Bookmark and Share

Illuminations of IP Week@SG 2017

Issued: September 29 2017

Tan Shau En (Centre), Assistant Chief Executive (Commercialization), Intellectual Property Office of Singapore, Singapore

Asia IP: What are Singapore’s unique competitive advantages to compete with other up-and-coming IP hubs in Asia?

Tan Shau En: Singapore is well-known for having a stable political system, a vibrant and adaptable economy, a trusted legal and financial system, a talented and educated workforce as well as its very reputable IP office.

We are also grateful that most enterprises view Singapore very favourably in terms of our national credibility and in terms of us delivering on our promises. In the IP Hub Master Plan, we have highlighted the importance of developing the IP ecosystem, building expertise, reviewing our IP laws and regimes to keep pace with economic and societal needs. We have introduced several new hub initiatives to drive IP commercialization from and through Singapore – we are pushing forward with continuous improvements to strengthen our ecosystem so that we can build trust and confidence among the business community that we are a progressive IP office.

Having a bold and determined mindset is another differentiating factor. We are open to testing new ideas, exploring uncharted territories, and forging unique partnerships and alliances to position Singapore as an IP Hub. For example, we announced in April our collaboration with Makara Capital for a S$1 billion (US$735 million) private equity fund. We are probably one of the first IP offices in the world to partner with a private equity entity to design an innovation-themed fund. The fund fills a market gap in providing high-growth, IP-rich companies with more financing options as well as the necessary expertise and networks to grow into global companies.

We have also recently signed a memorandum of understanding with Deloitte, one of the big four business advisory firms in Singapore, to help 100 innovative companies compete globally through IP commercialization. While some may find the partnership between an IP office and an audit firm uncommon, it is really about synergizing the technical and financial IP expertise and networks of both partners to help innovative companies take their ideas to the market from Singapore, through Singapore.

AIP: Besides the IP Week, how does Singapore maintain connections with global and local economies through IP?

Tan: Innovation flows are increasingly becoming open and global, and more and more economies around the world are capitalizing on intangible assets and IP to spur economic growth. Singapore can be one of the nodes along the global innovation supply chain, where ideas are transformed to assets through IP commercialization and flow out to key markets. Then, governments, MNCs, businesses, and innovators will find Singapore an attractive and relevant destination to set up a base to create and capture value.

To achieve this, we actively listen to the market and respond nimbly to the needs of our stakeholders and partners. This way, they will feel that Singapore is an important and valuable connection to their businesses.

Besides building a world-class IP regime, we are actively developing our connectivity so that businesses can use their IPs and innovations to seamlessly connect to major markets overseas. Singapore is the only ASEAN country to be part of both the Global Patent Prosecution Highway (GPPH) and the ASEAN Patent Examination Co-operation (ASPEC). This positions us as a useful gateway for businesses to take their technologies, products, content and services from ASEAN to the world, or vice versa.

We are also focused on building partnerships and networks. Through events such as our annual IP Week@SG megaconference, keynote exchanges, visits, and joint projects, we foster and maintain open lines of communications and collaborations with our counterparts in other governments, IP offices, innovation and IP communities, and industries and businesses.

We are always on a lookout for and warmly welcome likeminded partners who are keen to join us to create value through IP.

AIP: As executive director of IP ValueLab, IPOS’s enterprise engagement arm, you are responsible for helping companies understand and execute the business of IP. What are the typical challenges you face in helping them if they do not realize their assets’ potential? How do you overcome the challenges?

Tan: “How are you relevant to me?” That’s the first question that most companies would ask IP ValueLab. Businesses often only have a very basic understanding of IP at best. They usually associate IP with just patents, trademarks and designs. They do not realize that there are a whole lot more [parts]. Confidential information, trade secrets, know-how, databases etc. are all intangible assets, and IP is just one part of it.

