Takeaways From IP Counsel Café 2019 ‘Parts Unknown: Global IP in an Increasingly Connected Yet Foreign World’
By Sandy Chan | May 28, 2019
Earlier this month, IP Counsel from around the globe gathered in Silicon Valley for the 11th annual IP Counsel Café Palo Alto conference, a rare opportunity to openly discuss their IP practices and recent challenges, reconnect with colleagues, and hear from some of the world’s most innovative companies. The title of this year’s conference was “Parts Unknown: Global IP in an Increasingly Connected Yet Foreign World.” IP Counsel asked for no press to be invited to attend, in order to retain complete safety of collegiality. The elephant in the room was, of course, the ongoing U.S.-China trade war. As we sat in the ballroom exchanging ideas, news headlines flashed across our laptops and handheld devices, describing how the two nations were attempting to inflict wounds on each other via tariffs.
The IP Counsel’s job is impacted by many factors that are beyond their control. For one, IP strategy must follow the business strategy, and that depends on their client, the corporation they serve. Once their client determines what activities the business will engage in and where, IP Counsel must develop an IP strategy that best supports this business strategy. What is clear is that they must be intentional. Multiple panel discussions at IP Counsel Café emphasized that the IP space is not an area that rewards loose hand-waving. IP Counsel must be rigorous in their thinking, and plan every aspect of their IP strategies, down to the very holes that they allow to develop in their portfolios, which can later be filled through acquisitions.
At the same time, it’s important to acknowledge that many things are unpredictable and as one panel described, subject to “black magic.” Several members of the audience chuckled at the notion of using “black magic” to determine IP strategy, but in reality, many companies have to, at some point, simply guess. The key is to ensure these are educated, not uninformed, guesses. Making the effort to try to predict outcomes will help IP Counsel be more disciplined and clear about what they hope to achieve, and there is usually some data that can be brought to bear. For example, in the “How to Communicate IP Value to the C-Suite” discussion, the panel addressed how to quantify the deterrence value of patents. A company is less likely targeted for patent litigation if it owns patents that could be used in a countersuit, but calculating that deterrence value with complete accuracy is impossible. Nonetheless, data, such as patent licensing royalties, does exist to help measure value, thereby allowing the creation of some benchmark. The mere exercise of attempting to quantify value is useful in itself since it promotes a more rigorous thought process and clear articulation of goals.
Facing many unknowns in the current political landscape, many companies are engaging in some degree of “black magic,” whether they like it or not. Business strategy is hard to nail down, and the looming question is, how will the U.S.-China trade war play out? Many companies are trying to determine how to right-size their China operations. This depends largely on what the residual U.S. business presence will be in China, which will dictate the IP strategy in the region. Again, there are many factors beyond their control, such as the ongoing tariff negotiations, what the final tariffs will look like, and China’s domestic economic development policy. These factors will ultimately determine U.S. business presence in China, what operations can stay, and what operations must be extracted. If, for example, operations must be moved out of China into other South Asian countries, companies must learn to protect their IP in these new jurisdictions. Even if a company must move out of China completely, it may still need to maintain IP rights in China if its competitors remain there.
On the corporate side when it comes to U.S.-China relations, business strategy will largely depend on the changes in the investment review process. These changes will address national security-related concerns pertaining to foreign investment in the U.S. There will be updates from the Committee on Foreign Investment in the United States (CFIUS) and the new Foreign Investment Risk Review Modernization Act (FIRRMA). Companies are waiting to see what deal structures involving a Chinese partner will be acceptable, and whether they can separate the investment component from access to U.S. technology. What industries and technologies will be ‘safe’ and not subject to government regulation? We are in a period of flux, but IP acquisition and enforcement in China are not going away. As companies grapple with these unknowns, it’s important for them to keep one foot in China while also educating themselves on options in neighboring countries.
Observing change on the horizon and potential for great shifts in IP strategies, nations are competing to attract IP filings and litigation. One panel discussion at IP Counsel Café addressed what is happening in the U.S. specifically. Different sectors are striving to improve the IP system by achieving predictability around §101 of the Patent Act, which describes the types of subject matter that are eligible for patent protection. The case law is inconsistent, which causes uncertainty about which inventions are patentable and which granted patents could potentially be invalidated. Although parties are not in agreement, Congress, the USPTO, and the Federal Circuit are all examining §101, and stakeholders are working towards a path forward to §101 legislation.
Improving patent quality is another issue that arose in several panel discussions on how to build stronger IP portfolios, foster innovation, and increase invention disclosures. The USPTO, as well as companies such as Facebook, Intel, and Uber, have been researching potential links between diversity and patent quality. As different parties take steps to improve patent quality in America, one big concern is which elements of prosecution result in high quality patents. Data increasingly suggests that diversity improves patent quality.
As executive director, I believe it was appropriate and timely that IP Counsel Café introduced a Women Law Leaders program this year to address the challenges faced by women attorneys in the IP law profession. Many women attorneys had been asking for a networking opportunity exclusively for them, IP Counsel Café listened and delivered a unique experience.
A group of women attorneys came together to share best practices. The Women Law Leaders program began with a discussion on California’s new law requiring publicly traded companies to include women on their boards of directors. This law recognizes that men and women think differently, and having diverse perspectives enables better decision-making. Similar to the observation that links exist between diversity and patent quality, this California law reflects the belief that diverse team composition leads to more successful company performance.
The Women Law Leaders program then addressed the challenges faced by women attorneys in the IP law field. It is clear that women attorneys’ experiences are often unique to their gender, and by discussing best practices, women attorneys take steps towards leading more successful careers that enable greater contributions.
This year, IP Counsel Café also instituted the Lifetime Achievement Award. The award was presented to Bill Becker, former Head of IP at 3Com and Vice President of IP at Align Technology, and now consulting part-time with his own firm, BeckerIP. In his various roles, Bill was responsible for IP development, strategy, litigation, licensing and other IP transactional matters. He was also an active member of various industry organizations, in which he generously mentored the next generation of IP law leaders. The Board voted to present this inaugural award to Bill in recognition of his spirit of collegiality, mentorship, and selflessness, which he demonstrated throughout his career.
Finally, IP Counsel Café ended this year’s conference with its first cycling event, a 25-mile ride around the Stanford University campus. All proceeds were donated to SOS Children’s Villages, a nonprofit organization dedicated to protecting and supporting children.
This year’s IP Counsel Café conference made clear that the IP Counsel community is strong and intentional, with the power to drive change. Although many factors are beyond their control to change, IP Counsel still must be disciplined and rigorous in their thinking. And when IP strategies are subject to “black magic,” a well-informed, data-driven guess is more prudent than a dice roll. Together, the IP Counsel community has the power to improve the quality of innovation, patents, work culture, and beyond. As we navigate the changing IP landscape, let us be intentional in all that we do. I’m looking forward to continuing the dialogue next spring at IP Counsel Café 2020.
Sandy Chan is executive director and general counsel of IP Counsel Café, a 3,000+ member organization that empowers the IP Counsel community by creating a safe place for knowledge and information sharing. For more information, visit http://www.ipcounselcafe.com.
Reprinted with permission from the May 28, 2019 edition of Corporate Counsel ©2019 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.