where he was an award-winning revenue generator across various verticals and product lines over an 8-year period. This journey gave Ray the unique insight and inspiration to start the PatSnap ‘go to market’ in London. Ray now leads corporate development where he focuses his time on creating new partnerships and go-to-market strategies.
Ray Chohan: Welcome, Donal, to Innovation Capital. We’re really excited to have you here. I was searching through my LinkedIn messages before we hopped on the call. I think the first time we dropped you a note was in September of 2013, and the world of IP has changed so much since then. We’d love to kick things off with you story and how you ended up in the wonderful world of IP and Innovation Management.
Donal O’Connell: Thank you very much. I’m delighted to be here. It’s always fun to go back and reminisce about how things were many years ago.
I’ll start by saying I’m not an attorney. I’m an engineer. I started as a software engineer and worked with companies like Atari, Philips and Nokia. From there I moved up the traditional engineering ladder and worked as a Project Manager, Program Manager, all the way up to VP of R&D.
My first interaction with IP was when I was an inventor. I had some patents to my name, and as a result interacted with IP attorneys who drafted, filed and prosecuted those cases. But, never really thought about what was happening or what those patents might become or how they would add value. I was just happy to have patents to my name and didn’t think anything more about them.
Then, as VP of R&D I made the mistake of allowing some IP attorneys to occupy unused offices in the building. It was an R&D building, but we had space for them, so we gave them a home. Shortly thereafter I found myself dragged into some IP disputes in the US. I ended up spending about a year of my life supporting several litigation cases, often acting as a postman or communicator between the attorneys at one side and the engineers at the other side. But it was fascinating to be involved in these disputes.
And suddenly, these disputes open my eyes to the fact that the patents other engineers and I designed and developed years ago were being used in real life. That experience opened my eyes to another side of IP.
Then, for family and other reasons, I moved back to the UK. Nokia, the company I was working with, offered me the chance to become the director of IP. This opportunity came with a team of 160 attorneys and 120 paralegals. I spoke with a few of my colleagues and decided to go for it, and it was an instant change in direction.
The first few weeks were quite strange, because the attorneys didn’t speak or act like engineers and that was the role I was used to managing. But it was an interesting opportunity. Essentially, I was given a blank sheet of paper and told to go in and figure out what was involved in running a world-class IP department.
I had to sit back and read a lot of benchmarking, a lot of analysis to figure out what was working well and what needed to be improved. For the next seven years, I was involved in a number of major change projects including how the IP department interacted with the inventors, the way an IP function should manage its relationship with outside IP firms with a network of about 80 firms around the world, to the way we should embrace technology, as well as how to automate and use technology to be more efficient and effective.
Another major shift was looking at risk management. It shocked me coming from an R&D role where risk was in our DNA to coming in an IP function, and risk management wasn’t very well developed. We were more reactionary, rather than proactive. Even the way we communicated to the C suite executives about IP needed to be improved. Questions such as, “What types of reports should we be generating and presenting?” and “What are the key elements we should tell C Suite and SLT leaders?” were being asked. It was an interesting seven years, that’s for sure.
But my son had been very ill, and I realized I couldn’t keep up with running a global function like that and continue my travel scheduled. So, I jumped ship in 2009 and set up an IP consultancy company thinking I would continue to do what I was doing for Nokia, but for other large multinationals and that’s how it started.
Of course, things change. There were many different types of companies, including smaller companies, asking for advice. I even had financial intuitions and universities reaching out. Now, 12 years on, my consulting company has changed as well. It still does a lot of traditional consultancy work IP audits, IP strategy work, we do a lot of education. But we’ve also started developing technology ourselves including more technology to support management. We’re particularly interested in how you use technology to improve management, leadership and governance of your IP.
I’ve also always been interested in writing down my thoughts. Throughout that time, I’ve published two books and around 200 papers. It’s been an interesting journey. But I still feel I’m learning about IP, because it’s a damn complex issue. It isn’t simple, unfortunately. There are so many different forms of IP, different processes and different IP models. So, I don’t think I’ll ever stop learning about this stuff. But that’s my journey, in a not so short nutshell.