So, we start by explaining what we do, what value we bring to the businesses and how we can enhance their value through their intangible assets. Once we get through that phase, most would open their doors to us. So, I would not see that as a challenge, it is more like an “ah-ha” moment for them, when they realize that they are worth much more than they have thought.

After helping the companies understand IP, the next step is to help them identify their intangible assets and how to make money from them. That is where we come in with our advisory services and toolkits, and most businesses are very receptive to them.

AIP: As technology evolves every day, how does Singapore keep its IP regime relevant for the new economy?

Tan: We are always in touch with the latest ideas and innovations, and that gives us an advantage and a very good pulse of how technology trends and business needs are evolving. We are also constantly up-to-speed on the issues and disputes revolving around technologies and new innovations. Because of our unique advantage, we are sensitive and attuned to the global responses or reactions on IP at the governmental, industry, and community levels.

IPOS is not just an IP office but an innovation agency that understands what business requires from innovation. We want to help businesses and innovators, be it foreign or local, commercialize their intellectual properties, and take their ideas, technology, products and services to the global market. This requires us to adopt an adventurous and open mindset and see IP not just as a legal inventory, but a strategic business asset.

For example, we have extended the grace period provisions for our patent and design regimes so that innovators have more options and time to attract investors. We also lowered IP filing fees to encourage innovators to protect their inventions through IP. We are also currently reviewing our copyright laws so as to facilitate efficient transactions of copyright and meet the needs of the digital economy.

All in all, we have a keen understanding of the changing IP landscape and the ability to view IP from the economic, entrepreneurial, and social perspectives. This knowledge and insight have enabled us to update our IP regime in a timely manner so that it is forward-looking, balanced and addresses the needs of our diverse stakeholders – the innovators, the businesses, and the general community at large.

Abhijit Ghosh, Tax Partner, PwC, Singapore

Asia IP: The concept of using IP as a financial instrument is not new. While it has seen some successes in advanced economies like the US, its adoption is less so in Asia. Why?

Abhijit Ghosh: Companies in Asia have traditionally focused more on hard, tangible assets instead of intangible assets like patents, copyrights, etc. Correspondingly, banks and financial institutions have been more supportive for companies that have hard assets on their balance sheet. But the times are changing. Banks and financial institutions have started evaluating whether businesses own IP and how they are harnessing it. Besides checking on ownership and control of the IP, banks and financial institutions are also looking at how businesses are commercializing their IP rights, whether they have good human and other resources to manage and exploit their IP inventory, what is the overall business plan to access new sources of income, etc. Simply owning multiple intellectual properties without a strategic focus may not be sufficient to attract financial support. In this respect, some progress has already been made in Asia in countries such as Singapore, South Korea, China and India.

In Singapore, IPOS has started helping companies with their next level of commercialization program by partnering with Makara Capital. The idea is to ensure that potential companies have access to relevant sources of funding.

Therefore, it is very important to note that the focus of the capital providers is not only on the number or nature of IP owned by the businesses but more on the whole business concept and the ability to exploit the IP portfolio to enhance shareholders value.

AIP: Are IP-holding companies usually unaware of the potential of their rights?

Ghosh: Many of the SME IP holding companies are led by research scientists and they may not have the knowledge to market, commercialize or partner with another business to develop or exploit their IP inventory. It is therefore important that soon after the IP development phase is over, commercial partners or professionals are hired to take the organization forward to make it commercially viable. From that stage onwards, businesses must be driven by a forwardlooking commercial vision which should be executable in the marketplace.

AIP: What can IP offices do to further promote the use of IP?

Ghosh: Government-led IP offices around the world play an important role in development of the IP ecosystem for their respective countries. One focus area is in educating businesses and relevant professionals on the different types of IP, the relevant business drivers, and how they can extract value out of the IP.

They can also play the role of a facilitator. For example, IP offices can help to introduce an IP-owning company to another company which has access to relevant markets. Such collaborations could be a win-win situation for both the companies and help the country as a whole expand its export footprint globally.

