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Tony Tangena, country manager Netherlands, Philips Intellectual Property and Standards (IP&S)
Creating a consistent global approach to IP
This article explores how Philips creates a consistent global approach to IP, despite the diversity of its organisation and its partners. Among the keys to its approach are developing a good sense of the context within which its partners and employees work. It also tries to be flexible about how it protects its IP, and carries that flexibility over into its open innovation strategy, in which the goal is to ensure all parties win despite their differing corporate cultures. The overall message is to recognise cultural differences but work with them to maintain a consistent approach to IP.
eIQ Action Points – Creating a consistent global approach to IP
Tony Tangena is senior vice president of Philips International BV and country manager Netherlands of Philips Intellectual Property & Standards (IP&S).
Tangena did a Masters in solid-state physics and a PhD in mechanical engineering. He worked in Philips Research before joining IP&S in 1989. He is a qualified Dutch and European patent attorney. Within Philips he has been country manager of IP&S-UK, in London, patent licensing manager and portfolio director, responsible for the worldwide Philips patent portfolio and for worldwide counselling issues. He was appointed in his present position as head of the Netherlands IP&S organisation in January 2005. IP&S Netherlands has about 250 professionals working in IP.
Tangena is also a board member of AIPPI Netherlands (Association Internationale pour la Protection de la Propriété Intellectuelle); vice president of BUSINESSEUROPE; and a board and council member of epi (the European patent attorney institute) for the Netherlands. He is the co-ordinator for the training for Dutch patent attorneys.
Philips has had a formal intellectual-property (IP) management function since 1924. The company now holds 60,000 patents, 29,000 trademarks, 43,000 design rights and 2000 domain names. It files an average of 1600 patents a year, and employs 500 people in 26 offices in 16 countries to manage and exploit its IP assets.
So how do we maintain a consistent approach to IP in a global company operating in developed and developing countries, with an increasing emphasis on the kind of open-innovation strategy that sees us negotiating with partners whose cultures are radically different from our own?
The first step to understanding how we manage this is to know what we do. I run the IP&S group in the Netherlands, which has a staff of 250. We work in a project organisation, in which functional managers control projects such as creating or exploiting an IP portfolio. The portfolios are organised for specific business sectors - Consumer Lifestyle, Healthcare and Lighting. IP management at Philips is not a passive activity: we look at the strategic direction of each business unit, and try to suggest the kinds of inventions and resultant IP each portfolio will need for the next five or 10 years. We do this with the research function, the business units and marketing, as well as calling on a team doing our foresight work, looking at market predictions and possible futures.
Our major overseas offices are linked to key regional R&D labs, such as in Shanghai and Aachen, with smaller offices elsewhere around the globe to help with local licensing activity. We also have a team in Bangalore that does the prior-art searches required by the patent application process.
Consistency
Philips is still an R&D-driven company, filing around 1,600 patents every year. We’re also generating ideas globally. So we have developed a centralised process that enables us to assess all the ideas we receive in a consistent way. We’ve put a lot of effort into making all the documents involved in the IP process available electronically to anyone who needs them, anywhere in the company.
We also take steps to ensure that our process is approached consistently. To give an example, when people join our Chinese offices we bring them to our office in Eindhoven (the Netherlands) for a couple of months to train them on how we do things, before sending them home to start work for us. We also send people working in our Eindhoven offices, and other western European locations, to work in China and other regional offices to reinforce our training about the company’s processes.
We’ve done the same with the people working for us in Bangalore on prior art. Many of them have spent up to four months in the Netherlands, learning how we do patent searches and what we expect from those searches. This approach instils our processes in our overseas workers, as well as teaching them how they can act as an interface between locally generated ideas and our IP assessment and protection process.
Context
Different countries have different cultures that need to be taken into account. For example, the Chinese education system is quite different to that in Western countries, which means that we have to spent time to educate our staff in China to help them understand how we work.
It’s great for IP&S staff to go to China, to see how the Chinese work and share knowledge. It’s a real eye-opener. Every three months we send a Philips IP counsel to a top university in China to teach about IP matters. When these students become senior figures in business or the government they will better understand the value of IP.
It is worth remembering that the Chinese have just started to build an IP system, whereas our system is 100 years old. It’s hard to say they’re not moving quickly enough when they’re starting from that base.
