Sunday, April 12, 2009

Coverage by news media of IP issues, educating management about IP

IPBiz has been covering faulty (and/or deficient) coverage of IP in the news media for some time. If business managers really believe what they read in the media, they can form false impressions upon which they may act. IP Finance took a news piece in the Economist on the Nano and used it to criticize news coverage of IP issues:

What am I supposed to make of the contents of the paragraph? After being told, in previous paragraphs, that the car is small but "surprisingly spacious"; that its zero to 60 mph takes 30 seconds, but that it is a good drive and fuel efficient; that the placement of the engine in the rear is a marvel of design; that it has some flaws (what car does not?), and that is the bane of environmentalists, we are now told that Tata has filed over 30 patent applications. To what end?

Did Tata do this to send a signal to the market that the car represents a technological breakthrough and to keep competitors on edge (at least until the applications are published); are the inventions covered by the applications crucial to the success of the car; if so, do we know what makes the inventions so crucial; and what happens to the Tata Nano project if the applications, in while or in part, are not granted? Or is this simply a bit of public relations, under the theory that it always look good to claim that your new product is the subject of multiple patent applications, irrespective of their genuine value to the project? The article does not say.

Truth be told, we work very hard at trying to get our management students to treat IP as one component of the management mix, sometimes more crucial, sometimes less crucial to the success of the particular company and its activities. This means that we try not to be either a true believer or mere cheerleader for IP rights. In doing so, we hope that the sources of media information and manner of media presentation upon which managers may rely in fashioning their view of the business world will assist them in integrating IP within their larger managerial concerns. From the point of view, I wish that The Economist had done a bit better in connection with its treatment of patent filings and the Tata Nano.

IPBiz has commented on issues within the US coverage of patent reform, including strident advocacy by WSJ and BW of openly anti-patent positions. But the base concern of IP Finance was educating management types about IP. This theme arises in the book "Burning the Ships,' wherein the authors noted (in an interview at IP-Watch):

PHELPS: One theme of the book is that unfortunately, IP does not generally affect corporate thinking at the highest levels - but it needs to. With respect to the developing world, IP creates a structure that makes it far less problematical for companies to share their ideas and makes it far less risky for companies in developing countries to receive same. Both sides understand the ground rules.

David Kline (KLINE) adds: When you consider that IP represents up to 80 percent of the market value of publicly-traded companies, it’s really a problem that the vast majority of CEOs and corporate boards still treat IP as a “rights” issue for the legal department to handle rather than a business imperative deserving of executive suite strategy attention. There are historical reasons for that, of course - including the fact that most senior business leaders today were educated and came of age in a time (the 1980s) when tangible assets represented 80 percent of firm value and IP accounted for only 20 percent. The next generation of business leaders will certainly pay more attention to IP issues.

**Meanwhile, at IAM, on Phelps' "Burning the Ships" (with apologies to Tarik who "burned the ships" long before Cortez )-->

While Burning Ships is about Microsoft, what I enjoyed most about it was the opportunity it gave to get inside the mind of someone who has talked the IP talk and walked the walk for more years than he would probably care to remember. Phelps has done the business at both IBM and Microsoft, so the insights he provides are immensely valuable: they are from the coalface, not from the classroom. I do not necessarily agree with everything Phelps says about patent reform, for example - and I think he and Kline tend to overplay the collaboration and underplay the way an invitation to "partner" with Microsoft probably concentrates the minds of many company boardrooms - but the central point the book makes is clearly correct. No company will get anywhere with IP unless senior management buys-in to its transformative potential. So it is up to corporate IP managers to construct a credible narrative and then to deliver. You and your company will get absolutely nowhere with IP if you hide it under a bush. Phelps was clearly at an advantage at Microsoft because this is something that Bill Gates instinctively understood.

Dana Blankenhorn's first paragraph about the book raises a theme of interest to IPBiz: ghostwriting -->

A week ago Portland freelancer David Kline sent me a copy of “Burning the Ships,” which he ghost-wrote under Microsoft IP executive Marshall Phelps.

[IPBiz notes the irony of commentators on IP issues not caring about "inventorship" or "prior art" issues.]

Blankenhorn continued: For years, Phelps writes, Microsoft protected itself through a clause called NAP — Non-Assertion of Patents — which it forced upon business partners.

NAP freed Microsoft from worrying about most patent claims, he notes, but not from trolls who were not business partners. Worse, it left Microsoft isolated, with great ideas left as mine tailings behind the shop.

Finally: The title of this piece was chosen deliberately. Phelps’ book is essentially a defense brief for Microsoft’s legal strategy of the last six years.

Of the book, Matt Asay writes more critically:

Indeed, this is where Phelps' IP strategy for Microsoft departs from its stated intent. Phelps writes:

...(I)ntellectual property should always serve the business, not be the business....Microsoft didn't need money (from its patent portfolio)--it had billions of dollars of cash in the bank. Instead, Microsoft needed to transform its relations with the rest of the industry and build collaborative relationships with other firms. So that became the focus of our new IP strategy.

This sounds impressive, and it would be if it accurately depicted how Microsoft has approached the industry with its IP. Instead, Microsoft has spent the past several years menacing the open-source community and others with the threat of its increasingly large patent portfolio, and now claims "more than 500 patent and technology collaboration deals with companies large and small around the world."

I say "menace" because Phelps nearly always talks about these agreements in light of Microsoft approaching a prospective IP "partner." If Microsoft's IP were needed to build such cooperative bridges, presumably more of these "partners" would be approaching Microsoft, rather than waiting for Microsoft's heavy knock on the door.

PatentHawk wrote:

Marshall Phelps, Microsoft VP for IP policy and strategy, writes a first-person account of Microsoft coming to Jesus about patents in the self-serving book Burning the Ships. It's a corporate mea culpa sleight of hand, a pseudo-folksy self-absorbed Business Week as People magazine for business people book. Americans love to read fiction posing as fact about naughty boys coming clean and making good. What Phelps effects is classic propaganda, by admitting past mistakes and claiming redemption, though neither accurately so, and never explaining the meaning of the transformation when Microsoft retains its same old patterns of behavior. In other words, what Phelps never does is cut the crap.

For years, Microsoft had been on the defensive, beset on all sides by antitrust suits and costly litigation, and view by many in the technology industry as a monopolist and a market bully.

Phelps gives a nonsensical softball pitch as to motivation for transformation.

Underlying Microsoft's desire for change was its recognition that technology development had become too widely dispersed and heterogeneous, the pace of innovation too rapid, and the competition for markets and customers too multifaceted and demanding for any one firm to go it alone anymore.

Translation: being a corporate autistic bully wasn't working so well anymore. Microsoft was trying to butt into new markets, failing on its own, and getting a glimmer that no one wanted to do business with Microsoft if they could possibly avoid it.

IPBiz to PatentHawk: no need to say "BusinessWeek as People," because on patent issues BusinessWeek operates at the depth of People. [For example:]

--Of the Tata

**UPDATE. Another review of Phelps' book-->

Book Review: "Burning the Ships"

Of the co-author: So what is Phelps and Microsoft up to and where are they going with all this? Phelps, who teamed up with famed author and IP consultant David Kline (author of the 2000 best-seller Rembrandts in the Attic) attempts to account for his experiences and explain where he and Microsoft are (IP-wise) in Burning the Ships.


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