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Wind of Change Blows to the IP Practice

Issued: January 31 2018

"Innovate or die” has been the mantra of the year, ringing in the halls of innovation summits and conferences and avalanching on all industries alike. But how is IP, one of the legal practices closest to innovation itself, navigating these new waves? What are the trends and demand drivers, and what can we learn from those who are embracing new ways of doing things, whether it’s a revamp in process or use of cutting-edge technology or even a shift in organizational structure and business model? Asia IP spoke with some innovation champions from law firms and legal tech companies for a glimpse of what innovation looks like in IP.



The Trends

First to Take the Hit


“One of the first areas to be impacted is the area which is manpower intensive and repetitive, which is that of searches and investigations. Search technologies, coupled with application programming interface (APIs) to access databases, machine translation servers and artificial intelligence mean that machines can search more databases, in different languages, faster and wider than humans can,” says Bryan Tan, a partner at Pinsent Masons MPillay in Singapore and a member of the Singapore Academy of Law Legal Innovation Working Group. “Another area which should see developments is the use of bots to search out infringing material online. Again, coupled with different technologies, these can now seek material which has been altered at a speed faster than what humans can do,” he says.


Although many would agree Asia is slower in adopting legal tech than the US and Europe, Tan believes there is even greater potential for innovation to alter the face of IP and the legal practice, as the heterogeneous nature of Asian cultures, languages and legal systems provides fertile field for technology as a solution.


Integration for Efficient Internal to External Delivery


“The IP space is particularly prone [to technology solutions], because IP is not just the space where the lawyers hang out. It’s certainly in disputes where you get the lawyers involved these days, but mostly everything else can be done by a trademark or patent agent who most certainly will be using a technology solution,” says Paul Haswell, a partner and technology law expert at Pinsent Masons in Hong Kong.


The entrance of more, and at times, non-lawyer, players will make basic legal services more commoditized, increase competition and drive down prices. Further, seamless flow of information enables more transparent price comparisons across providers, leading to law firms publishing rates and work flows transparently. This comes in the form of cost estimation tools, well-defined charging mechanisms and online project tracking platforms where law firms allow their clients to monitor progress instantly.


The need for transparency is a close relative to the demand for integration: integration of solutions for seamless delivery, solutions of which are not necessarily new inventions in the IP space. Services that used to be separated and executed on different systems, such as IP docketing, trademark and patent searches, IP monitoring, project and task management, billing and payments to client portal and client communications (think everything from emails to instant messaging and video conferencing), will be increasingly merged on a same platform.


“[In-house legal teams] want to maintain ownership of their own IP filing data and to have real-time access to their IP portfolio. These trends are driving demand among corporate counsel for tools that offer instant collaboration between inhouse and outside counsel regarding the company’s IP portfolio and prospective filings,” observes Nehal Madhani, CEO of legal tech startup Alt Legal in New York.


 

 

 

 

 

As Hui Wang, head of IP at Chofn in Beijing, points out, this integration will extend beyond merging of various clientfacing offerings to merging of internal and external processes. The dashboards available for clients to monitor tasks could be an extension of a law firm’s own comprehensive practice management system, complete with communications tracking, document drafting and template libraries, key performance index (KPI) metrics, and visualization tools that facilitate real-time internal management reporting.


On the other hand, a corporate client’s internal IP management system can be linked to that of the external legal counsel to achieve more streamlined and holistic portfolio management. For example, cycle time for tasks can be more accurately measured and forecasted, tracking time and spend through processes from idea to disclosure, disclosure to firm assignment, assignment to first draft, and draft to patent application. Outcome evaluation such as stakeholder satisfaction and alignment with engineering innovation investment (e.g. number of applications per R&D spend) can be performed, taking the whole IP value chain into consideration.


Eventually, all case-relevant information would be accessible on one cloud-based platform, with internal, external and account specific views customizable by changing access rights instead of broken down into different systems and tools.



Demand for Monetization and Cost Reduction


“There’s been a fundamental change in what clients demand,” Wang tells Asia IP. “For example, in China, clients used to just file patents for tax rebates and tax deductions, or as advertisement for the company, without having a real need for utilization or protection of the patent.” But with the rise of domesticallydeveloped technologies, market liberalization and explosion of capital searching for the next Tencent and Alibaba in the market, there is now a real need for the services after the mere filing of an IP: protection, utilization, litigation, and even predictive intelligence to inform the next IP decision.