Working in India differs from the way we work in China. The education system is quite different to that in China, and lots of people working in high-technology companies have had experience overseas and have returned to India to share that knowledge.
As part of developing IP portfolios for five or 10 years in the future, it helps to make an early start on filing local patents in any countries that we think are to become important markets for us. We’ve done this in China and we are doing the same in Eastern Europe, trying to work out which countries will be important in the future and then building portfolios of locally granted patents.
The way we work with developing countries is to cooperate with them and to support them in their development. You can’t say things are difficult with countries or companies overseas if you’re working with them from Western Europe. Once you build your own organisation in a country, things become easier.
Flexibility
IP protection issues are often rooted in the scale of the economies where the IP is being used – or misused. For example, companies producing DVD players often perceive that the licensing fees for key DVD technologies are out of proportion with the local price of the player. So we also look at other higher value points in the distribution chain where we can get payment for our technologies.
For example, we have created a program through which importers can get a ‘letter of compliance’ stating that they have licensed any technology of ours that is used in the goods they are importing. If they don’t have such letters their shipments may get stopped at Customs - and then we have to make a deal. But we have to be flexible to find ways to ensure we get paid. Stopping a shipment on the docks is a last resort.
The way to avoid this kind of problem is to develop longstanding relationships with overseas partners. You need to have multiple meetings where you negotiate in good faith, explaining what you want, why you think they may be infringing your IP, and the advantages of taking a licence.
In these situations we’re trying to broaden our focus beyond patent licences, and to offer technology licences, which are an opportunity for companies to take advantage of early access to our technologies.
Open innovation
Philips has made a big commitment to open innovation. In the year 2000, the Eindhoven site where I work was dedicated to Philips’ businesses and hosted 2000 Philips employees. Today it is known as the High Tech Campus and home to 40 companies and 6000 employees.
We’re making similarly ambitious moves in our search for exploitable IP. We teamed up with US food company Sara Lee to develop the Senseo coffee maker, which combines our domestic technology expertise and their expertise in sourcing, packaging and distributing coffee. We’re also collaborating with a medical supplies company to develop a contrast agent that works particularly well in our magnetic resonance imaging (MRI) scanners. In these deals, the IP function’s job has been to create a legal framework in which both sides win.
Corporate culture
This brings us to the thorny issue of trying to handle IP consistently in deals with different corporate cultures. Some industries, such as pharmaceuticals, have a particular view of their technologies, wanting to hold them close and extract all their value themselves. Philips, on the other hand, is happy (within reason) to let other companies access its technology, as long as we get fair compensation.
So how do we overcome cultural differences between industries for the best long-term effect? We don’t use standard contract templates, instead we first try to work out how we can create a win for both sides. Once we have done that, it is much easier to draft a contract.
We now see multiple ways to exploit IP far beyond only creating a monopoly, for example through cross-licensing when two or more companies have equal market power and want to avoid pointless arguments; and through licensing, joint ventures and all kinds of asset deals in which our IP acts as a currency that enables us to make arrangements that add value to the bottom line of Philips.
This is what has changed most radically in our IP organisation. Ten years ago, most of the people in my team would have been busy writing patents. Now they spend most of their time counselling Philips companies on how we can work together. Our lawyers have become business development managers, who also need to be IP specialists, entrepreneurs, negotiators and many other things besides.
Navigating the future
Our global approach to IP will evolve as the global landscape evolves. Our feeling is that you shouldn’t focus on differences, but see working with other cultures and countries as an opportunity to get feedback from many different sources. That’s what multicultural organisations do - and it enriches them.
Tony Tangena
Country manager, intellectual property and standards, Philips Netherlands
Tony.Tangena@philips.com
eIQ Action Points
- Create a centralised process for assessing and protecting IP
- Make it easy to access the process from anywhere within the company
- Bring people from overseas offices to headquarters to show them how you expect your process to be run
- Recognise that different cultures create different contexts in which your staff work: be prepared to train staff and others to reduce these differences
- Make an early start on filing local patents in countries you think will become important to your company
- Be flexible about how you get paid for the use of your IP – if a manufacturer can’t or won’t pay, look elsewhere in the value chain
- Offer early access to what you are doing through licensing as a positive alternative to patent enforcement
- In open innovation, create deals that are a win for all parties
- Recognise that the cultural differences between companies and industries can be as big as they are between countries