tag:blogger.com,1999:blog-11424070665476644062024-03-05T10:31:29.774+01:00Intellectual ProfitDeriving value with IP ManagementRaymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.comBlogger48125tag:blogger.com,1999:blog-1142407066547664406.post-24918595078187706782018-06-05T22:13:00.000+02:002018-06-05T22:13:27.879+02:00DEMPE is not complicated – It is simply IP substance<br />
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For those who cared then, there was a lot of panic when the first
drafts of the OECD BEPS (base erosion and profit shifting) action items were
circulated. <o:p></o:p></div>
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The Action Plan had implications that were not limited to taxation
and economic development. In later drafts it became more evident that intellectual
property would receive extensive attention. Action Items 8 to 10 address the
aspects of intangible assets with respect to preventing base erosion and profit
shifting.</div>
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Make no mistake – the OECD BEPS action plan is not easy to
read. However, while it takes a lot of dedication to wade through the final version,
Action Items 8 to 10 are simply a handbook for prudent IP management. The <a href="https://intellectualprofit.blogspot.com/2017/08/dempe-elephant-in-room-for.html" target="_blank">DEMPE</a>
(development, enhancement, maintenance, protection and exploitation) approach
is a practical framework on how to assess alignment of IP ownership with the
associated value-creating activities.<o:p></o:p></div>
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The easiest way to achieve this alignment is to follow the
traditional approach of building IP substance in the same locations as the
ownership of IP. Rather than viewing it as a tax-compliance chore, firms should
see this as an opportunity to enhance intangible value sustainably in key geographic
markets.<o:p></o:p></div>
<br />Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com12tag:blogger.com,1999:blog-1142407066547664406.post-74747120671901111052017-08-27T23:48:00.000+02:002017-08-27T23:48:26.961+02:00DEMPE, The Elephant In The Room For Multinationals<h2>
Background</h2>
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At the 2012 G20 Summit in <a href="https://www.oecd.org/g20/summits/los-cabos/" target="_blank">Los Cabos</a>, participants raised concerns about multinational corporations (MNCs) using tax avoidance structures to exploit inconsistencies and gaps between different legal systems in order to shift profits to low-tax (or no-tax) jurisdictions. The G20 charged the OECD with the responsibility of coming up with an action plan to avoid Base Erosion and Profit Shifting (<a href="http://www.oecd.org/tax/beps/" target="_blank">BEPS</a>).</div>
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The resulting <a href="http://www.oecd.org/ctp/beps-2015-final-reports.htm" target="_blank">Action Plan</a> was adopted at the 2105 G20 Summit in <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/11/16-g20-summit-antalya-communique/" target="_blank">Antalya</a>.</div>
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On June 7th 2017, ministers and officials from 76 countries and jurisdictions signed a multilateral instrument (<a href="http://www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-measures-to-prevent-beps.htm" target="_blank">MLI</a>) that will allow rapid implementation of the BEPS actions into more than 1,100 bilateral tax treaties already in existence among the parties.</div>
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The only 3 OECD members to not yet sign are the USA, Brazil and Saudi Arabia.</div>
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What does this mean for IP owners?</h2>
Because IP accounts for the <a href="http://intellectualprofit.blogspot.ie/2010/06/blinding-flash-of-light-why-people-dont.html" target="_blank">majority of enterprise value</a> for MNCs, a simple shift in IP ownership can have a large impact in transferring profits (and therefore taxes) to other jurisdictions. The Action Plan paid special attention to the role of IP in base erosion and profit shifting.<br />
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The ramifications for IP ownership could be profound.<br />
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Action items 8-10 of the Action Plan concern the alignment of IP ownership within a jurisdiction and the value-creation activities. While the implementation details and interpretation may be subject to some dispute in future, one conclusion is that the mere ownership of intellectual property by an entity may not necessarily entitle that entity to the full income associated with the IP. It will be necessary to examine the functions of development, enhancement, maintenance, protection and exploitation (DEMPE).<br />
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Unless the firm is 1) carrying out the DEMPE functions, 2) assuming DEMPE risk and 3) applying assets in exploitation, it may not be entitled to benefit fully from the economic flows from the IP assets. Furthermore, the OECD insists these are not new rules - they are an interpretation of the current situation. In other words, the interpretation will be retrospective.<br />
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Firms with large IP holdings in low-tax jurisdictions will find it prudent to assess them in conjunction with their DEMPE functions, risks and assets committed to ensure alignment.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com4tag:blogger.com,1999:blog-1142407066547664406.post-22926876993364037242017-05-08T18:13:00.001+02:002017-05-08T18:13:12.525+02:00Multinational Subsidiaries - The Four Bridges<div class="MsoNormal" style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.8px;">
When you are running a multinational subsidiary, you start it, staff it and scale it. Day-to-day activities occupy the bulk of your attention. It is absolutely correct that you should concentrate on this – it is what you were tasked to do.</div>
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You can enhance this single-minded focus by addressing the other aspects that are crucial to the long-term sustainable success of your enterprise. I call them “The Four Bridges”.</div>
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The Four Bridges</h2>
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<i>No man is an island entire of itself. Every man is a piece of the continent, a part of the main</i></div>
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<span style="font-size: 12.8px;">John Donne (1572-1631)</span></div>
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No entity operates in isolation. Its ultimate success relies on a broad network – actually several networks. The links to those networks do not develop on their own. They require active nurturing. If a firm is an island, it needs to build bridges to the other areas that will sustain it.</div>
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I will describe 4 primary bridges.</div>
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The Parent Bridge</h2>
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Recent research into romantic relationships confirms that “<a href="https://www.usatoday.com/story/news/nation/2013/07/20/long-distance-relationships-2013/2568295/" target="_blank">absence makes the heart grow fonder</a>.” However, in business the reality is more a case of “out of sight, out of mind.” Despite the best intentions, when a firm is located thousands of miles away from the parent and separated by many time zones, it is easy to become isolated and even a little bit forgotten. Parent company attention will give priority to the people who are nearest and whose voices are heard loudest.</div>
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The responsibility falls to you as a leader in the satellite to reach out to colleagues in the parent company to keep them informed about what is happening on the ground. The message needs to be reinforced continuously about how the Irish operation is relevant and how it contributes to the overall success of the global organisation. This can be achieved by clear formal reporting, regular updates, exchange of personnel and joint projects.</div>
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Multiple benefits will accrue from this:</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Higher priority being allocated to your requests</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>A better understanding in the broader group about the relevance of the Irish operation</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Less interference from the parent company after they become comfortable that the local operation is being run well.</div>
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The Local Ecosystem Bridge</h2>
