Today I had the honor of giving the keynote address at the LES Asia Pacific Regional Conference held in Tokyo. With more than 270 registrants, this was the second largest LES meeting ever to be held in Japan.
The assignment for my address was to provide a short overview of recent “Global Trends in Licensing”. With such a broad topic, I chose to focus on a top ten summary list of observations I gleaned from my travels to more than fifteen countries as President of LES International. Attached is a copy of my presentation. A summary of noted trends, as I view them, follows:
- Strategic — licensing has become much more strategic, operating on a global scale. Often licensing negotiations, adversarial or not, must be segmented from other related aspects of the business. Apple and Samsung are a classic case of such “frien-emies” where they are simultaneously in the midst of contested litigation as well as an on-going supply relationship. Given such a global footprint, licensing is now multi-venue (e.g. via the courts, International Trade Commission and peer-to-peer negotiations) and multi-format where deals are struck through royalty bearing agreements, royalty free cross licenses, covenants-not-to-sue and patent acquisitions.
- Cooperative — one-to-one license negotiations may still be the norm, but cooperative partnerships are becoming more common. Key players include first and foremost patent pools spanning classic collections like MPEG-LA to next generation public (now private) company versions such as Mosaid. Other cooperative structures include patent acquisition funds (e.g. Intellectual Ventures, Acacia, etc.) and defensive aggregators with AST and OIN leading the field.
- Humanitarian — most gratifying is the recent global recognition of humanitarian objectives which can be accomplished through licensing. Prominent examples include WIPO Re:Search, the US PTO’s Patents For Humanity program and the Invent For Humanity Technology Transfer Exchange Fair presented this past January by LESI. WIPO Re:Search provides access to intellectual property for pharmaceutical compounds, technologies, and know-how (including data) available for research and development for neglected tropical diseases, tuberculosis, and malaria. By providing a searchable, public database of available intellectual property assets and resources, WIPO Re:Search facilitates new partnerships to support organizations that conduct research on treatments for neglected tropical diseases. WIPO Re:Search just completed its first agreement as AstraZeneca concluded agreements with iThemba Pharmaceuticals (South Africa), the University of California, San Francisco (U.S), and the University of Dundee (UK). The US PTO Patents For Humanity program rewards patent holders who make their technology available for humanitarian purposes through a voucher entitling them to an accelerated re-examination of a patent. Among the technologies eligible for the program are treatments for tropical diseases, diagnostic medical tools, crops with higher yields or better nutritional value, and treatments for sanitation or clean water. Participants can qualify in two ways: by making their patented technologies available to impoverished populations for humanitarian use, or by making their patented technologies available to researchers who are developing technologies that address humanitarian needs. Separately, Invent For Humanity seeks to leverage commercial market lessons to connect creators of Appropriate Technology with non-profit organizations who can deploy these solutions.
- Market Centric — the trend towards a more efficient market for technology transfer continues. Auctioning of IP is now routine though generally without the headlines of years past. The recognized need for an efficient exchange is spreading throughout Asia though European efforts slow. The U.S. based Intellectual Property Exchange International maintains a leading pace.
- Expansive — patents remain on center stage of the global licensing arena though the scope of activities is becoming more expansive with trade secrets now clearly a priority in many industries. This trend is fueled by the rapid development of technology often moving to second generation solutions in a period shorter than the time required for patent prosecution. The state of trade secret licensing and protection now very much resembles the state of patent transaction activities in the 1980’s. Expectations are that trade secrets will become an even more important adjunct to patent transactions and soon reach par when it comes to licensing priority.
- Distributed — licensing remains concentrated in select industries with telecommunication leading the way. That said, efforts are distributed along a number to sectors and a clear path of future activity can be seen in series starting with the internet and social media platforms followed by financial services and life sciences.
- Governmental — the most significant trend witnessed in the past one to two years has been the increasing attention paid to technology transfer and licensing practices by governmental and quasi-governmental organizations. Examples of such activity range from presentations by representatives of Hong Kong, China, UAE, Philippines, Turkey and Singapore at LESI’s own Global Technology Impact Forum this past January to the creation of sovereign wealth funds throughout Asia and into Europe. Their is a strong message that IP is a newly recognized tool for economic growth and everyone is rushing to best position their own economy for its use.
- Measured — the accounting profession is finally making progress when it comes to fair disclosure of IP and the impact of licensing on the financial statements. Although the lens of such progress must span the better part of a decade, efforts in the U.S. (FASB 141 & 142), Germany and Hong Kong are notable examples of progress in reporting on the value of IP. Encouragement by the Hong Kong Stock Exchange for newly listed companies to disclose the value of their IP is a trend which may spread quickly among growing economies and, if it does, may spur more sweeping reporting requirements in major markets, notably the U.S and European Union.
- Compulsory — criteria for compulsory licensing first defined by the World Trade Organization more than a decade ago are finally to be implemented in emerging markets in 2013. Although the subject of much debate when originally drafted, such WTO requirements pale in effect when compared to the U.S. Supreme Court decision in eBay or recent cries for unique and reduced royalties for standard based technology.
- LES — as an organization, the Licensing Executives Society has grown from a handful of patent attorneys in the U.S. to a global organization with 32 Member Societies representing more than 11,000 individual members. LES itself has become a significant global trend in licensing with a number of educational and policy initiatives designed to support “the business of intellectual property globally.” The attached presentation highlights the role LES is playing with respect to valuation standards, policy leadership, IP inventory, primary and derivative market actives, standard contracts and reporting requirements.
This top ten list only begins to detail the activities underway. In many respects, IP as an asset has finally become a 30-year overnight success.
James E. Malackowski