The Missing IP Narrative

It remains my most vexing professional challenge. The "it" is how to integrate IP/IC into management education. The vexation comes from the seeming paradox tha, while intellectual property and intellectual capital are routinely described as cornerstones of innovation, if not modern business itself, their systematic presence in MBA curricula remains sporadic at best. I was reminded of this in connection with two quite different experiences that I had during the week.

In the first, I had occasion to spend some time with the dean of a local business school. Recently appointed, he was taking bold action to modify the schools's MBA program to make it more appropriate for today's student body. In that connection, he wanted to hear more about my class on IP and Management that I teach elsewhere. His question, half  "devil's advocate", half an expression of curricular skepticism, was simply this: "I have space for 20 or so courses in the program. Why should a course such as yours be part of the curriculum?"

The case in favour of inclusion is not simple. In the face of multiple courses in strategy, finance, marketing, and operations, the role of a course focusing on IP is dfficult to explain. The uneven diffusion of IP subject matter throughout an organization, the origin of IP as a branch of legal practice and its intangible character all give IP a bit of orphan status within the school's curriculum.

The Dean pushed me for examples of how the course works in practice. A pregnant pause ensued, finally punctuated by several examples of IP and management that seemed to pique his interest. All the while I stressed that one can look at MBA education as a platform for imparting relevant narratives to the students. Taken from this perspective, the ultimate justification for the course is that it highlights the IP narrative in a manner that is front and centre: "Can you imagine a manager who does not have the ability to apply the IP narrative to his daily businsess?", I asked. I am not sure that I convinced him that the answer is "yes". If I failed, cohort after cohort of young managers will be trained at his school without receiving any systematic tranining in this field. The managerial narrative for these students will simply lack a meaningful consideration of IP.

This absence of a narrative for IP was reinforced in listening to a podcast that featured a well-known venture capitalist describing the foundations of the VC world. The speaker did not disappoint. He described the flow of foundation money from university and similar endowments as the turning point for VCs to attract substantial investment capital. He emphasized the importance of the human dimension in any investment, and observed that any prospective company that puts special emphasis on an exit strategy for the company lacks the necessary patience. He distinguished between great innovative ideas and market potential. There are a lot more of the former than the latter.

These multiple narratives about the VC enterprise were interesting and instructive. Except for one thing: the speaker mentioned IP only in passing. Based on his words, IP was not a central part of the VC narrative. In follow-up correspondence with the speaker, he replied briefly that the company "of course" takes an interest in the company's IP, ie., "FTO and patentability." In his view, IP is largely limited to patents, and the work required is the purview of patent technocrats, far removed from most of the company's managers.


This podcast and email correspondence reinforced the sense of frustation that I had felt in my meeting with the dean, namely that IP is not part of the mainstream MBA narrative for most students. The upshot is that most MBA students will continue to go through their programs with scant or simply no attention being paid to IP. Is there a price to be paid for this? Perhaps. It is frequently observed that innovation has materially declined over the last few years. There are no doubt a number of reasons for this troubling state of affairs. Against that backdrop, one wonders whether the absence of a meaningful narrative regarding IP within the context of most MBA programs is another source of the innovative malaise. This is at least narrative food for thought.

The Crisis in the Drug Industry: Where Do Patents Fit In?

The headline from the article that appeared in the 6 March issue of the New York Times had the clarion ring of crisis: "Drug Firms Face Billions in Losses in '11 as Patents End" here . The immediate problem is the spectre that patent expirations in 2011 will mean that drug companies will lose exclusivity over more than 10 major medicines with combined sales of nearly $50 billion, thus exposing, it is claimed, the reliance of the industry on blockbuster products.

At a more systemic level, the drug industry faces a whole set of daunting challenges, including "a drought of big drug breakthroughs and research discoveries: pressure from insurers and the government to hold down prices; regulatory vigilance and government investigation and thousands of layoffs in research and development." Finding the solution for any one of these factors is difficult enough; finding the right mix of solutions for these various factors taken together, can only be described as herculean in difficulty.

Taking Pfizer as an example, the industry is talking about "reinventing itself", "fixing our innovative core", and "refocusing on niche products rather than blockbusters, including branded generics". All of this, at least in Pfizer's case, is to be carried out while reducing R&D spending by 30%, so that R&D is directed only "on the most potentially profitable prospects".  The U.S. Government, on its part, through the National Institute of Health, dissatisfied with the pace of current drug development, is talking about the establishment of a billion-dollar centre dedicated to drug development -- this, despite the question why NIH will be able to do a better job of drug development than the companies themselves. In any event, the article then goes on the describe various aspects of the factors, described above, that amount to a potential perfect storm that will challenge the long-term prospects for the industry.

In reading this article from the IP perspective, one thought kept running through my mind. On the one hand, the expiry of more and more patents key to protecting blockbuster drugs is apparently a material proximate cause to the woes facing the industry. On the other hand, the article does not explicitly mention any measures regarding the patent function that might improve the industry's position.

At a certain level, this seems a bit odd. If the patent function is so central, why is there no explicit consideration of that function when considering the steps that the industry can take to reestablish itself. Better R&D--yes; better innovation--yes; but as for better patent strategy, the article is largely silent.

Several thoughts occurred to me:

Linguistic Alignment-- The thinking here is that, when the industry uses terms such as "rediscovery" and "renewed innovation", these notions inherently fold into them proper patent practices. Under this view, patents are an exogenous result of successful execution of these strategic measures. As such, there is no need to consider patents per se separately.

Strategic Potential-- To the contrary, it might simply be that patents are a less exogenous output, but rather an additional source for renewed strategic considerations. One way to think about this is as follows. Much attention has been devoted lately to the fashioning of a new corporate position--Chief Intellectual Property Officer--with high-level C-Suite responsibility to promote and enhance the role of IP (especially, but not exclusively patents) within the company. The CIPO is intended, presumably, to release IP from the silo of the corporate IP department, which more often than not provides patenting services for the company, but without much input at the more strategic level.

And so my question: would such a CIPO (or other form of restructuring of the patent function within corporate strategy) contribute to the efforts of the drug industry to improve its position in the current circumstances? One answer is that this is already taking place, even if these considerations were not discussed in the article. But another possible answer is that patents, as a strategic consideration, need to be reconsidered together with the other factors discussed above.