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Let’s face it, when your firm decided to invest in the Irish operation, the intention was to be around for a long time. It makes sense to become more connected with the local community and increase the “Irishness” of your operation. It is also a way to overcome the isolation you can experience when you are working so hard to make a success of your venture.</div>
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Depending on your country of origin, there are business associations and chambers of commerce such as the <a href="http://www.amcham.ie/" target="_blank">American Chamber of Commerce</a>, <a href="http://www.ija.ie/" target="_blank">Ireland Japan Association</a>, <a href="http://www.irelandchina.org/" target="_blank">Ireland China Business Association</a> and the <a href="http://www.german-irish.ie/" target="_blank">German-Irish Chamber of Commerce</a>. There are local organisations such as the <a href="http://www.dubchamber.ie/" target="_blank">Dublin Chamber of Commerce</a>. You may find an industry-specific organisation. All of these provide a way to meet like-minded people and advance common views.</div>
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There are Irish governmental organisations such as <a href="http://www.idaireland.com/" target="_blank">IDA Ireland</a> (promoting inward foreign direct investment) and <a href="http://www.enterprise-ireland.com/" target="_blank">Enterprise Ireland</a> (supporting indigenous Irish firms but also building linkages between Irish firms and foreign firms located in Ireland).</div>
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Something you will find in Ireland is that people like to help each other. Building connections in the community gives greater potential for collaboration and support. All of the universities are open to connection with potential partners for research, as sources of potential employees and they welcome guest lecturers from industry.</div>
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Another attraction of Ireland is the ease of access to policy makers. All TDs (members of parliament) publish their email addresses. Enda Kenny, the Taoiseach (Prime Minister), famously <a href="http://www.independent.ie/irish-news/if-you-want-to-contact-the-taoiseach-it-can-be-done-30140789.html" target="_blank">offered his mobile phone number</a> to USA CEOs to say that he is open to their call when investing in Ireland. He even vowed to keep the phone line open after receiving several prank calls in connection with the promise.</div>
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Some of the dividends of connections with the local ecosystem:</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Higher brand awareness among the talent pool</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Access to local supply base for goods and services</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Linkages with universities</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Influence on national policy making</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Closer connection with other firms operating in Ireland.</div>
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The Broader Ecosystem Bridge</h2>
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As a member of the EU, Ireland is also influenced by EU law. According to Article 288 TFEU, a Regulation “shall be binding in its entirety and directly applicable in all Member States” The consequence of this is that a lot of laws influencing activity in Ireland are made by EU policy makers. It may be important to keep abreast of changes that are happening at European level and even have a voice in the formulation of appropriate policy.</div>
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The good news is that European policy makers are keen to be informed by people with direct expertise. If your perspective is relevant, you can get access to members of the European Commission, European Parliament and permanent representatives to share your views.</div>
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Tending the wider ecosystem can provide the following benefits:</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Advance intelligence on EU-level initiatives that could have an impact on your business</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Ability to provide input on the direction of future EU policy</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Building broader coalitions and alliances</div>
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The Bridge to the Customer</h2>
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The success of your activity in Ireland hinges around how you satisfy the customer. Startups are always frantic and chaotic under the surface. However the customer expects continuity. When the parent company’s name is above the door, customers expect at least the same level of quality, service and delivery.</div>
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As the local leader, you cannot delegate responsibility for the customer experience. As a leader, you have to maintain open channels of communication with the customer. You also have to make sure your team always has to keep the goal of customer satisfaction to the front while they are rolling out capabilities from the Irish base.</div>
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Closer connection with the market can bring the following advantages:</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Keeping the customer in the picture of the evolution of the Irish operation</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Improved local responsiveness to potential customer issues</div>
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<span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>Strengthening the sense of ownership on both sides.</div>
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The Upshot</h2>
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The temptation for leaders is to focus on the organisation they have built. Locating in Ireland can be a very rewarding experience but it comes at the risk of isolation. Well-connected links will enhance the robustness of the operation but these links do not grow passively. They need to be nurtured actively.</div>
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Apart from the four bridges outlined above, your business can have other bridges too. These can connect you to supply chains, regulatory authorities, outsourced capabilities, etc. Please feel free to add your experiences in the comments below or message me directly.</div>
Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-27512777405230366262017-04-10T15:26:00.000+02:002017-04-10T15:26:41.650+02:00Why the European Commission Apple decision IS significant for policy and behaviour<div class="MsoNormal" style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.8px;">
In August 2016, the European Commission issued a <a href="https://ec.europa.eu/ireland/news/%C3%A9-cinneadh-aontais-eorpaigh-nach-m%C3%B3r-do-apple-%E2%82%AC13-billi%C3%BAn-ais%C3%ADoc-le-h%C3%A9irinn_en" target="_blank">final decision</a> in its investigation into the way Apple paid tax in Ireland. The sheer scale of the decision was dramatic and made headlines around the world. In the aftermath, analysts said that the ruling was limited to the specific facts around the Apple case and would not apply to other international companies in Ireland.</div>
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This may be true, but the reality is that this case is a significant wake-up call. It is an indication of a much larger issue.</div>
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The decision shows that foreign tax authorities:</div>
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<li>are envious of Ireland’s success,</li>
<li>attribute some of that success to questionable tax practices and</li>
<li>will do everything to expose and punish those activities.</li>
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Fairly or unfairly, this will inevitably bring more scrutiny on firms doing business in Ireland. Many firms are not well prepared to face that scrutiny.</div>
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<strong><span style="text-decoration-line: underline;">Policy developments</span></strong></div>
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In recent years there has been a string of developments in policy regarding multinational tax practices. Some examples are the OECD’s work on <a href="http://www.oecd-ilibrary.org/taxation/oecd-g20-base-erosion-and-profit-shifting-project_23132612" target="_blank">Base Erosion and Profit Shifting </a>(BEPS), the European <a href="http://ec.europa.eu/taxation_customs/business/company-tax/anti-tax-avoidance-package_en" target="_blank">anti tax avoidance directive</a> (ATA) and President Trump’s planned tax overhaul.</div>
