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Does IP help or hinder open innovation?
Orange’s approach to open innovation has evolved into an ‘Innovation Bazaar’, a network of skills and capabilities that can be quickly mobilised to develop new technologies, products and services. But how does it handle intellectual property issues in this fast and free-flowing environment?
by François Jamet, director of intellectual property and licensing for France Telecom - Orange
Francois Jamet has been developing the patents and licensing activities of France Telecom since 2000, as well as working on technology transfer to start-ups. Before joining France Telecom, Jamet was head of the networks division at Siemens France. Earlier in his career he helped create Global One, as vice president for Northern Europe. This joint venture between France Telecom, Deutsche Telekom and Sprint was created to offer telecom services to multinational companies. An engineer in telecommunications by training, Jamet is a graduate of Ecole Polytechnique.
Orange is doing an increasing amount of its innovation through a rich variety of partnerships with external organisations such as other companies (including start-ups), and third-party research groups. This approach is so different from the classic pipeline of internal R&D projects that we have started to call it the Innovation Bazaar, to highlight the flexibility and speed it brings to our efforts to innovate. But what’s the role of intellectual property (IP) tools, such as patents and licensing agreements, in this fast-moving environment?
I think they help us use the Bazaar to access the innovation we need, rather than hindering the process. They also provide us with the currency we need to negotiate on an equal footing with other very large organisations.
I have three major objectives in my role handling IP for Orange. The first is to exploit the efforts of Orange Labs, our R&D organisation, for financial gain. We have a very open and active approach to making our research available to others. We believe it’s best to make our results available, usually by offering a licence. We do this as much as we can, especially with those parties who can help develop our inventions, and participate in the “innovation chain” that starts with our research and ends with products implemented in our networks and services. At most, in cases of very differentiating innovations made in the Orange Labs, we may keep the exclusive benefit of the invention for a few months. We also participate in more than 15 patent pools. Patent pools play a key role in our business, which is driven by standards. They are a very good tool for helping to introduce new technologies, since the members of each pool have to consider the right market price for the IP they hold when setting licensing terms for the companies that implement the standard. This provides another way for us to get value from our work.
The second objective is the more traditional one of protecting the innovation of the group. The third objective is to use IP to facilitate collaboration, and this is the one that has been most affected by the move to open innovation. Some might see a paradox here, since IP is often presented as something that slows partnerships down, but I think the opposite - it’s an enabler.
If you want to be comfortable in a co-operation, you need to define what each party brings to the relationship and how they will share the results. When you co-operate you need to develop rules regarding IP at the very beginning. When you talk about IP you’re talking about the real content of the partnership, what each party wants to achieve and how the various parties will use the results and distribute the benefits - the real business issues. Addressing these issues early on helps avoid difficulties later. As the British say: “Good fences make good neighbours.”
You also need to differentiate the notion of the ownership of IP from the ability to exploit it. For example, we avoid the co-ownership of patents since it can be difficult to handle in future, especially when licensing is involved. Instead we prefer to make one party the sole owner of a patent and then give both parties the right to exploit it.
On the pace
The increased pace of collaboration enabled by the Bazaar means that we have to be quicker to protect our inventions. We have adapted our processes so that when we need to be quick, we can. Drafting a patent usually takes three months, but we can cut that to just a few weeks when necessary.
We also need to have a good understanding of the various types of partners with whom we’re working. Industrial partners often have different objectives and constraints to public research organisations, so we have to take that into account. When we discuss collaboration with an organisation that isn’t used to working with IP issues, it can be difficult. Some may be very protective of their IP, thinking that they are going to be cheated by working with a big group. There is no recipe for dealing with that. We just have to spend the necessary time to explain what we’re doing and why we’re doing it. The lack of understanding generates fear and makes the discussion more difficult. But we still need to protect our interests.
There can also be mismatches in terms of the perceived value of IP. One difficulty with academic bodies is that they sometimes look at a piece of jointly developed IP and argue that, because they will not be able to exploit it while the commercial partner will, the commercial partner should pay more for it. The issue here is that R&D involves risk: you don’t know whether its results will be exploitable. Academic bodies tend to think that patents have an absolute value, whereas industry thinks that patents have a potential value.
Part of our IP strategy in this very fast moving business environment is to ensure that our patent portfolio is still relevant to the products and services we have on the market and to the state of the art in technology. We review our portfolio regularly to ensure that what seemed a valid invention three years ago is still a good idea and still up to date.
So are IP instruments an unwelcome burden on deal making in our Innovation Bazaar? I don’t think so.
They give us the confidence to enter into collaborations, and help us formalise the relationships that we make. They help us get the most from our R&D investment: we can share innovation with partners when needed without giving up our capability to enforce our patent rights using licensing. And they give us a currency that we can use to influence the future of our industry. All these advantages spring from formalising our R&D results as IP: without it we would be much more reluctant to be open and much more hesitant to join collaborations. To stretch a metaphor, without the tools of IP protection, our Innovation Bazaar would be nothing but a lot of empty shop-fronts, and traders whispering furtively in corners.
François Jamet
Director of intellectual property and licensing
France Telecom - Orange
francois.jamet@orange-ftgroup.com