Ray: So, from 2009 onwards, after you left Nokia to launch your own venture around consulting and spinning into this decade, where do you think we’re at in terms of all the major industries understanding the intrinsic value of patents as an asset class? In life sciences for example, it’s clear to see this industry gets it. And you that in how big Pharma has acquired businesses based on the technology of a biotech, but the patent portfolio is still definitely on the table as a key asset when placing a price on biotech business. But in other industries, it doesn’t seem to be aligned the same way.
In a broader sense, are we in the first innings of the board understanding patent as an asset class, or where do you think we are on the journey?
Donal: Well, you brought up a cricket analogy, but I’m going to switch it over to football (US soccer) because I’m more of a football guy. If you imagine in football, you’ve got the the Premiership, Championship, League One, League two, and the lower divisions. If you were to plot the maturity of most companies on this IP maturity ladder, there are only a handful of companies that would qualify for the Premiership.
You might have a few pharma companies, but most companies would be down in the lower leagues. They’re not that sophisticated, they quite understand what IP is about. I think many of them see it as a legal issue. While there certainly is a legal component to it, and that’s a key aspect, IP is more of a set of management system for innovation and creativity.
Of course, it’s not the only management system, but it’s an asset class. When played right, it can competitive advantage. On the other hand, it can bite you and hurt you if you don’t understand the risks. It is much more than just a legal issue and I don’t think that’s fully understood.
Now, where’s the fault and why are all those people in the lower leagues not in the Premiership?
I suppose we have to look in the mirror. The way we explain, educate and train people about IP needs vast improvement. In my opinion, too much of the training is focused on patent basics, what is a trademark, what is a copyright and those other building blocks. Not enough of it is about how do you play this game? What is a strategy and IP strategy? How does it bring value? How do you understand the value risk aspects of it?
Maybe one reason why the education isn’t so good is that IP tends to be populated with specialists rather than generalists. So, the patent folks can talk about patents but might not be as comfortable talking about domain names or open source. The trademark people talk about trademarks, but maybe not patents. I believe one issue is the specialization of the IP community.
Another problem is many people who are in IP have been trained a certain way. If you look at the training path, a patent attorney is trained on how to get a patent and the intricacies and oddities of the patent prosecution process. Are they trained on how to educate non-IP people? Probably not.
The reality is training people is easier said than done. For parents, lock down has taught us how hard it is to teach children. The basics of math, English and so forth. I’ve realized myself it’s much trickier than I previously thought.
The same applies to teaching IP. You need to consider:
- How do you train?
- What do you train?
- How do you deliver the information?
- How do you make sure the audience gets it?
Circling back to why most companies are in the lower leagues, I think it really boils down to all of us in the IP community stepping up our game and becoming better at explaining the role IP plays. IP does play a role. Consider the recent research that outlines how 80% of the value of companies lies in intangible assets of one sort or another. Those assets take on the form from everything from IP to data, software, branding, reputation and beyond.
Consider Apple as an example. Most of the components in their products are made by somebody else. The vast majority of the apps on their phones are made by someone else. Their products are made and outsourced to a third-party factory. So, the most valuable copany in the world doesn’t make its own software and doesn’t actually make the products. Okay, that’s an exaggeration, it makes certain things, but it’s still the most valuable company in the world. I mean, if that’s not an example of the value of intangibles, I don’t know what is. And you can go on to the second most valuable companies like the Google’s of the world, and you suddenly realize that the value is in intangibles — it’s in data, process, algorithms, brand or patents and so forth.
Based on these insights alone, it should be easy for us to explain the importance of IP. Companies should take this seriously. But we’re not. Metaphorically speaking, if you go to many companies, you realize their IP strategy is in the back of a cigarette packet. It doesn’t make any sense. And the IP function struggles to explain to the other parts of the organization how it adds value.
Something is still misaligned. We have a long way to go to get to the ideal position. There’s also a huge lack of communication between the IP folks and the finance folks. IP isn’t in the books. It’s not something is that captured. So, that creates a disconnect.
Ray: Donal, you mentioned some of those household names like Apple, Google, and Amazon. If you look at the Fang group who command around 75% of the market on the S&P 500, all of those businesses are based around Metcalfe’s law, network effects, predominantly now data network effects. Are you seeing any best practices around how people would protect or be proactive around IP and data assets?
Donal: I think the data intense companies are aware the data is extremely valuable. In most cases, they’re treating the data as a trade secret and may be patenting some of the associated algorithms and so forth. But in essence, they have realized the importance of both the raw data and the process data.