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All of them have the noble intention of trying to reduce tax evasion and aggressive tax avoidance. While they aim to prevent firms from reorganising their activities for the sole purpose of reducing tax, they understand the economic reality that firms organise their international affairs to <a href="https://www.linkedin.com/pulse/why-firms-invest-ireland-more-reasons-than-you-think-hegarty" target="_blank">support their business interests</a> – whether that is to enhance their supply chain, serve customers responsively or access specialised local talent pools. Increasingly, firms will have to answer questions about their choice of location. The OECD BEPS <a href="http://www.oecd.org/tax/beps-reports.htm" target="_blank">final draft</a> proposes a Principal Purpose Test (PPT) that looks for non-tax reasons for establishing in a certain jurisdiction.</div>
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<strong><span style="text-decoration-line: underline;">Purpose and Behaviour – Substance</span></strong></div>
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Apart from the purpose of establishment, firms will be examined for their behaviour in Ireland. They will have to demonstrate that their Irish activities have real economic substance. However, there is no simple test of substance. Substance is not a black-and-white issue. It is more a combination of facts. Most firms will have the typical activities of running a business. Together, these activities will give a picture of the “Irishness” of the business. </div>
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Some examples are:</div>
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<ul>
<li>Board of directors with Irish-resident directors holding regular board meetings to decide and direct the affairs of the company</li>
<li>Irish premises as a place of business</li>
<li>Books and records being maintained</li>
<li>Well-qualified staff carrying on meaningful work</li>
<li>All important decisions made locally</li>
<li>Managing day-to-day customer relationships</li>
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Increasingly, substance is not about the mere presence or absence of these activities. It is about their quality and depth.</div>
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<strong><span style="text-decoration-line: underline;">Other threats to substance</span></strong></div>
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Moreover, even if the above activities are followed and documented, there can be unexpected threats to substance.</div>
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One example comes from confident international salespeople who are convinced they are making decisions in the field. Their negotiation behaviour could be construed as conducting business at the place of negotiation. While salespersons should be allowed flexibility and some clearly-defined autonomy, nobody should be allowed to doubt that all important decisions can only be made by the Irish firm.</div>
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Another risk to substance comes from smart senior executives in the parent company who take an interest in the activities of the Irish firm. Irish boards should resist any risk of being viewed as a “rubber stamp” for parent-company proposals. For “effective management and control” of the Irish firm, it is important to have strong local executives and directors who can withstand corporate pressure and manage the firm unambiguously.</div>
Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-15642894822737616772017-02-06T19:28:00.000+01:002017-02-06T19:28:33.360+01:00Monetising the Internet of Things<div class="MsoNormal" style="background-color: white; font-family: Calibri, Arial, Helvetica, sans-serif; font-size: 16px;">
A lot has been written about the Internet of Things (IoT) with Gartner <a href="http://www.gartner.com/newsroom/id/3165317" target="_blank">predicting</a> that the number of connected devices will grow to 20.8 billion by the year 2020. This figure compares with 2.1 billion <a href="https://www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/" target="_blank">smartphone users</a> in 2016 and 3.4 billion <a href="http://www.internetlivestats.com/internet-users/" target="_blank">internet users</a>. I believe the actual number will far exceed those estimates.</div>
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Because of the term "Internet of Things", most of the focus to date has been around the “things” that make up IoT. Clearly there is a huge potential market for suppliers of the devices that are connected, switches, networks, cloud storage, etc.</div>
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Aside from that tangible value in hardware, the real potential of the IoT is how the “things” interact. As they exchange information, value is being created in the data. This is a new development. Among lawyers, it is just beginning to open new questions. Historically, the laws around data protection, privacy and ownership assumed that a human was doing something with the data. The laws were designed to regulate how those humans would behave and did not envisage scenarios where humans might not be involved at all.</div>
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As an example, if elements of a network come up with a new idea, who owns the idea? Who should be paid? Where does the value reside? In a borderless world, what country’s GDP will benefit from the value? Can it be protected? How should it be taxed? Who should be held liable for damage caused by relying on the information?<br />
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And this is not trivial. When you go from 2.1 billion smartphones in 2016 to 20.8 billion devices in 2020, the complexity doesn’t just increase tenfold. In network theory, if each device is a “node”, the theoretical number of connections (also known as “edges”) is given by the following formula:<br />
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<b>E=(N)(N-1)/2</b><br />
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Even if you take the conservative estimate of a tenfold increase in the number of nodes, the theoretical number of interconnections swells a hundredfold.<br />
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And it doesn’t stop there – greater data volumes</h2>
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Not only are the connections increased, the amount of data potentially contributed by each device is also significantly higher. Data that is typed into a smartphone is limited by the speed of typing. The average typing speed of a PC user is <a href="http://www.ratatype.com/learn/average-typing-speed/" target="_blank">41 words per minute</a>. Smartphone user are even slower typists. Even if you look at denser data such as video uploads of original material to a site like YouTube, it is normally in short bursts and rarely more than a few times per day for any user. Some devices will be simple sensors but other machines have the ability to collect, create and share data at massively higher rates and without stopping.<br />
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An emerging new asset class</h2>
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With so much more data coming into existence, it will require special skills to find the value and make sense of it. There is a new dawn in the monetisation of the intangible assets that will be born in the IoT. It will require special skills to identify, classify and value these assets and establish mechanisms for trading them.<br />
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We are not starting from scratch. Monetisation of other intangible assets such as patents, trademarks and copyright has evolved tremendously over the last 2 decades. The ongoing shift in emphasis from physical assets to intangible value will continue to push the boundaries.</div>
Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com1tag:blogger.com,1999:blog-1142407066547664406.post-20423920557401881482016-06-29T00:42:00.000+02:002016-06-29T00:42:13.632+02:00No, Silicon Valley doesn’t like failure!<div class="MsoNormal" style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.8px;">
I often hear that Silicon Valley celebrates failure. This is a clear oversimplification. What Silicon Valley really likes is success. Huge success! If there are failures along the way, they are accepted as part of the experience.</div>
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Yes, I get it. If you always punish failure, nobody is ever going to try something new. Small failures can be a sign that you tried an experiment that didn’t work. </div>
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Those kinds of failures have three positive benefits:</div>