While this may generally be the case for China and other lessdeveloped Asian markets, jurisdictions that are more mature in the utilization of IP rights are also looking for better ways to monetize their IP, leading to “novel, cross-regional and nontraditional solutions” Wang says.


One of these innovative solutions manifests itself in the use of AI and machine learning techniques to analyze open data, starting with public patent databases. Mining patent filings can answer critical questions like: who’s filing for what technology in my industry? What are the new technologies and products that may come up and what are the strategic implications? Patent holders, inventors, investors and licensees can make use of this market intelligence to inform their business decisions from future product design and IP management strategies to potential merger and acquisitions, R&D input, and identification of new markets and business partners.


Karen Taylor, IP technology company Anaqua’s general manager of Asia Pacific, points out that machine learningassisted business intelligence also helps companies monetize on their existing IP portfolio better by correlating IP identification with market forecast across other industries and disciplines. Taylor offers a recent example where a technology company in possession of facial recognition technology that had not imagined a use case in cosmetics now discovers facial recognition can be used in augmented reality applications for customers to try out virtual makeup.


This kind of intelligence afforded by searchable patent database and supplemented by forecasting will be especially important as technology brings together industries and reinvent uses, creating new opportunities for IP licensing/ cross-licensing, IP rights pooling, sales and other utilization models. “Companies can really understand the assets they’ve already got in a more granular view, identify operators in similar space who may be interested in licensing, and then explore a deal,” she says.


In fact, analytics merging a corporation’s internal data with market information is gaining steam as more IP offices extend their API capabilities. “The Intellectual Property Office of New Zealand not only makes its data available through an API, but it also allows for IP practitioners to complete nearly any action through its APIs,” says Madhani. “For example, an attorney could use a software programme to respond to a routine office action through an automated workflow without ever visiting the New Zealand IP office website. With the use of third-party technology platforms, software tools could docket an office action, determine its filing deadline, and create and file a response with just a few clicks. This would eliminate some of the administrative and repetitive tasks associated with IP prosecution,” he says.


Both Taylor and Wang are noticing more demand in licensing and transfer from not only traditionally-active industries like telecommunications, semiconductors and pharmaceuticals, but also industries like cosmetics, watchmaking and food and beverages, whose business models are heavily impacted by new technologies.


“What’s interesting is many new spaces are being created through this convergence. What do we mean by industries anymore? It’s all being more horizontal, which also means IP will become more complex to manage and monetize,” says Taylor.


Another space where changing demand, both from clients and lawyers, is leading to IP innovation is the need to lower uncertainty and more effectively manage cost before it is even incurred. Several technology players and law firms have been using AI to facilitate the prediction of dispute outcomes, building statistical databases and machine learning algorithms that analyze factors such as a judge’s track record, a lawyer’s success rate, outcomes in relevant cases and tendency of a party to settle to help clients decide whether litigation is worth pursuing. Machine learning can also codify legal concepts in publicly available court documents to predict potential areas of legal dispute to better prepare contract teams.


For example, legal tech company Lex Machina has generated its own statistical database for IP litigation, allowing subscribers to search for statistics that help them determine the costs and benefits of pressing for litigation in the US, and quickly identify legal concepts from relevant cases to inform their litigation strategy.



Law Firms That Are Doing Interesting Things (and What You Can Learn From)

Chofn


Effectively at the junction of IP practice and legal tech, Beijing-based Chofn has three technology platforms supported by a team of 800 IP lawyers and specialists and an in-house engineering team of 400. The first IP services company to go public on the National Equities Exchange and Quotations in China, Chofn’s leadership in Chinese IP technology was recently hailed by the Science and Technology Department of Sichuan Province as a key demonstration project for its innovation value in the professional services industry.


Chofn’s online trademark tool, Chao Fan Wang (超凡网), enables rapid trademark registration using a searchable database, generating analytics-assisted reports on application success to enable quick decision-making. Wan Xiang Yun (万象云), Chofn’s search engine and analytics platform for patent information, accesses patent data and APIs from over 105 jurisdictions and allows users to customize their search from industry to specific players and technologies and classes. Chofn also runs an IP trading hub called Yi Zhi Chan (一只蝉), which functions as an open platform for IP holders to promote their inventions and trade with one another, hosting 12 categories of IP rights from electronics and software to beauty and personal care.


Acknowledging that their offerings are still relatively new and have yet to be widely adopted in the market, Wang also highlights the perks of being a pioneer of such model in China. “We are very flexible in our offering and we constantly upgrade and even customize our databases for different clients. Our tools are open to clients of our legal services as well as external users on a subscription basis, and having so many technicians in-house mean we can constantly cater to different clients’ needs,” says Wang.