It’s not just those types of companies. There are a number of companies who have realized data is critical, and that means it needs to be managed, and identified. One it’s identified as a valuable intangible asset in the company, then they can take steps to protect it.
They’re treating it treating like the way you should treat a trade secret, wrapping it in legal protection, technical protection and administrative protection measures. In some cases, it needs to be balanced with things like GDPR. But in essence, it’s seen as a valuable intangible asset.
And that’s not just those companies we talked about, but I see it emerging. And even companies that are software companies, they’re realizing maybe the value isn’t in the software code, maybe it’s in the associated data.
I saw this with a company I worked with a while back, I won’t mention the name, but they’re in the maritime space. They have sensors and computing technology they put onto ships to help them navigate more efficiently. It was interesting to watch the journey they went on.
In the beginning, they thought the value was in the sensors. Then they went to a second stage and thought the value was in the computer software measuring the sensors. When the third stage came, they said, “Forget the sensors and the software! The value is in the raw data and process data.”
They kept updating their IP strategy and their approach to intangibles to say, “Yes, it’s the data that is the most valuable assets.” Of course, they still recognized the importance of the sensors and actual software. But now they see themselves as a data company, even thought when you’re on the outside looking in you see them as a company with a physical product that puts sensors on ships.
Watching them move through the IP and legal functions, as well as changing their internal approach and their relationships with the ship owners and fleet operators and everyone else in their ecosystem was really interesting. They realized it was the data that was critical. And they wrapped it in protection, even though maybe in phase one or phase two, they didn’t. Once they realized that’s where the value was, that all changed.
I see it with food and beverage companies that are suddenly realizing certain things they’re doing in production or engaging with clients, that data is valuable.
Even a pharma company we’ve been working with recently. At first glance, they looked like a traditional pharma company delivering drugs. But actually, there are a few research groups inside the facility that are developing apps. There’s an app on the phone that accommodates a drug, and they can then prompt the user for information such as side effects, how and when the drug was administered, if there were any issues and so forth.
They’re beginning to realize that while the actual development, testing and delivery of drugs will always be a critical part of their business, but the software and data side is important too.
Obviously, they’ve always had data in terms of testing the drugs, as that is regulatory. But, I’m talking specifically about the new side of their business emerging, which is developing apps.
Data is critical. It isn’t just the obvious places like the Facebook’s and Google’s of this world — it’s permeating more industries and sectors. I think the IP functions that are on the ball are realizing how important it is to consider the data.
In many cases, it will be trade secrets, although you might find that the raw data is maybe public information, and it’s the processed data that’s a trade secret. Alternatively, you might find the raw data in the public domain while the algorithms are patent protected in the trade secret, and then the process data is a trade secret or reverse.
When we say data, we have to go a little bit deeper and ask:
Are we talking about the raw data we’re generating?
Are we talking about the raw data coming from third parties?
Where do we see the value? It is the algorithm that’s valuable to us? Are we less concerned about the data? Is it the process data that’s valuable to us?
More and more people are dissecting the data to find the real value. I fully agree with your sentiment, data is growing in importance and not just in the obvious places you think about. I see it coming up more and more, even in startups and scale companies, they’re beginning to realize (at least the clever ones) that intangible assets are crucial.
Ray: You raise some fascinating points. We’re also seeing that in the non-obvious spaces.
We’re doing interesting work with emergent biotech businesses who are what we’re calling ‘tech bio’. They’re fundamentally software and data companies first, operating within the life sciences space. So, a.) they have some core IP around biology b.) they have a strong software capability c.) they have a centralized database and they’re using that technology.
But now, unlike traditional life sciences, they’re sharing that fundamental tech with people outside their business and enabling them to build and develop new drugs on that platform. It’s the data network effects, which is the value of that business in time.
We’re seeing some amazing transformational changes in non-obvious industries like logistics, for example. Looking from the outside, you think it’s just the tangibles — it’s the ships and the containers. But the real game they’re playing now is all the data from the sensors and using those network effects to process that data and yield new value.
So, with this trend, are there new practices around protecting the IP of that process or proprietary data?