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<li><span style="font-size: 12.8px;">They may be part of a gamble that sometimes pays off well when it does work.</span></li>
<li><span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span><span style="font-size: 12.8px;">Lessons can be learned from the failure to help improve on future attempts.</span></li>
<li><span style="font-size: 12.8px;">People admire someone who can get up after a failure, dust themselves off and try again. That shows character.</span></li>
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Taking a gamble that doesn’t have a prospect of paying off is reckless. If you fail and don’t learn you are stupid. Multiple failures without learning just means you are cumulatively more stupid.</div>
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<b>Fail Faster!</b><br />
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Because failure can be an indication of someone having the courage to take a chance, the number of failures can be a proxy for the number of attempts that are being taken to do something new. Welcoming experimentation is not the same thing as saying you would prefer failure. Simply encouraging failure can be disastrous if it merely means incurring cumulative reckless losses.</div>
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“Fail faster” is not a rallying call to build a history of catastrophic losses. It is an exhortation to:</div>
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<li><span style="font-size: 12.8px;">Try more things.</span></li>
<li><span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span><span style="font-size: 12.8px;">Identify when it is not working and pull the plug earlier on ideas that are not working.</span></li>
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Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-65562608864453399152016-06-06T12:42:00.000+02:002016-06-06T12:42:03.823+02:00Innovation is not about Beanbags<div class="MsoNormal" style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.8px;">
In the 1980s, Japan was hailed as an “<a href="https://en.wikipedia.org/wiki/Japanese_economic_miracle" target="_blank">economic miracle</a>”. There were best-selling books such as Ezra Vogel’s “<a href="https://books.google.ie/books/about/Japan_as_number_one.html?id=lQ1oAAAAIAAJ&redir_esc=y" target="_blank">Japan as Number One: Lessons for America</a>” and SONY President Akio Morita’s “<a href="https://en.wikipedia.org/wiki/Made_in_Japan_(biography)" target="_blank">Made in Japan</a>”. American electronic and automobile manufacturers were caught by surprise by the success of Japanese manufacturers.</div>
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One thing that became apparent on visits to Japanese factories was that they used impressive manufacturing robots. American manufacturers raced to catch up. They invested in expensive robotics. This was done without looking at any of the less-visible aspects of the Japanese miracle. The investment in robots was an increased expense that did not yield the ultimate competitive benefits in terms of quality or productivity that justified the expense incurred.</div>
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I attended a conference in China where one keynote speaker from a large Western multinational corporation described their approach to innovation. We heard about the more than 100 years of history, the thousands of employees and the billions spent on R&D. Then we heard about the big plan for innovation. A team would be given 5 weeks to focus on bringing innovative projects. They would be given beanbags.</div>
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<b>Beanbags?</b></div>
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Where does that come from? My theory is that it is like the American companies in the 1980s who tried to emulate the Japanese success by using robots. Nowadays, incumbent players are looking in fear and awe at the Silicon Valley startups and seeing beanbags. They think, “if we want to get some of that innovation mojo, we need a few beanbags.”</div>
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However, innovation is not about beanbags. Beanbags can be symbolic of a less repressive environment where individualism can be celebrated. Beanbags are also a place to be comfortable when you are working the 18-hour days of the entrepreneurial startup.</div>
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<b>Another example</b></div>
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At the same conference, there was a speaker from the Chinese electronics firm <a href="https://en.wikipedia.org/wiki/Xiaomi" target="_blank">Xiaomi</a>. In 5 years, the firm has come from nowhere to become one of the top 5 smartphone handset makers in the world.</div>
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Xiaomi doesn’t have customers – it has “fans”. This is not just some cute name. The company has a <a href="http://www.mi.com/en/" target="_blank">website</a> where fans can design their own smartphone. The website even says "We want to hear from you."<br />
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<b>Boy! Do they listen!</b><br />
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To date, they have had more than 150 million submissions from fans. Some of the more technical fans are even able to build their own mobile operating systems (OS). The result is that there are three times as many fan-designed OS variations as Xiaomi-designed OS.</div>
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The Xiaomi story doesn’t mention beanbags.</div>
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In fact, for lazy employees, beanbags are just one more excuse to be lazy.</div>
Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-39569865980278413272014-12-14T12:28:00.000+01:002014-12-14T12:28:04.068+01:00Still underestimating China?The Economist magazine has a piece this week entitled "<a href="http://www.economist.com/news/finance-and-economics/21636100-are-ambitious-bureaucrats-fomenting-or-feigning-innovation-patent-fiction?fsrc=scn/tw_ec/patent_fiction" target="_blank">Patent Fiction</a>". They take issue with the findings in a Thomson Reuters' report "<a href="http://blog.thomsonreuters.com/index.php/chinas-iq-innovation-quotient/" target="_blank">China IQ (Innovation Quotient)</a>" that looks at the latest data on the growth of invention patent applications.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYB3ao9A9isuSVF-abogkzreqdAGz89ZQFcyd7EQgVAe4E1RRtaJQYPVBz8_KKrWLCJeSCjt0VGjo7a7-sa1cNx4zkFQVOHu-7FoF9XQ93J0T-hkqmr1bix5NMFrxo0NDUxq7AF47k018/s1600/ip_thomsonreuters_chinas-innovation-quotient.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYB3ao9A9isuSVF-abogkzreqdAGz89ZQFcyd7EQgVAe4E1RRtaJQYPVBz8_KKrWLCJeSCjt0VGjo7a7-sa1cNx4zkFQVOHu-7FoF9XQ93J0T-hkqmr1bix5NMFrxo0NDUxq7AF47k018/s1600/ip_thomsonreuters_chinas-innovation-quotient.png" height="246" width="320" /></a></div>
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It is funny how they trot out the old <i>quantity-versus-quality</i> cliche. I <a href="http://intellectualprofit.blogspot.ie/2010/11/no-doubt-china-is-world-power-in.html" target="_blank">predicted </a>that response 4 years ago when this shift was becoming apparent. It indicates a dangerous level of complacency.<br />
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<a name='more'></a>The Chinese government has made concrete commitments to IP as an important pillar for their long-term economic policy. This is evident at all levels in China.<br />
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Over 5 years ago, I pointed out how China had passed out Japan to become the <a href="http://intellectualprofit.blogspot.ie/2009/11/china-is-top-in-chemical-invention.html" target="_blank">World's #1 issuer of Chemical patents</a>. I also mentioned 5 years ago about how Renmin University's Intellectual Property Academy had <a href="http://intellectualprofit.blogspot.ie/2009/11/new-intellectual-property-academy-in.html" target="_blank">41 PhD students</a> studying intellectual property law. This Academy had its roots in the <a href="http://english.cri.cn/6826/2009/11/27/164s532173.htm" target="_blank">Intellectual Property Teaching and Research Centre</a> set up some 33 years ago in 1981. Children as young as six years old are being taught about respect for intellectual property.<br />
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Some of the top PhD and postdoctoral students in the USA are from China. Many of them are now encouraged to come back to China and contribute towards building innovation in China.<br />
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So when I hear the <i>quantity-versus-quality</i> argument again, I wonder at the myopia of commentators. Sure, incentives to file patents will cause a lot of dubious IP to be generated. But with so many smart people with a high level of IP-consciousness in China, there is bound to be a lot of good-quality inventions coming through.<br />
