IP: From sword-and-shield approach to tool for cooperation

By Mr. Lim Chuan Poh, A*STAR Chairman and Mr. Suresh Sachi, A*STAR Deputy Managing Director and General Counsel

Intellectual property is best used to spur open innovation that benefits even SMEs and excite economic growth

With slower economic growth becoming the new normal, countries increasingly look to research, innovation and enterprise plans as strategic levers.

Companies on their part are leveraging innovation to diversify and achieve sustainable growth. They are also seeking collaborations to derive synergies from a broader suite of competencies and expertise. The goal? New solutions to problems humanity faces, and new markets.

An example of this is the move by GlaxoSmithKline to team up with Alphabet, Google's parent company, to tackle chronic conditions like arthritis, asthma and diabetes, and work on research in bioelectronics or electroceuticals. This is a new area of therapeutics that requires expertise in biology and miniature implants. Both companies established Galvani Bioelectronics to develop and commercialise bioelectronics medicines, investing in intellectual property (IP) and up to £540 million (S$957 million) over a seven-year period.

Such innovative enterprises that take advantage of intellectual assets are set to power the global economy in the future, with IP playing a critical role.

THE OLD WAY

Organisations used to adopt a sword-and-shield approach to exploiting IP but that is increasingly at odds with the shift towards open innovation.

An example of the old approach is the ongoing patent dispute over CRISPR-Cas9, a gene-editing technology, between the Massachusetts Institute of Technology and the Broad Institute at one end, and the University of California, Berkeley, at the other. This case is now before the US Patent and Trademark Office.

CRISPR-Cas9 is a bacterial defence system that allows scientists to disable, replace, or tweak genes and rewrite snippets of DNA sequences. Its relative simplicity and versatility has resulted in its adoption and proliferation in research. Over the last three years, more than US$300 million (S$423 million) in venture capital funding has gone into start-ups to further develop the technology for generating improved crops, research reagents and therapies for human genetic diseases. That is in spite of clinical trials of CRISPR-Cas9 still being many years away and the uncertainty from the ongoing legal dispute.

The case, a rare example of a patent dispute between academic institutions, demonstrates the traditional approach of using IP as the law intends - as a compact between the state and the rights owner, where the latter is given a monopoly to use and commercially exploit the IP to the exclusion of others.

This approach is being challenged. Disruptive technologies, new business models and the advent of open innovation have changed the way corporations view the development, ownership, use and protection of IP.

THE NEW WAY

Corporations are increasingly receptive to the idea that IP rights are not just a legal tool, but should in fact be integrated with their business strategy.

However, without a clear strategy for monetisation, IP may only garner short-term gains such as the initial valuation of the corporation. Very quickly, management and investors will find that IP is a costly asset. If there is no clear commercial pathway to profit, maintaining the patents will be a significant drain on precious resources.

A corporation does not need to develop and own all the IP it requires for its business. Global successes like Google and Genentech licensed university technologies and went on to develop more IP in-house and in partnership with others. Companies must differentiate between IP that is fundamental to their business and which they must develop and own, and IP which they tap on a non-exclusive basis or need only a limited exclusive licence for. That can help to lower their costs of business. They should also consider what IP can be co-created with partners, be these public institutions like the Agency for Science, Technology and Research (A*Star) or other corporations.

Further innovation then lies in devising new and exciting products and services from this bundle of rights, acquired from multiple sources. By adopting open innovation, corporations can access capabilities and technologies in public research institutions and institutes of higher learning without having to bear the developmental costs themselves.

The World Intellectual Property Organisation's (Wipo) first World IP Report in 2011 highlighted the emergence and shift towards such open innovation strategies. These included new modes of thinking about the role of patents and how they could be used flexibly by companies.

According to recent World Bank reports, over the past 20 years, global royalty and licensing fees have grown at the rate of over 80 per cent a year, reflecting that collaborations among companies worldwide have ballooned. A.T. Kearney's report, Collaborative Innovation In Digital Europe, states that seven in 10 of respondents expected more than a quarter of revenues to be generated through collaborative innovation by 2030.

What that reflects is a big shift from the traditional approach of IP as a monopoly right for exclusion to IP as part of a collaborative strategy for mutual benefit. With this shift, IP awareness and management must move from the general counsel's office to the boardroom and the C-suite.

TAPPING IP FOR GROWTH

Singapore recognises that a one-size-fits-all approach towards IP does not always result in the best outcome for innovation and growth. Our public sector's economic agencies leverage open innovation to strengthen Singapore's key industry clusters and grow new ones. We do this by exercising flexibility in our approach when it comes to IP ownership, use and access rights. We also consider the nature of the collaboration and the needs of our industry partners, which include multinational corporations, large local enterprises, small and medium-sized enterprises (SMEs) and start-ups.

For example, through the A*Star Aerospace Research Consortium, leading players in aerospace and aviation, local companies and A*Star research institutes collaborate in pre-competitive research with ready access to the IP arising from the consortium projects. This enables the industry to develop R&D expertise and contributes to Singapore's competitive edge over other aviation hubs in the region.

In drug development, licensing helps companies grow and gets drugs to the market. Local biotech company Aslan Pharmaceuticals exclusively licensed an immuno-oncology antibody from A*Star's p53 Laboratory and will develop it further to advance treatment of cancer types prevalent in Asia. This will help the company fast-track the process of moving the drug from clinical development to market.

Smart use of IP can also be a key business advantage for SMEs, allowing them to adopt emerging technologies to gain a competitive edge. The government supports local SMEs in this endeavour. Initiatives such as the annual IP Week and Global Forum on IP run by the Intellectual Property Office of Singapore are valuable platforms to raise awareness of how IP drives innovation.

Visit the Timbre+ food hall at one-north and you will be using the radio frequency identification (RFID) tray-return system, a result of work by Tunity Technologies, an RFID solutions company, and its collaboration with the Singapore Institute of Manufacturing Technology (SIMTech). The system has helped to reduce manpower costs and spurred the majority of diners to return their trays.

More than 70 per cent of the more than 1,000 technology licences signed with A*Star between 2011 and last year have gone to SMEs and start-ups. These efforts were amplified through platforms such as A*Star's GET-Up, Technology Adoption Programme and Headstart.

The Headstart licensing programme grants SME collaborators an exclusive, royalty-free licence for the first 18 months to start with. This provides access to practical and affordable technology and first-mover advantage, encouraging companies to participate in further R&D to create their own products and solutions.

Worldwide, the licensing of technologies is increasingly becoming the norm. The Association of University Technology Managers Annual Licensing Survey estimates that 6,900 licence agreements were closed by universities, research institutions, and hospitals in 2014, up from 4,900 in 2005. Closer to home, A*Star's licensing numbers to companies grew from 40 in 2006 to 1,250 last year.

As a small country with scarce natural resources, Singapore's economic survival will increasingly depend on how well we are able to leverage our talent and intellectual assets. IP is a critical link in the innovation value chain. Just as critical is the need to steward what we have created with public funds to achieve greater economic outcomes and societal benefits for Singapore.

•Lim Chuan Poh is chairman of A*Star; and Suresh Sachi is deputy managing director and general counsel at A*Star.

This article is also available in The Straits Times on November 12, 2016, with the headline 'IP: From sword-and-shield approach to tool for cooperation'.