Donal: Well, it’s linked back to the point that you made about the companies that have this network. The clever IP folks are beginning to realize no company is an island these days. You’re part of an ecosystem. It could be more of a traditional ecosystem where you have your suppliers, collaboration partners and customers and you’re responsible for controlling those relationships.
Then there are the newer ecosystems where you’re collaborating with communities, an example being open-source software.
So, you’re having to rewire your IP strategy. In essence, your IP strategy becomes a work in progress. As a result, you look across your entire ecosystem and identify how to protect those intangible assets. It’s not just about patents and trademarks. It’s also about the IP provisions and agreements (obvious and non-obvious).
Companies these days are not connected. This means they have hundreds of thousands of connections to traditional suppliers. There are many players including the person you buy your widget from, collaboration partners, your app developer, the company who builds your website, the person hosting your assets on the cloud and so forth. You end up with this ecosystem you have to manage. Naturally, in almost all cases there’s an agreement of one sort or another.
Some of these agreements are what I’ll call ‘obvious agreements’ where I sit down with you across the table and we put together an NDA, and then a collaboration or supply agreement. As we walk through the provisions of that agreement, we discuss IP provisions and so forth. That’s the obvious one.
Then you’ve got the non-obvious agreements. For example. If I use Amazon cloud-based services, there are terms and conditions (T&C) I have to agree to in order to use. Within the T&C, there are IP provisions. Likewise, I’m a heavy LinkedIn user. When you read the T&C of LinkedIn you realize there are IP provisions there too.
When you talk about software, yes — software is eating the world. But open source is eating software. If I use any open-source components or libraries, there’s an agreement, in essence, an IP agreement. If I work with researchers and universities or access their publications, there’s a creative commons license of some sort. If I’m embracing data sets from public sources, there might be an open access license. If you look at those agreements, you suddenly realize, “They’re asking me no questions about the tangible assets of my company. All of these licenses are about intangible assets of one sort or another (ownership, usage, various conditions, etc.).”
Nowadays, when you’re managing your IP portfolio, it isn’t the obvious portfolio you need to manage. Yes, you need to manage your patents, trademarks, non-registered assets, trade secrets, domain names, copyrights, and then you’ve got this portfolio of licenses you’ve got to manage. And again, it’s not just the obvious ones — it’s the non-obvious ones too including:
- Where am I getting my source code from?
- Where am I getting my raw data from?
- What are the terms and conditions of use?
These considerations and asset management needs are making the job of the in-house IP manager even more challenging. This person has to manage a large portfolio of assets.
One reason I think many companies are still down in the lower leagues is because some IP managers still see themselves as patent managers or trademark managers. From my perspective, I’m thinking, “No, your job is IP manager. If it has any relationship with IP in any capacity, it sits on your shoulders.”
I think many companies and professionals haven’t woken up to the fact that the job of IP manager is much broader than they originally thought.
Ray: This is interesting Donal. You mentioned the word non-obvious a couple of times, and I agree with you. But that statement is also really concerning. The phrase ‘software is eating the world’ was coined back in 2011 by Marc Andreessen. It’s about a decade old now, and data being the new oil it’s very 2013 to 2014 in terms of school of thought.
So why are we so behind in looking at this amazing opportunity where in fact software is eating the world, but we’re getting to the point where data is writing the software (including the code)? Why do you think we’re so far behind from an IP manager and head of R&D viewpoint?
Donal: The job spec has sort of grown so fast. The way the world works embracing technology, the internet and open or collaborative forms of innovation, and the fact that software and data have grown have created a world where IP is having a hard time keeping up. That’s one problem.
And, of course, you can’t tell business and the world to slow down while we get our act together. That’s not going to happen. We have to figure out what role IP plays in this new world.
Look at one IP model such as open source. Ten years ago, there were events and conferences taking place and the focus was “What the hell is open source?” Now, we’re way beyond that. Today, open source is fully embraced. These days, it’s more about how do you make sure it works to your advantage and you mitigate risks?
If you take a similar IP, trade secrets, today we’re at the point where we’re asking, “What is that? What should I do?” In 10 years’ time, we’ll be way beyond these questions and be like open source is today.
The reality is that the world is moving much faster than the pace at which we operate. We’re having to catch up, and depending on the model and specific form of IP or process, the time this take varies. It depends on the model and specific for of IP process. With IP, we’re asking those same questions we asked about open source 10 years ago. We’re trying to figure out how to protect the data, and asking fairly fundamental questions. Maybe in a few years, we’ll be beyond that and able to go onto the next stage.