<br />
.... And it is not just a matter of percentages. With the increased experience of filing a lot of patents, quality improves with increased quantity which leads to higher "hit rates" of excellent patents.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-59004106098891915782014-11-14T19:59:00.002+01:002014-11-14T20:00:46.113+01:00Ireland to host local division of Unified Patent CourtBREAKING NEWS:<br />
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Richard Bruton, the Irish Minister for Jobs, Enterprise and Innovation, has announced that Ireland will host a local division of the Unified Patent Court (UPC).<br />
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The UPC is a key part of the Patent Package that is currently in the process of being ratified in Europe. Its adoption depends on ratification by 13 Member States.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-26234187009619975352014-11-14T00:25:00.000+01:002014-11-14T00:35:04.234+01:00Ireland's proposed Knowledge Development BoxThe 2015 Budget speech by the Irish Minister for Finance mentioned that Ireland is taking steps to develop a "Knowledge Development Box" (KDB). Most people took this as meaning that it would be implemented in 2015. This is not exactly what the minister said.<br />
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<a name='more'></a>As the word "box" implies, it is envisaged that there will be similarities with patent box regimes that have been implemented elsewhere.<br />
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Countries such as the UK, the Netherlands and Luxembourg have all implemented systems that give incentives to host IP-related activities in those countries. Many of these regimes are under examination by European authorities. Most observers believe that the current scrutiny will lead to modifications in the various European regimes.<br />
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<b>Irish Government intentions</b><br />
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Intellectual property is important to Irish economic development and Irish policy makers have been observing the activities of competing jurisdictions. It would not make sense to roll out an Irish KDB before the deliberations are complete. However the Government has now signaled its intention to be ready when there is more international clarity.<br />
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The Minister gave a <a href="https://www.kildarestreet.com/wrans/?id=2014-11-05a.194&utm_content=buffer480ea&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer#g196.r" target="_blank">written response</a> to an opposition question on this issue last week.<br />
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He also dealt with it in parliamentary questions, as outlined in this <a href="http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2014110500007?opendocument" target="_blank">transcript</a>. (Deputy Noonan is the Minister for Finance.)<br />
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<b>Why call it something different?</b><br />
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While "Knowledge Development Box" is a bit of mouthful, it is an interesting expansion on the concept of patent box. Clearly, there is a lot of creativity in Ireland in software and brand development. "Knowledge" is a broad catch-all term that could include IP such as patents, copyright and trademarks. Indeed, depending how deliberations progress, the definition of KDB could extend to other intangible assets such as know-how, trade secrets, designs and image rights.<br />
<br />Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-53727400766887487572014-09-30T00:10:00.001+02:002014-09-30T00:10:30.740+02:00The Hazard of Phenomenal Success<br />
Previously, we have seen how even some large firms <a href="http://intellectualprofit.blogspot.ie/2014/06/ip-strategy-and-awareness-in-uk.html">do not have a formal IP Strategy</a>.<br />
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We have looked at how entrepreneurs can <a href="http://intellectualprofit.blogspot.ie/2014/07/what-entrepreneurs-forget.html">plan for success</a> by making provision for IP rights they will need even if they do not develop them along the way to success.<br />
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<b>But what if you are wildly successful?</b><br />
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What could go wrong?<br />
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Well, plenty actually.
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<a name='more'></a>Let's imagine you are a baseball player. You swing the bat. You connect with the ball. As you connect with the ball, you know. You just know. "This is going to be good! This one is going to go out of the ballpark!"<br />
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Entrepreneurs can get that thrill too. They can sense when they are about to hit it out of the ballpark. There is a thrill. With that thrill, there is also a deep terror.<br />
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<b>Different levels of success, different challenges</b><br />
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When you are a new entrant, you develop IP to protect your ideas. You want to make sure none of your jealous neighbours copy your idea. As you grow, you strengthen your protection to make sure more significant competitors don't copy your idea.<br />
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<b>Slings and arrows of outrageous fortune</b><br />
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But until you are successful, you have the protection that comes from flying beneath the radar. As you become successful, you begin to grow a target on your back. Your size makes you more noticeable and your new prosperity will attract opportunists.<br />
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<b>Hitting it out of the ballpark</b><br />
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When I speak to entrepreneurs, I ask them about their ambition. How they will prepare for phenomenal success?<br />
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Because when they are wildly successful, a new class of challenge can materialise. When you make, as Steve Jobs called it, "a dent in the Universe", how will the Universe react? Especially if the Universe is lorded over by powerful incumbents.<br />
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This leads to a sequence of 4 questions:<br />
1) If your success is disruptive, who will you disrupt?<br />
2) How will they react to your disruption?<br />
3) What will they do to prevent you disrupting their business?<br />
4) What tools do you have to protect yourself then?<br />
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Now go back and look at your IP strategy for success.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-85097227277296253342014-09-25T01:32:00.001+02:002014-09-25T01:34:03.223+02:00Progress report on UPC preparationsLast week the Preparatory Committee of the Unified Patent Court (UPC) issued a <a href="http://www.unified-patent-court.org/images/documents/roadmap-201409.pdf"> revised roadmap</a>.<br />
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The report outlines the significant activities to date in preparing for the UPC as part of the broader Patent Package. <a name='more'></a><br />
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These preparations are running in parallel with the work being done on the Unitary Patent.<br />
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One of the takeaways from this report is that there is still a whole lot more work that needs to be done. While there is an aspirational deadline of the end of 2015 it is not likely that the package will be operational before 2017.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-77607434713582149822014-07-18T00:39:00.002+02:002014-07-18T00:41:22.561+02:00What entrepreneurs forgetThe history of entrepreneurship is replete with tales of failure. Failure followed by dusting yourself off, getting up and trying again.<br />
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It may not be catastrophic failure. Sometimes it is trial and error ... testing what works and what doesn't ... changing the mix ... until the recipe for success reveals itself.<br />
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What are the implications for IP? Well, I mentioned in the <a href="http://intellectualprofit.blogspot.ie/2014/06/ip-strategy-and-awareness-in-uk.html">previous post</a> that few firms - large or small - have broad awareness of IP strategy.<br />
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Consider what this means for entrepreneurial firms who eventually make the grade.
