No company - not even Google or Microsoft- has an unlimited Intellectual Property (IP) budget. It’s an ongoing challenge of fine-tuning strategy and prioritizing tactics, each balanced against a financial reality that there’s never enough money to do everything you want. The opportunity, however, to do more of what you want often rests with your ability to solicit and secure the blessing of senior management.
In this installment of IP Answers, we’re talking with Bruce Elder, in-house counsel for Integrated Device Technology (IDT), one of Silicon Valley’s oldest semiconductor companies. We were very fortunate that he was available to speak at our recent IPforward 2016 conference as it’s rare to find someone whose biography covers so many lines on a company’s org chart. He’s ready to provide tips and recommendations to get attention and budget from the C-suite so you can fund your IP program.
In Part One, Bruce explains how to position IP in the context of overall priorities, speak the language of the boardroom, and demonstrate an understanding of the importance of risk management and insurance.
A candidate for Most Interesting Person in IP
IP attracts individuals who typically combine a mix of academic and professional experiences. Bruce’s background, though, is so diverse that he would certainly contend for any “Most Interesting Person in IP” prize.
With an academic background in aerospace engineering and early work launching and flying satellites in orbit, he can talk shop with engineers. He can chat knowledgeably about market development, product launches and cash flow priorities by virtue of a decade in sales and marketing roles at Sun Microsystems, followed by leadership positions at three VC-funded startups.
He spent the early years of his IP law career at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC and Perkins Coie LLP, then went in-house as IP counsel at Silicon Graphics International Corp and MobileIron. An English Solicitor, a California Attorney, and admitted to the USPTO, his formal IDT title is Legal Director of Intellectual Property and Licensing.
IPfolio: First things first, Bruce, what’s your current role?
Bruce: I’ve been at IDT since December 2014, creating and running global programs in IP, licensing, M&A transactions, and providing counsel related to company product and technology make/buy/license decisions. My role reduces fundamentally to helping the company devise and execute programs that can increase the business value of IDT's technical designs and related IP. It’s something that uses a lot of my background.
While I am admitted to practice as a patent lawyer, I have never actually prosecuted patents for a living, although I have litigated them several times. I have also raised venture capital and started small companies, and been the executive running sales and business development in both large and small companies.
I think what I really bring to the IP table is a very business-centric approach. While my work on our small in-house legal team does, at times, take on elements of a more traditional legal role focused on risk management, compliance or even day-to-day transactions, I spend most of my time working with the management teams here to support technology development and business growth initiatives. It is really fun, too!
It is impossible to be bored when you’re lucky enough – sometimes in a single day – to be involved in such diverse areas as corporate development, overseas M&A transactions, advanced technology strategy planning, and even global tax strategy. Not always what you might expect someone with my title to do.
IPfolio: Your resume clearly differs from most in-house counsel.
I’ve sometimes thought perhaps I do things a bit backwards. When I went to law school, many of my younger new lawyer friends were hoping to evolve their new law practice from junior associate to someday perhaps become a VP of business development.
My last job before law school was VP of business development, which I left to become a junior associate. A result is that my IP perspective starts from the point of view of someone who has run P&Ls, a business, worried about payroll, and tried to figure out how and where to grow sales. It’s generally not starting from the legal ‘IP Guy’ perspective.
The reason I was so happy to speak at IPforward is because this IP-business intersection is critical for every in-house counsel to understand as deeply as they can. They need to understand the priorities and challenges of the CXOs to win them over. It’s vital for counsel to understand this simple imperative - if you want to grow your portfolio, you have to get alignment with your C-suite and you need to get a budget. That’s the bottom line.
IPfolio: How do you do this effectively?
Aligning IP and business strategies is the key, of course. Irrespective of whether they’re actually meeting this goal, everyone at least understands its importance. This said, so much time and effort is spent in the IP field today - especially patenting - on operational aspects. I call this “Doing Things Better.” Not as much time is spent on the strategic alignment, or “Doing Better Things.” Every business needs both to thrive.