Throughout the past few months, we’ve see some interesting developments. We’ve seen the emergence of IP management standards and conversations happening about what is expected of a company or organization when it comes to IP risk management. We’ve also seen entities arrange dedicated conferences and seminars on IP risk management. If you take one key IP process, namely IP risk management, we’re at the point where we’re asking fundamental questions like “What it is?”
Three or four years down the road, I’m hoping we will be at the point where we’re saying, “Well we already know what it is. Now let’s figure out how to do it more efficiently and effectively.”
We seem to be running to catch up in the world of IP. But maybe that’s no different from any other industry like finance, HR or IT. We come to the point where there’s suddenly that realize that this is actually really important and we need to get our act together. And that takes a while, and if often driven by the fact that the outside work is moving very fast and things are changing rapidly.
Ray: Is it fair to say there’s a lot of catch up in terms of designing the actual organization chart for the roles? You see so many different job titles on LinkedIn, do you think there needs to be a stronger evolution around what the job looks like day-to-day and who the head of IP should partner with in a broader sense?
Donal: Yes. You see some companies appointing a Chief IP Officer, which I think is a smart move. If you have an innovative, creative company that is going places you need someone who has a broad view of what IP is all about and has a good understanding of the different ways you can play this game and how to make sure the IP ads value and is not adding risk to the business.
I absolutely think some clever thinking is needed to move forward. The role of a of an in-house IP Manager or Chief IP Officer is not the same role as what you see in some companies who say, “Well, I’m a Trademark Manager” or “I’m a Patent Manager”. There’s a difference. Even the title, Chief IP Officer, I would expect much more from that individual than I would from somebody who is responsible for the management of a particular asset class within the umbrella of IP.
Ray: Now spinning off into a different dimension, in a broad sense, the patent system has been around for well over 100 years. Do you see that changing with the rise of blockchain and people like Elon Musk putting $1.5 billion dollars into Bitcoin on the company’s balance sheet, and Michael Saylor before that with MicroStrategy?
Are you seeing any compelling movements around how the actual notion of a patent much change with the rise of technologies such as time stamping, block chain, digital assets, tokenization and beyond?
Donal: I think all of the forms of IP are under some stress. We’ve been through a period of patent checks in the US and reform for a number of years that has had some impact on the world of patents. In particular, areas such as software patents and business method patents. I think the reform in the US has meant it’s become a little more challenging to obtain a patent quickly in certain areas. It’s also harder to keep your patent alive, and easier for others to knock you off your pedestal. And it’s slightly harder to enforce your patterns.
This subtle change has already taken place, and we’re seeing the same thing with copyright. There has been a lot of discussion around whether copyrights fit for purpose in the internet and digital world. We’ve had recent developments in Europe with regard to copyright in particular. For example, let’s say the creators of copyrighted material and the consumers, if it’s on social media and so forth then the copyright is under stress.
We’ve also seen tremendous change in trade secret laws. It’s gone from being a neglected stepchild to suddenly a much more interesting form of IP because of these dramatic changes. Laws are being developed and changed around trade secrets including the Japan Trade Secret Law of 2016, the US Federal Trade Secret Law, the European Directive, and of course China going through a number of changes as well including a collection of rules around the anti-unfair competition line and so forth. To answer your question in a roundabout way, all the forms of IP are gone through some change because of various pressures and people feeling IP needs to be adjusted to better suit where we are.
You also raise the issue of emerging technologies like AI and blockchain, and this opens up another can of worms in the quest. There are a lot of issue when you put patents, blockchain and AI into the same sentence. For example, do you allow AI to be the inventor? I’m not sure what my stance is yet, but as of now I think I would be uncomfortable if I saw the name of a computer as the inventor on a patent.
Then on blockchain, this is an interesting technology. If I put blockchain on a trade secret, I see it as an interesting protection mechanism. It’s a way of perhaps better handing that data. When there are transactions of trade secrets between one company another, how do you make sure that if I transfer something highly confidential to you, how do I have a record of this transaction? How do I know you’ve received what I sent? I see blockchain having a useful case there.