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<a name='more'></a>Let's say a firm has experienced disappointment with Plan A ... and maybe even with Plan B ... before taking off with Plan C. They will have invested a lot of effort, research and development in Plan A. They may have even have obtained some protection for their IP. They have rejigged the business plan to develop Plan B.<br />
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Eventually Plan C takes off. That is a happy situation. Of course.<br />
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However, in all the excitement of scaling the business, it is very rare that the founders will have set aside a budget to acquire sufficient rights to protect them in their new area of focus. They need to have a strategy to address this.<br />
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This issue will be dealt with in future posts on this blog.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-91159631783151144832014-06-23T01:12:00.002+02:002014-06-23T01:19:06.157+02:00IP Strategy and awareness in the UKThe UK Intellectual Property Office has invested a lot of effort into raising awareness among UK firms. The primary focus has been on micro, small and medium sized firms on the assumption that larger firms have a higher level of awareness. <br />
<br />A survey published in 2006 confirmed the assumption. IP awareness increased with the size of firm. The same research was repeated in 2010 and yielded similar results about awareness as well as marking an increase in the overall awareness in the intervening period.<br />
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This didn't surprise me. I have <a href="http://intellectualprofit.blogspot.ie/2010/06/blinding-flash-of-light-why-people-dont.html">commented</a> previously about the prevailing climate that promotes such awareness.<br />
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What really surprised me was the low level of firms with an IP strategy. <br />
<a name='more'></a>Even among the "large" firms (defined as having more than 250 employees) who have a high awareness, only 35% of firms surveyed in 2006 had a formal IP strategy.
Despite the increasing awareness the survey found in 2010 that the number of large firms with an IP strategy had fallen to 22%.<br />
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In some upcoming blog posts I will explore some strategic options available to innovative firms. Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-9828888053942693592014-05-19T22:01:00.000+02:002014-05-19T22:02:06.409+02:00Graphene - lessons for British innovationToday's Financial Times has an article with the headline "Asia ahead in race to develop graphene".
This is a technology that the British Chancellor of the Exchequer described as a "great British discovery". However, the UK has only filed 101 of the 11,372 patents and patent applications filed worldwide in the field of graphene - a mere 0.9% of the total. Asia has filed 7,318.
<a name='more'></a>China has invested heavily. In 2012-2013 it filed more than 80% of the global total patent applications.
The reaction of Manchester University was unfortunately predictable. The FT quoted "It is not simply a numbers game."
That is correct. It is not <b>simply</b> a numbers game. However, among the overwhelming 11,271 non-UK patents there will most certainly be <b>some</b> strong patents. Some of them could be strong enough to prevent Manchester University having the possibility of commercialising the technology on a grand scale.
Furthermore, it is not just a numbers game of locating strong patents because the pool is bigger. Despite the inevitable protestations of "quality versus quantity", <a href="http://www.policonomics.com/experience-curve/">experience curve</a> effects mean that as more patent applications are filed, the quality of each new patent increases.
Saying that "It is not simply a numbers game" cannot be an excuse to do nothing and simply allow Britain to fall behind in yet another area where it was a pioneer.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com1tag:blogger.com,1999:blog-1142407066547664406.post-37011770391539937382011-05-18T18:53:00.004+02:002011-05-18T19:11:58.917+02:00On the move<h2>Announcement </h2><br /><br />I must apologize for the gap in postings. From the end of March, I have started working for <a href="http://www.intven.com">Intellectual Ventures</a> - the World's foremost invention capital company - as Vice President of Global Licensing in Europe.<br /><br />It will be very busy as we build the team over the next few months to grow our business.<br /><br />I would like to thank everybody who has stopped by this blog, especially those who have contacted me to give comments and feedback.<br /><br />For more information about Intellectual Ventures in Europe, <a href="http://www.intven.ie">click here</a>.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-54688108588095541032011-03-10T20:36:00.006+01:002011-03-10T20:58:09.890+01:00Newsworthy week in European IPWhat a week for IP in Europe!<br /><br /><h2>Big news 1: Rejection of EEUPC </h2><br />First the <strong>European Court of Justice </strong>(ECJ) rejected the proposal to form a new <strong>European and European Union Patent Court </strong>(EEUPC). It seems to be a polarizing decision. <br /><br /><a name='more'></a><br />I was speaking to a German professor of IP who thought it was an eminently sensible outcome.<br /><br />On the other hand, many people are very disappointed and feel that it is a disastrous decision. There is a considered analysis by <a href="http://www.bardehle.com/en/team/detail/person/pagenberg-jochen.html">Dr. Jochen Pagenberg</a> on the <a href="http://www.ipeg.eu/?p=2394">IPEG blog</a>.<br /><br /><h2>Big news 2: Agreement on European unitary patent </h2><br />Hot on the heels of <em>that </em>news was the announcement from the European Council this afternoon that 25 of 27 member states have voted to go ahead with the unitary European patent. The 3 official languages will be English, French and German. This single filing system will save costs for inventors compared with the current system of having to file applications in each individual member state with applications translated into local languages.<br /><br />Italy and Spain had resisted such a move because they wanted their respective languages to be included in the list of official languages. Under the "enhanced cooperation" rules, unanimity is no longer required. <br /><br />The 25 member states will now press ahead with preparations for a system for a single European patent. Italy and Spain will have the opportunity to join in the future, if they so wish.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-78710574249737315662011-02-04T20:37:00.002+01:002011-02-04T20:46:15.458+01:00EmigrationMartin Murphy, managing director of Hewlett Packard in Ireland had an important <a href="http://www.irishtimes.com/newspaper/opinion/2011/0204/1224288982193.html">opinion piece</a> in the <a href="http://www.irishtimes.com/">Irish Times </a>newspaper today. It prompted me to comment with the following rant.