While continuing to refine and promote its IP solutions is one of Chofn’s growth goals, the firm has a greater ambition in mind. “We want to bring in inventors and investors onto our platforms, because one of the ultimate goals of our firm is help make technology transfer easier and more transparent, thus creating a real ecosystem in the form of a trading and discovery platform for industries,” Wang envisions.


Currently, a major challenge in efficient tech transfer is finding the right match due to a rather opaque IP market. Chofn’s trading platform aims to not only provide visibility for IP owners and seekers, but rather one-stop shop services including due diligence, negotiation and value-added services like detailed patent analysis of selected industries to help investors stay on top of the technology trends in their interest areas. As for the inventors, Chofn also engages with them on front of its patent platform, working with clients to constantly updates its search and analysis tools to help companies optimize their R & D strategies.


But the lofty aim is not without its challenges. Wang observes major problems with buy-in from corporations, and the fact that in-house legal teams in China have yet to play an active and recognized role in corporate strategy is not helping. In-house teams are often seen more as cost centres than strategic units, a mentality Chofn hopes its inventor-friendly tools can one day help change.


The mentality of the legal industry is also due for an overhaul, according to Wang. “Right now, the legal industry, we’re a closed group, we’re happy working with each other in our old ways but that’s not right. For our industry to thrive in the future we need to be more open more collaborative and we need to provide real value to the economy,” he says.



Pinsent Masons


Awarded various innovation awards by Legal Week, The Lawyer and the Financial Times, Pinsent Masons is another law firm taking on legal tech by being one itself. The full-service law firm has developed many cloud-based legal solutions for both internal use and for its clients, from practice management and delivery tool Smart Delivery to compliance platform Cerico, many of which have roots in and impact its IP practice.


Smart Delivery is a proprietary tool that assists with service delivery between clients and lawyers from work scoping, pricing and managing workflow to instant messaging and providing management information. The compliance platform Cerico helps automate compliance processes by creating a tailored and one-stop dashboard view of clients’ compliance programme that encompasses employees, suppliers and service providers.


Pinsent Masons also have an IP dispute tool under the works, something Haswell is both excited about but reluctant to discuss in depth before its official launch. The tool will make use of AI to mine information from dispute cases and court rulings to help the legal team better apply legal concepts and predict outcome, an arduous task that “just a few years ago would need an army of junior lawyers trawling through lots of information for weeks on end.” While Haswell keeps the veils on the impending dispute tool, he reveals the innovation culture that helped the company nurture its new products.


“[Our innovation] really came from individual groups of lawyers coming up with innovative solutions, realizing how effective they were, then forming innovation group within the firm. We have various innovation champions around the firm who try to look at new ways to do things. We’ve set up a system whereby if you come up with an idea, you can get sponsorship within the firm for that idea so we will give people the time and the resources and the technology – literally just time away from their day jobs to take it forward,” he says.


“I think all law firms are realizing that they’ve got to be innovative, but we are one of the first to really put it into action and make it part of what we do and make it part of our DNA. I’ve been with the firm for 10 years and it’s been going on before that. It was one of the reasons I joined.”


As the firm explores the legal tech space, it doesn’t necessarily see technology companies as their competitors. Instead, Pinsent Masons has been working with legal tech companies like Dragon Law in Hong Kong to provide cross legal and technology trainings as well as referring clients that fall under each other’s area of expertise. “I think expecting a law firm to be the sole purveyor of all legal services is a bit of an outdated concept,” says Haswell.


“I think what you’ll find is the lawyers become more of specialists – certainly in this part of the world there is a lot of ‘generalism’ going on and people don’t specialize as much as they do in other jurisdictions – but in the future you’ll find lawyers become more specialist and more expert, and you’ll be able to have some of the small law firms or even non-legal players provide very simple, one-size-fits-all and entry-level solutions while clients use lawyers for the more complicated things.”



Baker McKenzie


2017 marks the 10th anniversary of Baker McKenzie’s Global Intellectual Property Support Centre (GIPSC) in Manila, a dedicated offshore IP service unit that supports the firm’s global trademark registration and portfolio management operations. A pioneering initiative among law firms to utilize technology, process streamlining and offshoring strategy to drive down costs, GIPSC now handles close to 200,000 trademarks and designs for 11 global brand owners, and runs on a suite of in-house, bespoke software like automatic translation apps.