On patents, I’m still not sure where it really adds value. As you well know, there are some interesting data integrity issues in the world of patents. Everything from confirmation that these inventors are actually the inventors and have contributed, as well as reassignments of patents. How do you understand that the patent has moved to licensing of patents, and ensure we can map a patent license or even map a patent to a product? I can see blockchain having some interesting applications to address some weaknesses at key steps on the patenting process. But I probably haven’t given enough thought as to the right fit. Now whether we’re there yet or not, I’m not sure.
I think all forms of IP are under pressure, and technology certain has a role to play. But some of them unnerve me. AI being the inventor, I’m still having gut concerns about that one. But maybe my position will change over time.
Ray: I’d love to unpack that a little more. What specifically unnerves you around the machine being the inventor and listed on the patent?
Donal: The patent system is like a three legged stool. You’ve got to make sure it takes three perspectives into account:
- The inventor
- Other companies
On the inventor front, you need to be able to see things from their perspective and the fact these patents are published. Then you have to take into account other companies, specifically the companies that want to take that innovation and build upon it and further enhance it. Oftentimes, there are discussions around the inventor versus who can use that patent, and the right of the inventor versus the rights of others. Finally, there’s society. Society needs to benefit from the patenting system.
When someone invents a patent, you can explain to an ordinary person with no familiarity with IP why the inventor needs some protection. You can explain this person spent their time and energy coming up with this idea, testing it, developing it and so forth. The patent system is to give them acknowledgement for their contribution to society, and we give them this patent right and we give them this limited period of exclusivity. If I talk to my mom or sister who aren’t aware of IP, they get it and say “I understand the argument.”
But then you say, “Well actually, we want to reward a computer.” Now I’m a bit concerned. Every day people will think, “How do you reward a computer, and why? It’s a dumb piece of machinery.”
Of course, these are very sophisticated pieces of machinery. But do we need to reward the machine? That’s my concern. And are we going to? Are we going to fundamentally change what the patent system is about if what we’re trying to protect is a machine?
Now, I admit — I haven’t thought this through yet. I’m still having a lot of coffee table discussions with colleagues of mine around this. Sometimes I’m at the point where I think, “Okay, yes. I get it. I understand why we need to be able to have an AI machine as the inventor.” But other times I’m thinking, “Are we going somewhere that’s going to mess things up?”
So, I may not be the best person to discuss this with right now because I don’t know the right answer. And I don’t know the right thing to do when it comes to allowing AI machines to be inventors.
Ray: A broader topic which we here at PatSnap have worked for years to educate the community about, is the connective tissue within the enterprise, government or an academic institution around linking other teams to IP. Where do you think we are on that journey? Specifically looking at the connection between R&D teams, the organization, corporate strategy, corporate development, marketing, sales and so forth?
To use your analogy, are we in division one, division two, the Premiership? Where are we on that journey?
Donal: We still have a long way to go. I will highlight some examples. I remember being at a workshop that HMRC in the UK that the tax authorities organized a couple of years ago when they launched the patent box. The patent box is an initiative to give some tax incentives to encourage innovation and creativity. And obviously, one of the key metrics was the patenting of those companies.
The patent box regime in the UK requires you to be able to create a very simple link between the patent you own, and the product you have developed that is on sale at the marketplace. It sounds very simple. If you’ve patented new products, it should be a no brainer that you link your own patents to your own products.
But actually, there were people in the audience saying, “That’s quite challenging.”
They weren’t asked to link patents to other people’s products, they were asked to link their patents to their own products, and even that was a challenge.
Now you might be wondering, “Well, how come that’s a challenge?” But for companies with large patent portfolios and large product skews, it is an interesting challenge for a lot of companies.
Connecting the dots between IP and other things can be difficult. IP has a lot of work to do to connect these dots between what it’s managing, what’s going on in other parts of the organization and so forth.
Regardless of the form of IP, I know some companies are trying to have much more engagement between the IP folks and the HR community because of employment, and because some trade secrets unfortunately get stolen by their own employees. And the HR people are saying, “We need to better understand who of our own employees have access to these valuable trade secrets?” And the IP folks are saying, “Well, we don’t know.”