Further, IP offices can also guide the companies to a pathway for accessing capital. Many banks and financial institutions may not be used to nor have sufficient knowledge to evaluate an IP-driven company. That’s where IP offices need to step in to collaborate with banks and financial institutions or private equity houses and encourage them to support IP-driven companies.

AIP: Fifty-three percent of banks and asset managers say there is an institutional desire to own the IP when working with FinTech firms, which stands in the way of better partnering, according to research from law firm Simmons & Simmons. Do you agree with that?

Ghosh: Generally, yes, because banks could then control the IP if they buy it out. However, that may not always be the right approach. Particularly if they are in a business where they want to access the state-of-the-art technology (for example, in areas such as RegTech), they will likely need to go for a licensing or a partnership deal, because they cannot continue to invest in those technologies all by themselves. They must allow other external specialists to collaborate with each other for continuous development of the IP so that they can have access to better technology, expertise, etc., through a licensing arrangement without being burdened with the cost and risks of developing or upgrading the IP.

AIP: When should people acquire or license IP?

Ghosh: When a company has an opportunity to develop a new product or service or an in-house solution, it may consider buying an intellectual property, as it will form the core of its business activities or offerings.

However, if a company is in the business of manufacturing and distributing technology-driven products, which must be cutting edge and continuously evolving, then instead of spending huge amounts of effort and funds in buying IP, the company may consider licensing it in. This will help access the latest and more developed technology and know-how on a continuous basis.

AIP: Does having many subsidiaries also allow parent companies to let loose its wild imagination?

Ghosh: Yes, because when you set up a subsidiary that is nimble with a certain degree of autonomy, it can act faster outside the normal rules or compliance obligations of the parent company. It therefore does help to use subsidiaries to develop and/or test bed new IP. But my advice would be to work with a competent independent third party, who is at the top of his or her league. Through such partnerships, businesses can access the right to use the IP through a licensing arrangement and can even manage the licensing structure to their advantage.

AIP: If I license for too long, would I be better off buying it?

Ghosh: If the IP is crucial to your business, you may want an exclusive license for long-term periods or in perpetuity. This will provide the business access to new generation technology, know-how, etc., over a longer period of time and yet get some discount as it is a long-term contract.

However, one must be careful about the licensor’s ability to continue providing such a license. If there is any indication that the licensor will be out of business, the licensee may be better off in buying the IP out because they do not want their business to be disrupted.

AIP: With all the financing instruments such as bank loan, grant, business angel, venture capital, corporate venturing, crowd funding and tax incentive available, do companies tend to capitalize on most or even all of them? Is it the more the better?

Ghosh: Each financial instrument is tailored for different needs, so it is vital for companies to consult with IP consultants or lawyers in order to identify which options are most relevant to them. Once identification is done with the understanding of business objectives, then they should start the negotiation process to access funding or tax incentive support.

Lorenz Kaiser, Division Director, Fraunhofer-Gesellschaft, Munich

AIP: What are the key factors that come into play when designing commercialization strategies?

Lorenz Kaiser: An overall strategy doesn’t exist, we must dissect each individual case. A strategy must be determined by experts who have assessed the value, financial situation, knowledge and application of the technology as well as market and competition that you’ll be serving.

In many cases, you won’t meet a market in a shape you expect so you must include in your strategy a flexible approach that opens alternative options. Additionally, you must be aware that products often take longer and cost more than expected to develop.

Many projects are incomplete and end in a promising situation as they lack budget for pursuing concrete commercialization activities. This is something that agencies often miss when they fund a project. They support research institutes or companies to bring the product to the stage of commercialization but then they stop supporting. But also in this situation the beneficiaries need support after they developed, especially the spinoffs.

AIP: So how would you encourage agencies to keep supporting innovative projects even after they are developed?