<br /><br />I agree with almost all of this opinion piece apart from the opening premise. There is a broadly-held view that emigration is a bad thing for Ireland. <br /> <br />In some ways it is true. Splitting up families and tearing people away from their roots is always a huge personal sacrifice. When people are forced to emigrate because of lack of options at home, it is tragic. Similarly, it is a huge waste of national funds and effort to educate our young if the result is that other economies will benefit unilaterally from Irish investment. <br /> <br />However this misses out on some important questions. <a name='more'></a><br /><br />Are we ignoring how international experience provides training that is just not possible in Ireland? As an example, Irish doctors who go to England or the USA will see exotic diseases on a weekly basis that they might only see once in a lifetime in Ireland. <br /> <br />The experience of living and working in another country allows us to open our minds and develop as people. To quote Mark Twain – <strong>“Travel is fatal to prejudice, bigotry and narrow-mindedness.” </strong>That would cure a lot of ills that have afflicted Ireland's modern history. <br /> <br />Academic training or on-the-job experience has never been the barrier to career development in companies. In the 1970s, Irish industry already identified lack of international experience as the biggest limitation to development of middle managers and future leaders. <br /> <br />High value-added jobs typically are knowledge intensive. One of Ireland’s biggest opportunities from the future lies in the network of educated people who are globally welcomed and not afraid to travel. <br /> <br />Just because many commentators see emigration as a failure of the Irish economy does not mean the solution is to do everything in our power to retain them at home. That is NOT the issue. The missing element is the welcome for them to return. <br /> <br /><strong>“No one realizes how beautiful it is to travel until he comes home and rests his head on his old, familiar pillow.” </strong>Lin Yutang. <br /> <br />In my years of living and working overseas, I have observed an interesting phenomenon in the Irish abroad. Many Irish leave our shores with huge intentions of returning after (say) 2 years. About 18 months after leaving, a change comes over them. They start complaining about Ireland. Blaming Ireland. They talk about the traffic, the weather, the cost of living, the politicians. Most of all they talk about the tax. <br /> <br />Again, I am hearing about the 53% marginal tax rate. Even worse, there is an ugly undercurrent in the current political discourse that anybody earning over EUR 100,000 per year is fair game for increasing taxes further. Just like talk about increases in the corporate tax rate makes potential FDI nervous about committing to Ireland, personal taxation increases will discourage any successful person from coming back to Ireland. <br /> <br />The result is the following: <br /> <br />1) We invest huge amounts in educating people. <br />2) They go abroad and gain invaluable experience. <br />3) We create a clear barrier to educated and experienced people coming back and rebuilding our economy.<br /><br />That sounds mad to me.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com4tag:blogger.com,1999:blog-1142407066547664406.post-5456808483279496242010-11-29T22:17:00.004+01:002010-11-29T22:23:04.312+01:00Economic policy - IP commercialization as a stand-alone disciplineBelow is my opinion piece from Innovation Magazine published by the Irish Times, reproduced with permission:<br /><br /><h2>We need to develop a specialised competency in commercialisation to build this route to the market</h2><br /><br />HOLLYWOOD has perpetuated the myth that any inventor with a patent is on the road to great riches.<br /><br />In the UK, James Dyson is a poster-boy for inventors. Many see him as the man who struck it rich with a vacuum cleaner that he started manufacturing in 1993. The romantic image is one of overnight success.<br /><a name='more'></a><br />In fact, Dyson’s first product came 23 years earlier in 1970, when he designed a “sea truck”, a flat-hulled, high-speed watercraft. He also got a patent for the Ballbarrow, a modified version of the wheelbarrow, and other products such as a Trolleyball and a Wheelboat.<br /><br />When perfecting his product, he made more than 5,000 prototypes. The reason for his success is that, apart from being in possession of perseverance and inventiveness, Dyson is an unusually good communicator who has become the face of his invention.<br /><br />Dyson achieved mass-market commercial success only after a TV advertising campaign. That happened more than 10 years after his original idea for the cyclonic vacuum cleaner. As we can see from Dyson’s story, many patents are of limited commercial value.<br /><br />John Wanamaker, American retailer and advertising guru, is reputed to have said: “Half the money I spend on advertising is wasted – the trouble is, I don’t know which half.”<br /><br />Some people apply the same quote to patents, suggesting that just half of them have commercial value. The reality, however, is much worse.<br /><br />Tony Clayton of the UK Intellectual Property Office surveyed almost 10,000 owners of patents in France, Germany, Italy, the Netherlands, Spain and the UK. His research shows that the top 0.8 per cent of patents in Europe account for 42 per cent of total patent value. The same research found that the top 3.5 per cent of all patents account for 77 per cent of total value for single patents. This means the remaining 96.5 per cent of all patents account for only 23 per cent of total value.<br /><br />So the challenge is to identify potential blockbusters among the bulk of competing inventions and then find a way to bring them to the market.<br /><br />The idea behind the smart economy is that the payoff for Ireland will come from the “commercialisation” of ideas and processes. The ideal process involves inventing something, patenting it and then commercialising it.<br /><br />There is huge pressure on researchers to commercialise their efforts. This is unfair, however. Asking top researchers to become commercialisers is like asking car headlight designers to race against Michael Schumacher because they are both in the car business.<br /><br />This may seem logical because researchers are intimately familiar with the subject matter – but commercialisation involves more than knowledge of the product. It demands extensive knowledge of the market for the product, as well as an ability to exploit that market.<br /><br />Most Irish inventors do not have the resources to manufacture and market their product for global markets.<br /><br />Licensing is the typical route to market envisaged for products of the smart economy. A licence is not a physical product, though – it is a legal one, so it requires a different business model.<br /><br />A licence agreement is a special form of contract. It is underpinned by intellectual property in the form of patents, copyright, trademarks and know-how. It is also often supported by and subject to litigation.<br /><br />Managing all of this requires specialist knowledge of intellectual property (IP) law. Typically, the minimum entry requirement for legal personnel is a master’s degree in law, often with an additional IP specialisation.<br /><br />Commercialisation is more than just law. By definition, it requires a deep understanding of business. To get the best return from potential licensees requires formidable effort. Structures are often complex and special negotiation skills are involved.<br /><br />Because IP is at the heart of business for both the licensor and potential licensee, negotiations can be heated and intensely emotional. It takes special skill to work through a deal and still maintain a relationship that may have to continue for decades.<br /><br />We should not forget that the subject matter is usually scientifically complex. A scientific vocabulary is essential in order to understand the technical needs of the market and communicate the specific attributes of the product. Without technical sensitivity, it is impossible to identify potential infringements by non-licensees and to manage compliance of existing licensees.<br /><br />This means the commercialiser needs a combination of legal, technical and business credentials to achieve commercial success working with the fruits of Irish research and development.