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LES (USA & Canada): fostering economic efficiency through licensing

Sunday, October 05, 2014  
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Brian O'Shaughnessy of LES (USA & Canada) highlights the increasing importance of intellectual property transfer to markets around the world

Originally published in IPPro The Annual 2014/15

The innovation economy has never been so vibrant and essential, and at the same time, at such risk. Intellectual property rights are the foundation of new markets, and the cornerstone of commerce. In the absence of sound, predictable, and enforceable IP rights, new business ventures cannot gain a foothold, and society is deprived of the fruits of their intellectual achievements. Yet IP rights are under attack, and vested interests are eager to deny innovators this valuable property right.

The Licensing Executives Society (USA and Canada) (LES) is devoted to the development and growth of new markets spurred by a vibrant innovation economy and the orderly exchange of IP rights. Diminishment of those property rights threatens economic development, and is contrary to the public interest. LES is working with legislators and the licensing community as a whole to promote sound IP policy in furtherance of the public good.

Of the congressional power to confer copyright and patents granted by the US Constitution, James Madison, famously said: "The utility of this power will scarcely be questioned. The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to inventors. The public good fully coincides in both cases with the claims of individuals." The acknowledgement that IP rights inure to the benefit of both the individual and society in equal measure is critical to this debate.

Without this property right, investors deploy resources elsewhere, inventors are mere hobbyists, and vast intellectual resources are wasted. It is far better to reward the commercial employment of the inventive mind. How else to cultivate in our youth the same awe and reverence for the inventor as for the professional athlete?

The exclusive right conferred by a patent is, in effect, a public resource. Regrettably, public resources are occasionally diverted for purely personal gain. A certain few notoriously use patents in bad faith to demand payment where none is due. This is a breach of the social contract that trades disclosure for that exclusive right. The illicit acts of a few, however, should not frustrate the legitimate interests of the rest.

LES is committed to promoting the progress of the useful arts, and dedicated to doing so consistent with the public good. LES has a unique voice. It is the largest member society of Licensing Executives Society International (LESI), the only global professional society dedicated exclusively to taking technology to market by sharing IP rights through licensing.

A Unique voice in industry

LES uses its unique voice in support of prudent IP policies. Earlier in 2014, LES convened a focus group of leaders of the innovation economy to discuss standards of sound licensing. Led by LES trustees Bill Elkington, senior director of IP management at Rockwell Collins, and Bob Held, vice president of intellectual asset management at TeleCommunication Systems, the LES standards focus group convened in July to debate whether such a standard setting initiative could be carried out, how it might be done, and what the end product might look like. The debate focused on whether the initiative could deliver well defined standards of IP management applicable throughout the community, from fully-integrated manufacturing concerns to research-oriented enterprises to financiers and brokers. The undertaking reflects LES's belief that the principles of sound and responsible IP management prevail regardless of the business model or the industry sector. We are an equal opportunity professional society.

LES is well positioned to convene the seemingly disparate voices of the diverse licensing community, and to bring those voices to a more harmonious consensus. LES members come from all industry sectors, from high technology and communications to healthcare. LES provides a unique forum for experts of various competencies in the licensing value chain to come together to network, share best practices, and foster more efficient business development.

The LES Standards Initiative is born of the belief that the innovation economy can police itself, and can come to agreement on codes of conduct that respect the competing interests of the marketplace, while honouring traditional notions of ethics and responsible business behavior. We believe there is more to be gained by devising a set of common codes than any one organisation or industry sector will lose by committing to abide by those codes. LES is dedicated to transparency and inclusion in this process. The more voices we have at the table, the better. However, we will not be dissuaded or diverted by private interests in conflict with the public good.

The next scheduled dialogue on the subject of LES standards will convene at the LES 2014 Annual Meeting, 5 to 8 October, in San Francisco. There, on 5 October, at a morning workshop, the LES Standards Focus Group will discuss further the rationale for moving forward with an LES Standards pilot programme, what the work product of the committees might look like, and what sorts of committees the various members might find relevant to their business interests. The LES board of trustees will then consider a proposal for further action, and will decide whether to take the LES standards concept forward.

We encourage all interested parties to attend and participate. As envisioned, the initiative will result in the cooperative development of international standards relevant to IP transactions, IP management, and IP-based products. In doing so, LES acknowledges the essential requirements of openness, balance, consensus and due process.

However, the deliberations of each approved LES standards committee will be conducted under Chatham House Rules, and input and access will be limited to the members of each committee. Each LES standards committee will be open to all, but subject to a membership fee.

Each LES standards committee's recommended consensus standards will ultimately be published for comment. The terms and conditions under which the proposed consensus standards will be presented for comment are yet to be determined. It is envisioned that the LES standards development process, and the standards themselves, will be accredited by a national standards organisation such as the American National Standards Institute.

A unique voice on IP policy

LES has also exercised its voice in public policy over the past year. The recently implemented America Invents Act is the most significant change to the US patent system in 60 years. Its effects are wide-ranging and profound, and largely indeterminate. The wisdom of deferring further reform would seem self-evident. Yet, there is a movement afoot to attack other perceived weaknesses in our patent system. LES believes that the blunt instrument of legislation must be used sparingly, and only where the consensus is that a systemic, rather than merely anecdotal, problem exists. We are convinced that such consensus does not prevail. The LES public policy committee has repeatedly informed Congress of the society's view that legislative reform must be undertaken only upon a full and impartial hearing from diverse interests, and with proper deference to that input. Efforts to push legislation without consensus, and without a full and fair hearing for all concerned, is profoundly undemocratic, and risks systemic damage to the most potent economic engine ever devised.

We further believe that the innovation economy, and the economy as a whole, will best be served by strong, reliable, and enforceable IP laws that protect equally the sole inventor and the multinational manufacturer, and without regard to the business model or core competency of either.

LES will remain active in public policy and legislation. We are monitoring legislation for a federal right of enforcement for trade secret misappropriation. We are generally of the view that such legislation will enhance the protection of IP, and so have a beneficial effect for both individual enterprise and the public good. However, this does not diminish our commitment to due process and a full and fair hearing for the user community.

A valuable voice for members

LES is a nimble and forward thinking professional society that respects the views and interests of its members. We abide by an ethos consistent with our longstanding dedication to educating, mentoring, and networking. Our educational model emphasises open exchange of ideas, and sharing of best practices. We lead our society in much the same way.

In the summer of 2014, at the request of LES president, Russell Levine, president-elect Pamela Demain convened the LES board and various sector and committee leaders for a two-day strategic planning retreat. Topics included the organisational structure of LES, and member benefits, and participants debated modifications that might more effectively meet members' needs. While the initiatives and objectives of the resulting plan remain under development, a report to members will be produced explaining the plan and mapping its implementation.

Ever more competitive markets favour the nimble, efficient enterprise. Licensing promotes economic efficiency through market segmentation and specialisation. As such, licensing, as an industry, will continue to grow in scope, significance, and sophistication.

LES will continue to play a vital role in the evolution of that industry, and is eager to work with the licensing community as a whole and our elected leaders in doing so.

Download the pdf version of the article here.