Sponsored by. New thinking on intellectual property. Written by

Sponsored by New thinking on intellectual property Written by

Commonwealth Bank viewpoint In the digital age, the best business outcomes are achieved when companies come together rather than work in isolation, according to Leif Gamertsfelder, EGM General Counsel Customer Service at Commonwealth Bank of Australia. He says this is particularly true of intellectual property (IP), where establishing a mutual understanding that enables businesses to confidently share their ideas is a cornerstone of effective collaboration. The work Commonwealth Bank are doing on blockchain technology is a good example. We are one of nine founding financial institutions in the R3 consortium, which now brings together more than 70 of the world s largest financial institutions to research and develop applications of distributed ledger technology in the financial system. Mr Gamertsfelder says the bank takes this approach across all its collaborative projects. These include its Innovation Lab, which recognises that participants will be contributing existing IP in order to create new IP, or in its work with Australian and international academia on quantum computing and cybersecurity. We have been working with universities for some time on projects that share ideas for mutual benefit, as well as to address issues of national importance. In today s digital world, we re only as strong as our weakest link and we recognise a shared responsibility to secure Australia s digital economy, he explains. The most effective innovation environment should promote sharing of ideas and co-creation. The idea of IP as a product of an Innovation Partnership is very much in line with Commonwealth Bank's philosophy.

Introduction In a Harvard Business Review article in 2014, Michael Schrage of the MIT Sloan School suggested that the acronym IP should henceforth refer to innovation partnerships rather than intellectual property. Referring to the large and thriving ecosystems with the likes of Amazon, Apple, Netflix or Google at their centre, he wrote that their success rests not so much on an exchange of value amongst the partners but on their ability, through collaboration, to make each of the partners more valuable innovators. The more powerful players in such ecosystems, Mr Schrage wrote, should resist the urge to gobble up potentially profitable opportunities when they emerge, instead identifying the partnerships that would expand them even more 1. Australia s young ecosystems, and the larger players within them, appear thus far to be following this advice. When it comes to intellectual property (IP) protection, often a tool used to seal off opportunities from others, experts interviewed by the EIU say that Australian universities and large businesses involved in ecosystems are generally taking a relaxed approach. There are exceptions, and partnerships can come unstuck over patent or other IP-related issues, but the large and small participants involved appear more focused on the mutual benefit to be gained from idea and information sharing than on appropriating the best ideas. This also applies to the direct equity involvement companies are taking in start-ups that are developing and commercialising such ideas. z 1 Michael Schrage, How Innovation Ecosystems Turn Outsiders into Collaborators, Harvard Business Review, April 30, 2014. The Economist Intelligence Unit Limited 2017 1

Opening the research taps? Universities are integral to innovation ecosystems around the world, but in Australia they have played a particularly important role as the principal recipient of government science and research funding. They often enter into partnerships with the private sector to collaborate on research in certain areas. However companies have not always found the interaction to be mutually beneficial. Jason Held, CEO of Saber Astronautics, a small space technology company based in Sydney, says that universities have traditionally guarded their IP closely. In contractual discussions about joint research arrangements, he says, Universities insist that they must own the IP. So companies like us shrug and walk away. More generally, he believes that universities have held back innovation in Australia, preventing the commercialisation of innovative ideas through a reluctance to share research with the private sector. Petra Andren, CEO of Cicada Innovations, a deep technology incubator, agrees that universities have been over-protective of their research in the past but believes this is changing. The catalyst, she says, is the 2015 launch of the federal government s National Science Innovation Agenda (see Australia s digital ecosystems ), which has made it easier for universities and companies to collaborate. It has also made it easier for the start-ups operating under her incubator s roof to commercialise IP out of universities. We ve been able to extract intellectual property and create ventures and start-ups out of those, she says. The more relaxed university approach is reflected in Easy Access IP, a system developed in the UK by the University of Glasgow, King s College London and the University of Bristol, and introduced to Australia by the University of New South Wales (UNSW) 2. Under the scheme, universities make chunks of their IP portfolio available to companies for free using a simple, one-page license agreement in return for a commitment to bring the innovation to market. A further six Australian universities have now signed on to the programme. Almost as important for companies as the simplicity and low cost, says Ms Andren, is the existence of a standardised IP regime that most major universities are now using. z 2 The Economy of Open: Easier Access to Academic IP, Scicasts, August 3, 2016. 2 The Economist Intelligence Unit Limited 2017

Corporate pragmatism Changes are also evident in how parts of corporate Australia address IP issues in their collaborative relationships. Cameron Whittfield, who is a Melbourne-based partner and head of digital and technology law at PwC Australia, an accountancy and business advisory firm, observes a more liberal approach to IP being taken by companies in recent years. Many business leaders here understand that a more open and democratised IP landscape is taking shape, and that much innovation today in fintech, for example is driven by the ease with which people can enter the market, whether it s through online platforms or through leveraging democratised IP. The more relaxed approach manifests itself, for example, in corporate equity investments in early stage start-ups where the larger partner does not insist on some form of control or transfer of the smaller partner s patent, or where the former agrees to give the latter access to its patented inventions or processes. (Some experts caution, however, that large companies are not yet as relaxed about making their own IP and data available as they are about controlling the other parties IP.) Many business leaders here understand that a more open and democratised IP landscape is taking shape. CAMERON WHITTFIELD PARTNER, HEAD OF DIGITAL AND TECHNOLOGY LAW, PWC AUSTRALIA The health and life sciences sector is one example of an exception to the IP relaxation observed elsewhere, says Mr Whittfield, due to the significant costs that companies have invested in their research and development programmes, and the intrinsic financial value their IP represents. Even here, however, Ms Andren has witnessed more relaxed big company attitudes toward IP in the med-tech and bio-tech ventures her organisation has helped to forge. z The Economist Intelligence Unit Limited 2017 3

The value of clarity None of this obviates the need for ecosystem partners to continue protecting their IP, even in a more liberalised regime. Mr Whittfield emphasises that this can potentially undermine the overall ecosystem if partners seek to use such protection simply for defensive purposes. For Ms Andren, the responsibility for using IP constructively in a venture lies as much with the junior partner as with the senior and more powerful one. That starts with establishing clarity on the scope of the patent it owns and whether or not it is actually infringing someone else s IP a problem that scuppers many ventures several years into their existence. Startups are often unequal partners with corporates and universities when it comes to knowledge of IP protection, so above all they need to educate themselves about it. z The responsibility for using IP constructively in a venture lies as much with the junior partner as with the senior and more powerful one. PETRA ANDREN CEO, CICADA INNOVATIONS 4 The Economist Intelligence Unit Limited 2017

Key takeaways ONE Universities and businesses are taking a more relaxed approach toward control over IP in their partnerships with start-ups. TWO Start-ups in particular are benefitting from a low-cost, simplified and standardised regime of access to university-based IP a major repository of potentially valuable commercial ideas. THREE The need for IP protection for all parties in a relationship remains, but if there is clarity about patents and they are not used defensively, innovation should not suffer. The Economist Intelligence Unit Limited 2017 5

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