Kaiser: There are different approaches to that but I would recommend strongly on one precondition, namely the beneficiary taking care of a licensing or an application partner early.

AIP: What types of information sources do you consult to help making strategic decisions regarding commercialization?

Kaiser: Market and product analyses are two of the most important things. Reverse engineering also plays a big role in that, because many companies analyze the products of their competitors and copy them more or less – that’s not a strategy, though!

Nevertheless, you will still have to face changes of the markets and needs for your product, even if you have done all the research and analysis before starting your, so nothing is guaranteed but risks will be greatly mitigated if preparation is done.

If the market for the product doesn’t exist – such as smartphones before the iPhone – you would then need to seek help from marketing research companies to find out whether there is a potential market. But be careful, this is often for a show on paper only, as innovative products are very individualized and special.

As early as possible, you should assess the fields of application of the product, because in the lab, there is only experimenting and not many people there can assess what the product is good for in real markets.

For example, we developed a wonderful robotic technology in the 1990s. It was originally a construction robot for the automotive industry. We developed from this technology, for example, a cleaning machine for skyscrapers which did not sell very well. You never know which application will be the most successful and, 20-plus years later, it turns out that the most interesting applications in the current and future markets are in the healthcare sector and as a information and guiding robot for shops. This is typical for research work, where you don’t know what your final product will be for in the beginning and in the end. Therefore, save the chance for as many fields of applications as possible and observe and analyze the market needs currently.

Fraunhofer-Gesellschaft’s development of MP3 technology is another example. In the beginning, the researchers only had the idea of data compression. They did not imagine a chance to develop it into the revolutionary technology it became later. In the development of the markets, when the need for music transmission and a quality standard was required, the success story began. Finally, when it became a standard, the technology finally entered the economic mainstream.

AIP: What are some common issues that arise when negotiating or transferring IP?

Kaiser: the most underestimated point is that IP alone is no guarantee for success. The patent is only a form of right to defend the knowledge. You must have the knowledge, people and technology to work with. Otherwise, it is absolutely useless if you have a license right that you can’t apply. And often in those technologies we have today, they are so complex and challenging that you will need more than one or even several specialists to take care of engineering, software development, electronics, etc.

AIP: Do lawyers and business people often have miscommunication during commercialization?

Kaiser: You must have a team nowadays – you cannot do it alone. Lawyers, scientists, engineers, etc., can’t be separated, so you must build a competent team and you must start to understand each other, because economic perspectives and financial issues are completely different from the technical needs. But you need both! You need technology that is able to solve problems or produce something special and economic experts preparing paths for that, so projects won’t be out of financial possibilities.

AIP: With multiple internal teams formed, how to break the “language barrier” and make business people listen to your advice?

Kaiser: When institutes at Fraunhofer have the idea to approach a special market or to create a product, they would look for a commercialization partner and when this partner is in place, be it an electronic or a car company, they will contact them with a technical perspective and lawyers come in at the end. Misunderstanding is therefore avoidable if you start everything early enough.

For example, there is a wireless mobile phone charging technology available. While this is a perfect technology for many, e.g. the furniture market, the automotive market is very interested. But it took a long time, until one industry branch made the first step. It was the automotive industry which liked the concept and installed a charging function in their cars. This isn’t an impressive but a typical example – sometimes it’s just hard or almost impossible to make business people listen to our advice whenever the costs are perceived high.

Another example is the organic LEDs. Everybody knows that the future of lighting isn’t lamps like today but a surface that can be installed on ceilings. Besides illumination, it can become a screen of sky, clouds or even moving pictures and films. This market is unbelievably large. But if you ask lamp manufacturers, there is no real reaction yet. The production costs are too high in the moment and that means the products would not be marketable.

And yet, last year I think, Samsung decided to produce screens with OLEDs only. The screens for their TV sets are already very expensive but they are investing directly in this future technology. The market analyses assess this is a mass product as the technology is developed. Let us see who will win the competition in this field.