The Risk of Short-Termism - An expert view by Ray Millien, Chief IP Officer at Volvo Car Group and CEO at Volvo Cars Ventures.
This is the third blog, resulting from a series of interviews with senior IP experts discussing the question: "What do executives need to know about intellectual property to make better business decisions?".
Recently I had the pleasure of meeting Ray Millien for an interview for our research project. Millien is a highly regarded IP business leader with very broad experience. He has been the Head of IP at GE Oil and Gas, Head of Software IP at GE Healthcare, and Head of Patents at American Express before joining the Volvo Car Group. Millien has also served as the General Counsel of merchant bank Ocean Tomo, LLC, practiced law in the Washington, DC offices of DLA Piper US LLP and Sterne, Kessler, Goldstein & Fox PLLC and founded the boutique IP Law firm PCT Law Group, PLLC. “During my career I have seen every angle of the profession.”
Buffet and Dimon argue, on behalf of nearly 200 chief executive officers from major US companies, that “Quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability.” Whereas “The nation’s greatest achievements have always derived from long-term investments. In both national policy and business, effective long-term strategy drives economic growth and job creation.”
Throughout his career Millien found that management and executives, when striking a deal or negotiating a term sheet, do not think about the long term consequences of IP arrangements. “There is always this kindergarten-sense of fairness when it comes to understanding IP within the business …. we should own all the IP jointly.” But merely including a clause that confirms joint IP ownership is “like dissolving a marriage with young children, but where the kids never grow up.”
This kind of thinking, according to Millien, is due to Short-Termism - business executives want to close deals quickly before a quarter ends to show end results. Whereas, IP management per definition requires a long term vision.
“Joint ownership seems fair in the short term, but that is not always the case in the long term.”
“Either IP should not be jointly owned, or you should at least have at least another six pages in the contract discussing what is jointly owned and how you shall deal with joint ownership. If you fail to do so, you will have to depend upon the applicable laws of the multiple jurisdictions where the IP rights are vested, and in each jurisdiction such laws differ per type of IP.” That is per definition not a desirable situation.
How does Millien solve this? “By educating people. Being the Chief IP Officer is an educational job. Maybe even think of it as inter-company sales: it is all about marketing and education.”
“A lot has been written about IP strategy, we’ve all read the books ‘Rembrandts in the Attic’ and ‘Edison in the Boardroom’. Yet, it unfortunately takes at least one big fuck up in some companies before IP is really taken seriously. It seems that for over 20 years, we in the IP industry have been fighting the same battle.”
My biggest frustration is getting true value out of partnerships. The IP function has to be the guardian of the corporate assets in the long term if everyone is thinking quarter to quarter.”
The need for continuous education has also been identified by IP strategy consultant Graham Bell, whom I previously interviewed for our project (see here). The struggle between short term business interests and their long term implications for IP and thus for the corporate assets of the organisation has also been identified by Gwen ten Berge, Director of IP Litigation at VMI Group (see here).
About the author: Charlotte Wittkampf has extensive in-house IP management expertise with responsibility for managing global portfolios, including both soft and industrial IP as well as related commercial contracting, legal advice and training for different departments of a business and the board with a strong focus on connecting IP with the business.