So, there are lots of links — IP and HR, IP and finance, IP and R&D, IP and marketing. Again, maybe it’s back to looking at ourselves in the mirror. In fact, there was an interesting study done by a major UK London based IP firm. They looked at the characteristics within their legal IP function. There are a lot of INTJ’s (Introverted, Intuitive, Thinking, Judging; Myers Briggs personality test) within the IP community. I believe the INTJ’s are typically loners who are very detail oriented, intelligent and good at solving problems. But they may lack some of the softer skills such as communicating and networking. So again, maybe looking in the mirror, perhaps we need some networkers to come into IP and help us connect the dots with other parts of the organization. It’s a combination of hard skills and soft skills to break some of these barriers down.
Ray: Yeah, essentially, you mentioned about the soft skills, we are seeing that within the R&D organization. There was a great piece from the in Innovation Leader by Nigel Hughes, the Senior Vice President of R&D at the Kellogg Company. He spoke about how he needing his R&D team to have the technical chops as that’s the bread and butter, but that the new generation of recruits needed to be storytellers. Those recruits need to be great at pitching the rest of the organization, so not the INTJ type profile but have some sales chops in their DNA.
Are you seeing more folks coming into IP departments who do have those softer skills and are storytellers who are good at presenting in front of boards or other departments?
Donal: I think the in-house functions are beginning to realize the soft skills are critical. The ability to communicate cross-organization, as well as to senior management. We all know very good attorneys in the IP community, but you wouldn’t put them in front of an R&D group because they would get murdered. They lack the commuication skills, even though they may know the patents inside and out, and they may know the nuances of office actions in Pakistan. But you don’t put them in front of an R&D group because they can’t explain these nuances to a non-IP community.
I think the in-house functions that are clever are beginning to realize how critical soft skills are. More and more IP firms are awakening to how important these skills are especially when it comes to forging links with new clients, maintaining relationships with existing clients, and better explaining what service offerings they have to their operating company clients.
I know of one law firm recently, this was before the pandemic, I met one [of the partner’s] for a coffee, and he said, “This year we didn’t hire the top guys.”
I said, “What do you mean?”
He said, “Well, normally we would look at the scores and pick the guy who was the top of his class. But this year, we actually went through and did an interactive session. We hired one guy who wasn’t at the top of his class, but he can tell a story. He’s got his soft skills down, and we felt we needed a few of those.”
I am aware that IP firms are realizing that the relationships and the way they manage those relationships is just as important as having the people inside who can understand exactly how you get IP protection or how to get you out of a risky IP issue.
You still have a lot of traditionalists who think more along the lines of strictly the legal matters. But at least in my network, people are beginning to realize this is important. I think that the clever IP firms are realizing this, and that the nature of the relationships they have as well as how they maintain those relationships is critical.
Ray: Right! Well, Donal, this has been an awesome overview of your journey and your latest thoughts. Now we’re going to have a bit of fun and do a random quickfire round. In terms of books that you regularly gift to family or friends or your top two favorites, any recommendations?
Donal: Oh, this may sound strange. My favorite book in the world is Fear and Loathing in Las Vegas. It’s a really strange book, and it’s the only book I’ve ever read where I laughed out loud in an airplane and embarrassed myself because I just laughing. It’s not an IP book at all. It’s just a fun book to read.
I must admit, these days, the books I’m reading are books that would be that would resonate with my 10- year-old daughter because I’m doing a lot of homeschooling. So, I can recommend that to books that are at that level at the moment.
Ray: Next question, are you an extraterrestrial life believer or non-believer and why?
Donal: Absolutely. There’s life out there. Absolutely.
I mean, think about the size of the universe. The opposite is to believe there’s nothing else out there. That’s even scarier! So absolutely. I mean, you look up at the sky at night and I’m in a rural part, and you see all of those stars and planets.
And our little planet is zooming through space. I mean, we’re turning around every 24 hours and it takes us a year to get around the sun. This little galaxy of ours is heading off in one direction. I’d be really worried if someone told me for definite that we’re the only thing out here. I’m thinking, “That doesn’t make any sense.”
So, I’m an absolute believer.
The thing that worries me though is I think sometimes we think whatever else is out there is somewhat like us or maybe has a bigger head or eight arms. But maybe what’s out there is completely different from us. You know? It may be something that we don’t even recognize as being something but there’s got to be something out there.
Ray: Excellent, Donal. I really appreciate you taking the time out and spending time with us on Innovation Capital.
Donal: Thank you very much for having me. Be safe!