There are two critical prerequisites to achieving this alignment; the first is awareness and vocabulary, and second is actionable knowledge. I can’t emphasize enough the importance of vocabulary; the way we as humans put concepts into words frames and structures our thinking to an amazing extent.
Does your way of talking align with the way your CEO thinks? If you speak about patents, for example, in the language of risk management – warding off competitive assertions, leveraging cross-licenses or defending differentiation – then you’ve already framed the discussion in an “insurance” context. Insurance is a necessary item for the C-suite, but always a cost and burden to be minimized and mostly forgotten.
Then, once we master speaking – and conceptualizing – IP more strategically as a valuable business asset, the next critically important tool to achieve alignment is gaining deep knowledge about the business strategy, and about your IP portfolio, especially. If I could add a third point, it’s also critical to understand that nothing is fixed; IP strategy evolves over time as your company does.
IPfolio: Can you elaborate on the last point?
I have been at a 60-person early stage startup, and I have been at an $18 billion public technology company. I helped take a mid-size company public. Today, I work at a 36-year-old, very established mid-cap public company employing 2000. The IP needs of each require radically different initiatives and strategies. The ability to make the transitions and adjust your IP strategy at the right time is a really important and valuable skill for in-house counsel to nurture
Early-stage startups should be all about focus on that one competitive differentiation that will compel an early customer to take a chance – and protecting it with IP so a VC will fund them. Pre-IPO companies are about amassing enough of a portfolio in their core market-disruptive areas so they can survive the leap to profitability, without being crushed by established players trying to halt the new guys taking market share. More established companies with evolving products lines are likely more concerned about keeping in sync with changing product lines, active portfolio pruning, and so forth.
IPfolio: So where do you begin to frame IP in the context of the larger business discussion?
The essential prerequisite is this: gain deep knowledge of your IP portfolio, and the business strategy. Without deep knowledge, you really are left to play the numbers game for strategy, and instead spend your energy primarily focused on the operational aspects of getting the most for your IP dollar.
For example, you might try to patent enough. You can then be ready when a time comes that you must rely on your portfolio for some critical business situation like defending against an aggressive competitor, and by sheer volume may have a couple gems that can survive litigation and read on your likely competitor. That’s expensive and inefficient, obviously, so you’ll certainly need to be constantly budget-conscious.
In this scenario, you’ll be defending the IP budget regularly because this is really an “insurance” model, writ large. You should also be ready to go to the C-suite for a patent acquisition budget if facing key litigation and you didn’t get lucky enough to have the gem you needed organically in the portfolio. I don’t mean to minimize defensive patenting or budget management, obviously these are key fundamentals, but I think IP can be more valuable to the business if it is taken to the next level.
IPfolio: Are there alternatives?
Certainly. You can invest budget and effort now. It is not an easy task to do well with a portfolio of any size or complexity. To really understand your patent portfolio, you have the ability to develop it more strategically. Look at each asset, and map critical metadata to the assets or asset families. I try to anticipate the questions I might need to answer about our patents in support of business goals, such as technology area or concept coverage, competitor reads, standards essential patents, or product instantiations.
For example, can you quickly pull from your portfolio a list of patents that read on a particular high-threat competitor? This obviously implies other questions. Do you know who your high threat competitors are now and likely to be in a few years’ time? Do you know what features drive significant revenue for their products that your patents might read against, and therefore be potentially valuable against them.
In parallel, of course, you need to be gaining a similar understanding of the business strategy. The most fundamental concern of any CEO should be how to create value from the assets of the business. Every successful CXO has an immediate, near-term and longer-term strategy to achieve this, As an effective IP leader in an organization, you’ll need to understand it in some depth.
If you’ve done the homework, then you can start to progress up the IP value pyramid, aligning your IP strategy more to the business strategy, and delivering greater business value as a result.
Thank you Bruce for your time. We will be back with Part Two in a couple of days.