CENSIS white paper: Intellectual Property in Business

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Intellectual Property in Business: IP basics, IP management, IP strategy IP Management during Growth (continued) The open-source software example shows that there are sometimes strong reasons to let others use your intellectual property with fewer restrictions than the law establishes on your behalf automatically. 46 Another great example of the open access model, from a less technical field, is the Creative Commons initiative which facilitated access to many creative works under ‘some rights reserved’, such as giving the author credit, attribution or a share. 47 The mindset behind ‘open access’ spilled over into the patent world, resulting in ‘patentleft’ models – in an analogy to copyleft – where the patent owner releases its patents to the public in the spirit of the open-source movement, with the assumption that any follow-on solutions will be released under the same ‘open terms’. In 2014, Tesla shocked the public by making its patents available to everyone interested in using its technology in good faith. This patent pledge had one condition, namely that the interested party did not assert any IP rights against Tesla or any other party and did not copy Tesla’s designs. The outcome: Tesla gained access to various improvements in technologies relating to electric vehicles. The move also helped Tesla to grow the EV customer base more quickly than it could have done by working alone in what was at the time a nascent market. A similar move was taken by GlaxoSmithKline (GSK) when it opened its patent pool of 800 granted and pending patents to boost development of new formulations against neglected tropical diseases in least-developed and low-income countries. GSK expanded its pledge to not file for patent protection in these regions. 48 Co-creation 49 and co-design models also assume ‘open access’ to the knowledge and innovation of a company and the involvement of ‘outsiders’ in the ideation process. Very often these outsiders are the source of new ideas and new IP. That fresh perspective in designing processes and business ideation is extremely valuable for companies that generously use this source of innovation as part of an ‘open innovation’ approach. Take-home message: The entrepreneurial journey assumes a great deal of experimentation in terms of business models, collaborations and IP strategy. The same applies to experimentation with open-access business models. After Palfrey, there might be great value in ‘open’ exploitation of your IP portfolio and letting others access your company know-how. For start-ups, it might be less appealing to open their patent portfolio where so much resource has been invested in patent registration. But as open-source software success stories teach us, such collaborative, shared-benefit approaches are more common among software developers who take solutions into the businesses they are part of. 46 Palfrey (n 5) 107. 47 Ibid 107. 48 ‘GSK expands graduated approach to patents and intellectual property to widen access to medicines in the world’s poorest countries’ (GSK, 31 March 2016) accessed 2 December 2022. 49 C.K. Prahalad and Venkatram Ramaswamy, ‘Co-opting Customer Competence’ (Harvard Business Review, From the Magazine (January–February 2000) accessed 2 December 2022. 32
Intellectual Property in Business: IP basics, IP management, IP strategy IP Management during Growth (continued) 14 Supply chain and IP In 2019, the University of California (UC) sued Amazon, Walmart and other major retailers 50 in the US for alleged infringement of four university patents relating to ‘filament’ LED light bulbs, despite the fact that these are manufactured abroad (primarily in China). What dictated this move? As commentators explain, it was a practical choice as the University had patent protection in the US but not China. Even if it had wider protection overseas, it would still be very difficult to locate the manufacturers in China (and other countries, as applicable) and pursue legal proceedings in those countries or even take the companies to court in the US. Interestingly, the University also asked the US International Trade Commission (ITC) to open a probe into the retailers’ conduct, claiming the retailers failed to require their suppliers to honour the University’s patents. 51 In 2020, UC made another move: it requested a second investigation by the ITC and filed a complaint against one retailer and several manufacturers (General Electric, Savant Systems LLC, Feit Electric Co. Inc., Home Depot, Ikea and Satco Products Inc.). As reported, UC expanded its complaint to reflect the award of four new patents to UC since the filing of the initial investigation. It also filed lawsuits in the Central District of California, US District Court, home to UC Santa Barbara. The procedural strategy in this case focused on keeping the litigation costs low by suspending the court cases while the ITC investigated the matter. As reported, UC hopes to achieve licensing agreements (settlements) and create a group of authorised suppliers on which retailers can legally rely. 52 It is very likely that UC achieves this goal and, in many cases, resolves the case outside the courtroom. What we can learn from this case is a clever litigation strategy: once the University approached the retailers, it learned the names of their suppliers and manufacturers. This can be copied into a business (licensing) strategy in which a company initially contacts OEMs/retailers and is later referred to the relevant suppliers. This is particularly important for fast-expanding and crowded markets with various retailers, suppliers and manufacturers – no online search can replace direct communication and reference from the right source. Similar conduct of targeting OEMs/retailers in a litigative manner can be observed in other industries, such as automotive (automotive connectivity) with high claims at stake: Broadcom’s (…) $1 billion patent claim against Volkswagen (Mannheim District Court) is another example of the patent holder directly targeting the OEM, while the infringed technology was used in the supplier’s components (e.g., from Becker Automotive Systems (a subsidiary of Harman Becker) and Conti Temec (a subsidiary of Continental AG) originating from the chip manufacturers Texas Instruments and Nvidia). Just at the beginning of 2019 Broadcom initiated similar actions against the German OEMs Daimler and BMW. 53 50 Amazon, Walmart, Target Corp, Ikea AB and Bed Bath & Beyond Inc, from Jonathan Stempel, ‘Amazon, Walmart, Ikea targeted in University of California light bulb lawsuits’ (Reuters, 30 July 2019) accessed 2 December 2022. 51 Eric Giler, ‘Where Does IP Responsibility Fall Within the Supply Chain?’ (Supply Chain Brain, 10 January 2020) accessed 2 December 2022. 52 Robert J. Bowman, ’ UC Expands Patent Lawsuit Against Retailers and Manufacturers’ (Supply Chain Brain, 5 October 2020) accessed 2 December 2022. 53 Tim Pohlman, ‘SEPs in the auto industry – the case of 5G’ (IAM, 17 April 2019) accessed 2 December 2022. 33
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