Saturday, November 19, 2005

HBS Cyberposium: IP and Global Tech Protection

The Intellectual Property System and Global Technology Protection panel is starting up here with John Palfrey introducing the crew.

[These are NOT direct quotations, just my quick notes. Will be editing them into more coherent statements.]

We've got Michael Rashid from Wilson Sonsini, Karen Copenhaver from Black Duck, Jon Putnam Charles River Associates.

Doc's quick summary post is here.

John's just introduced "Sifry, Searls & Suitt" as the bloggers in the front row of the room. Hell, I like the ring of that.

He's giving us a case study-type game to play, we have $10M of capital in a new start-up, we've got a bunch of lawyers at this hypothetical firm, here are some questions to pose the lawyers related to IP.

Palfrey: "Michael, how do you advise the board in terms of their intellectual property strategy?"

Michael: Intro of how Wilson Sonsini was THE law firm that grew up with entrepreneurs in Silicon Valley. Their last IPO client was Google.

"There are 4 buckets of "intellectual property" ... first, and least important is trademarks, then the more important issues relate to trade secrets, copyrights and patents.

"Trade secrets are "self-executing" -- not your most important concern.

"Copyrights, need to register if you need to enforce it at some point.

"In terms of strategy, patents do require you to jump through many more hoops than these others. If your invention really advances the state of the art, patents are very important."

"With fast changing technology, and the average patent time is 3 years for filing, you must do a cost/benefit analysis. Many new start-ups with a fast development time may choose not to patent their technology because of the time frames."

Palfrey: "If it's a fast moving sector, you actually would suggest your new company NOT pursue filing the patent."

Michael: "Not always, but often it isn't worth doing."

Palfrey: "Do you agree with Michael -- esp with your solid background in Open Source software development."

Karen: "I began my legal career with IBM in Armonk. Then on the West Coast with an IP firm. Then returned to the East Coast and did mostly fund-backed companies. Now I'm at a start-up."

"And I do agree with everything Michael said. They often, a new company, wants to file a broad patent. I would ask, "Tell me if this will advance the technology." It should not be too broad. If you study your market and identify one very specific different, innovative aspect or feature and patent THAT."

... other questions ... I missed a few.

"Distinction between IBM's focus on patents -- their's is big company and could be called a focus on "freedom of action" -- whereas a venture-backed start-up has a very different issue, which is about the value of their patent within the valuation process of their new venture."

"A start-up needs to ask, are you in the critical path of a big company?"

Karen draws on the board with chalk -- we all oh and ah about what a good UI.

She's showing the history of software start-ups and their patents.

You write the app.

Next you write an app that requires another layer that you license or cross-license some IP of another company. You're Veritas + you license tools related to other data storage devices, for instance.

Next -- NOW -- You have a small set of apps you write, with a couple of things that are unique, you have some licensed stuff and you have a whole SLEW of OPEN SOURCE stuff all combined.

So this combo of three parts, I would be talking to the board about the complexity of their IP layers and how to be sure they're managing it properly and can have a clean exit strategy.

"These days, you can't hire developers to write software by telling them your app will have no open source components."

Jon Putnam: "It's not easy to put your finger on it -- what the "great idea" is exactly. The better question is "what have you got that's unique that on one else can do."

When do you have "an idea" and when do you have "intellectual property."

Jon tells how he decided to do a thesis on the value of all the patents in the world.

The resulting data is not something unique that I can charge people for.

It's just information, not intellectual property.

The difference between from start-ups and IBM in terms of patents. IBM is talking about licensing fees. Start-ups are patenting for other reasons -- they are all about protecting unique features.

Dave Sifry talks about his company Technorati and their patent strategy. (I'm not blogging this. Some info is confidential.)

Karen: "There's a piece of your business that anyone can do -- I call that the Walmart part. You need to drive costs down -- and assume you will make NO MONEY there. You can't do your business without it, but it will not make your money."

"There's another piece of your business that will make you unique and rich (possibly) -- what is my differentiator -- it may be your brand, or simply your IP and the people who are inextricably linked to it. It may be the trust your customers feel about you and your product. You need to understand and identify that."