The firm’s belief in improving efficiency through process optimization and technology is now driving improvements to its know-how system, Harmony, through application of the Lean Six Sigma methodology to redesign processes. In 2017, the firm conducted business process reviews for its IP practice to streamline China trademark portfolio management. Several members in the IP practice group are also enrolled in the firm’s Lean Six Sigma Programme to become champions of change within and beyond the IP practice.


The firm has also been deploying different third-party technologies customized to various extent on a global scale. Relativity provides the firm with a global eDiscovery and investigations platform, supported by Nuix, which extracts facilitates data collection, processing and early analysis before data is loaded onto Relativity. eBrevia was selected for firm-wide rollout in June 2017, leveraging the power of machine learning for faster and more comprehensive contract review on M&A work. To help lawyers and clients make better sense of the everincreasing information, Tableau has also been used to deliver visualization and analytics in various tasks.


But just as Pinsent Masons, Baker McKenzie is convinced that being innovative is about culture, and strives to create an environment for that culture to grow. In early 2017, the firm launched its Innovation Committee to spearhead a firm-wide approach in all aspects of its global operations. The committee oversees teams that focus on areas from Business & Delivery Models to New Technology and Client Management with the aim to bring in expertise and perspectives from across different practice areas.


“Above everything else, it means listening to our clients and understanding the challenges they are facing, wherever they are in the world, so we can adapt our services and business model to anticipate their needs and provide them with solutions to help them stand out in their industries not only for today, but also for the future,” Andy Leck, managing principal and head of the intellectual property practice group of Baker McKenzie Wong & Leow, and member of Baker McKenzie’s Innovation Committee, tells Asia IP.



What the Future Holds: Innovation in Business Model


The perceptive reader must already know innovation hardly only manifests itself in technology, and any innovation in or impacting the IP practice would most likely diffuse into the entire legal industry. Ultimately, changes brought on by technological solutions will catalyze changes in the business model of legal services itself.


“I think the days of billable hours are numbered,” says Haswell. “There’s been a very old-fashioned model where you have the in-house department, they try to do something and they realize they don’t have the resources or expertise. So, they send it to the lawyers, and when they’re done the lawyers send it back, and that’s it. I think that’ll change; it’ll be more of a partnership. We’re seeing that with some of our clients that we entered into long-term arrangements with where we found alternative, more cost-effective models to work together, and they appreciate that approach. I think the old ‘let’s just be their lawyer’ approach is dead and buried now,” he says.


“[Clients] will tell you ‘we have this problem, what can you do to solve it?’ It basically requires expertise on all sides, from legal to business,” observes Wang of the changing client demands in a similar train of thought.


But wouldn’t the takeover of basic legal tasks by non-lawyers mean a more commoditized relationship between lawyers and their clients?


Haswell sees great opportunity amid this potential challenge. “It’ll actually be a much closer and transparent relationship model,” he says. “In the old partnership model, you’d have one or two partners with a handful of clients who they jealously guard and nobody else gets to see. Now clients expect to see a wide team, they expect to see all of the lawyers they work with and they expect to call them up whatever time of the day without having to think, ‘oh, well now the clock starts running, am I being charged’.”


Instead, more cost-effective and transparent pricing will encourage law firms to compete on value-added services by acting as their clients’ business partners, offering flexible and customized services beyond the more manual tasks that are easily executed by machines. This could mean building specialized document drafting tools for key client accounts, entering into long-term legal services agreements and even business partnerships instead of the traditional and rigid way of delivery IP support.


User experience and customer journey, terms lawyers may think are only thrown around a start-up or app developer’s office, will become buzzwords of the innovative law firm. Dashboard and data visualization tools will leap beyond their current management uses to become the norm for most legal deliverables, which clients will expect to be accessible from a range of media – desktops, tablets and mobiles – on the go.


“The lawyer of the future will provide machine learning-enabled judgement,” says Leck. “Legal advice will no longer be confined to lengthy documents, spreadsheets and slide decks. We are already focused on enhancing our clients’ user experience with interactive work products that are quick and easy to absorb when necessary but which also provide the ability to drill down into the advice, model different scenarios to improve decision-making.”


In fact, some go as far as to see the business and organizational structural of the future law firm to be radically different. “You’ll find the law firm of the future – or it’s even called a law firm – to not only have lawyers as partners. You’ll have data scientists, computer scientists, technology specialists, you’ll have people from other disciplines and ever more areas – civil engineers, infrastructure sector experts, finance experts. It will become a very different business,” Haswell says, with undeniable excitement in his voice.

 

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