<br /><br />It takes 10 to 20 years to make a top-class researcher, and it takes just as long to make a top-flight commercialiser. We need to develop a specialised competency in commercialisation to build this route to the market.<br /><br />This is not a mere matter of adapting the efforts of researchers. No political bullying should divert our researchers from focusing on what they are good at: producing world-class research outcomes.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com1tag:blogger.com,1999:blog-1142407066547664406.post-20214456552307729772010-11-25T19:02:00.005+01:002010-11-25T19:15:01.009+01:00Innovation Dublin 2010Last week, as part of the <a href="http://www.innovationdublin.ie/">Innovation Dublin 2010</a> festival, I was invited to give a lecture to the MBA class at <a href="http://www.smurfitschool.ie/">Michael Smurfit Graduate Business School</a>.<br /><br />I spoke on the topic of IP commercialization with the title "Invention or Innovation?"<br /><a name='more'></a><br /><br />The interchange with the audience was stimulating.<br /><br />It is encouraging to see how conciousness is growing in the area of IP commercialization.<br /><br />Also, while I was in Dublin, I attended the launch of the <a href="http://www.innovationalliance.ie/academy/index.html">Innovation Academy</a>, a collaborative initiative by the Innovation Alliance to educate PhD students about matters of innovation and commercialization.<br /><br />At these difficult times it is good that there are endeavors that are focussed on the future.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-51779785032462003062010-11-11T18:47:00.002+01:002010-11-11T18:54:14.913+01:00Now THAT's smartIf I had a hat, I would raise it to the principal of St. Aidan's primary school in Wexford, Ireland. <br /><br />His contribution to developing young minds is not to just accept the laptop and projector for each class, as offered by the Government. He said he needs to get an iPod into the hands of each pupil. He went about raising the funding and had educational software loaded in each unit.<br /><br />The verdict of the students is that it is "cooler than laptops and a deadly way to learn." (If you know Irish colloquialisms, you will know that "deadly" is high praise.)<br /><br />The article in the <a href="http://www.independent.ie/opinion/editorial/a-lesson-in-thinking-smart-2415938.html">Irish Independent is here</a>.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-53489567306323188842010-11-08T21:04:00.004+01:002010-11-08T21:17:46.894+01:00No doubt: China is a World Power in PatentsI saw it reported in the <a href="http://economix.blogs.nytimes.com/2010/10/06/china-poised-to-lead-world-in-patent-filings/">Economix blog</a> of the New York Times that China is about to take the global lead in patent application filings.<br /><br />There is nothing surprising about this. <a name='more'></a><br /><br />Indeed it is almost exactly a year since I mentioned in this blog about <a href="http://intellectualprofit.blogspot.com/2009/11/china-is-top-in-chemical-invention.html">China passing out Japan to lead the world in Chemical patents</a> and also about the country's <a href="http://intellectualprofit.blogspot.com/2009/11/new-intellectual-property-academy-in.html">academic commitment to IP</a>.<br /><br />Of course you will hear the usual chorus about <em>quantity-versus-quality </em>and <em>they-don't-respect-our-patents-so-let's-not-respect-theirs</em>. <br /><br />The more enlightened might just get get a little more scared and a bit more respectful.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-53467730029090879942010-11-01T13:34:00.003+01:002010-11-01T13:42:31.225+01:00The case for commercializationI was asked to write an opinion piece for Ireland's Sunday Business Post with the title <a href="http://www.sbpost.ie/newsfeatures/working-smarter-not-just-harder-52555.html">"Working smarter, not just harder"</a> making the case for IP commercialization a key element of the Smart Economy strategy. <br /><br />The edited version is a bit sanitized, but the main message gets through.<br /><br />As always, I welcome and enjoy your feedback.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0tag:blogger.com,1999:blog-1142407066547664406.post-75780884760838148072010-08-29T10:06:00.002+02:002010-08-29T10:11:19.541+02:00IP in DivorceOf course it stands to reason, but it was interesting to see in a <a href="http://indianaintellectualproperty.wordpress.com/2010/08/28/division-of-intellectual-property-upon-divorce-in-indiana/">blog</a> from Indiana (USA) that intellectual property can be considered "as marital property for purposes of dividing property" in divorce cases.Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com1tag:blogger.com,1999:blog-1142407066547664406.post-34528335734346840962010-07-23T20:54:00.004+02:002010-07-23T21:04:39.313+02:00Sources of growth - Part 4<strong>(This is part 4 of a 4-part series. If you want to view the series from the start, click <a href="http://intellectualprofit.blogspot.com/2010/03/sources-of-growth-part-1.html">here</a>.)</strong><br /><br />In previous parts, I have described 2 sources of growth from IP commercialisation activity, namely <a href="http://intellectualprofit.blogspot.com/2010/04/sources-of-growth-part-2.html">managing and growing existing licensees</a> and <a href="http://intellectualprofit.blogspot.com/2010/07/sources-of-growth-part-3.html">recruiting new licensees</a>.<br /><br />To round out the discussion, there is another source that is often underestimated.<br /><a name='more'></a><br />It is often assumed that an IP portfolio has a fixed value. One unheralded source of growth is the growth due to improving the value of the portfolio.<br /><br />Among the various methods of valuing portfolios, several are variations on present worth of future licensing cash flows.<br /><br />If the activities of managing existing licensees and developing new licensees increase the future royalty volumes, the value of the portfolio also increases. Simply put – if there is an unexpected increase of 50% in royalty streams, that in itself will allow an upwards revaluation of the portfolio by a similar percentage.<br /><br /><strong>And it does not even stop there ...</strong><br /><br />The value of the portfolio is not simply the stream of royalties. If quality and efficiency improve, there is a further boost to valuation.<br /><br /><h2>Success breeds success</h2><br /><br />A well-run licensing operation will in itself add to the valuation. As the process of managing and recruiting licensees becomes slicker, subsequent victories will become easier to achieve. If it is not a perpetual-motion machine, it certainly is an efficient machine.<br /><br />Learning curve effects mean that you can improve the quality of agreements to optimise returns. The experience may even give the opportunity to go back and improve on aspects of existing agreements through renegotiation.<br /><br />The cumulative effect of the sources of growth mentioned in this series is illustrated in the chart below.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhW_9EwIorkhkQMzZQxaszWO9h8JrZ2olIea8JtZyLtsXsyN8Tf0BB8gT5xOL6xVdMIE0jW9W0uO9MF40SgYOeBHTeF8jy3jRagQTTU6bsi4QOw2a5KtvBvtHv7mIu-fXtiNPKHihgaOLI/s1600/Part+4+chart.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 193px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhW_9EwIorkhkQMzZQxaszWO9h8JrZ2olIea8JtZyLtsXsyN8Tf0BB8gT5xOL6xVdMIE0jW9W0uO9MF40SgYOeBHTeF8jy3jRagQTTU6bsi4QOw2a5KtvBvtHv7mIu-fXtiNPKHihgaOLI/s320/Part+4+chart.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5497178211908706258" /></a><br /><br /><strong>(This is part 4 of a 4-part series. If you want to view the series from the start, click <a href="http://intellectualprofit.blogspot.com/2010/03/sources-of-growth-part-1.html">here</a>.)</strong>Raymond Hegarty, FDI CEO, IP evangelisthttp://www.blogger.com/profile/12177762264047819025noreply@blogger.com0