BUILDING IP MANAGEMENT CAPACITY IN CANADIAN FIRMS The Business Intelligence Express Online Experiment. Jean-François Luc and János (John) Szabó (CDN)
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1 BUILDING IP MANAGEMENT CAPACITY IN CANADIAN FIRMS The Business Intelligence Express Online Experiment Jean-François Luc and János (John) Szabó (CDN) Department of Industry, Canada Jean-François Luc On behalf of my colleague, János (John) Szabó, from the Ministry of Industry, Canada, which we both represent, I would like to thank the Commission and, in particular, Dr Manfred Schmiemann, for giving us the opportunity of presenting to you the results of our work, the idea being to develop the know-how of Canadian small and medium-sized enterprises (SMEs) in the area of management and strategic use of intellectual property. This presentation is specifically related to an experiment that we have been conducting in Canada online, so in a virtual environment. It is known as the Business Intelligence Express toolkit; also known as BIX. Firstly, we will give you some background as to how this toolkit was developed, how we went about this experiment. We will then launch into a toolkit demonstration; describe the next steps that we currently envisage; and finally answer any questions you may have. As most of you in this room are aware, the intellectual property rights framework laws are an essential component of national innovation systems, and for a variety of reasons: they reward the labour and the 223
2 skills of creators; they also provide incentives for inventive activities to occur; they protect persons natural rights in their intellectual property. And last but not least, they promote, or ought to promote, disclosure of creations to advance further R&D by others. Results from recent studies and empirical research in Canada suggest that a significant number of Canadian businesses, and especially small and medium-sized enterprises, do not seek patents or intellectual property rights, nor make use of them as an information resource. As a consequence, one might say that the intellectual property rights system fails in its fundamental objective of stimulating inventiveness and maximising the exploitation of technology. One such survey, carried out in 1994, for the Canadian Intellectual Property Office (CIPO) identified a number of concerns. More than one in five SMEs in Canada were not at all familiar with intellectual property rights. For example, they could not tell whether they included management processes. As a result, many such firms were exposed to risk because their intellectual property assets lay unrecognised as forms of intellectual property. Many of these firms were possibly infringing on others' intellectual property rights, simply because they did not know about intellectual property. And lastly, 10% found out about intellectual property the hard way, either by being involved in a lawsuit or the threat of a lawsuit. There is also empirical evidence that has been gathered from the activities carried out by CIPO's Technological Information Service. This service shares many similarities with the Quick Scan initiative of 224
3 the Commission which we certainly applaud in Canada. Specifically, the evidence indicates that Canadian firms in general do not make effective use of intellectual property rights information. They do not know that this information is there, and once they find out that it is there, they do not know how to make it actionable. Furthermore, the variety of users of that service that tended to appreciate its value from the outset were larger firms. So the smaller and medium-sized firms really were not aware of the value of IP rights information and, as a result, were not using it initially. This has led us, in the Department of Industry, to ask ourselves two fundamental questions. The first one is, how can we increase the level of awareness of Canadian firms about intellectual property. The second is, how can we improve their intellectual property management performance. At this point in the presentation I would like to invite Mr Szabó, who is a senior economist with the Department of Industry, to come to the podium and provide more information about the history and the rationale for this experiment. János (John) Szabó I would like to join Mr Luc in thanking the European Commission for this opportunity to present Business Intelligence Express, or BIX as it is known. Firstly, just to give you a bit of history about the product, the original project team was created in At this time the Metals and Minerals Processing Branch of Industry Canada, was seeking ways to increase the technological sophistication of its client base. We were trying to do this by using online sources of information. This goal was shared by CIPO, although obviously their client base was much broader and 225
4 incorporated virtually all businesses in Canada. Previously CIPO has received data assets which provided the infrastructure to make BIX possible. This included the ability to search patents according to international patent classification descriptors. Ultimately this led to a joint effort between the Canadian Intellectual Property Office and Industry Canada to develop BIX, starting with the metals and minerals processing sector as a pilot industry, with the ultimate intention of making versions of BIX available for all the industrial sectors represented in Canada. Our first order of business was to create a steering committee. This was to help guide the development of the product. It involved assembling a group of professionals involved in a variety of disciplines, including intellectual property, economics, web site design, representatives of Canadian industry. The organisations represented included, among others, the private sector, various government ministries, CIPO and universities. Following this a user needs analysis study was embarked upon, in which we canvassed companies and research organisations in the metals and minerals sector, to determine first of all the value of this product. We were delighted to discover that the response was overwhelmingly positive. It was at that moment that we decided to proceed. The results of the study also verified the objectives which drove the development of Business Intelligence Express. There were two such objectives. These two points will be developed as the presentation proceeds but we think it is important to state at the onset that BIX has been, and is being, driven by the following fundamentally important 226
5 and complementary objectives: that BIX be based on an understanding of the latest findings of innovation research and technology diffusion dynamics, based on OECD research within the firm itself; and given this understanding, that we develop the next generation of practical tools that firms can use to improve their awareness about intellectual property and intellectual property management performance. There are three primary findings from the innovation research which we used to help set the framework for our next generation toolkit. First, improving firm-level capacity for innovation is key to increased growth and employment. Basically, what we wanted to do was to influence our clients' behaviour in the area of innovation management, for example, getting them to adopt best practices. Second, governments should be more challenged to help firms help themselves to become more innovative. More specifically, we have to ask ourselves, what can governments do to influence firms to adopt changes that would appear to have major pay-offs in terms of increased innovative capacity and profitability? The third finding considered several underlying capacities for innovation. This includes idea management and intelligence. Trends in OECD technology diffusion programmes, as discussed in the 1997 OECD study entitled Diffusing Technology to Industry: Government Policies and Programmes, reflect an emereging agreement on several best practices at a general level. Two trends that were identified as being beneficial, and that we feel BIX also addresses, are as follows: Upgrading the innovative capacity of firms. This can be achieved by (a) promoting a general awareness of the value of innovation 227
6 among management, and (b) by stimulating demand for technical and organisational change within firms. Later on, Mr Luc will demonstrate the Intellectual Property Diagnostic component of BIX which is designed to promote this general awareness at the firm level. Integrating government programmes and activities with national innovation systems. In other words, building existing interrelationships in national innovation systems and ensuring a greater coherence between programme design and service delivery. This last trend may appear to be a somewhat esoteric concept but there are a couple of examples that we can give you which apply to BIX. Actually, in Canada, BIX is an integral part of Industry Canada's Strategis initiative Strategis (strategis.ic.gc.ca) being our Ministry's main web page and business information site. Like BIX, part of the function of Strategis is to prevent possible market failures resulting from inadequate information on the part of Canadian decision makers. BIX has also achieved some level of integration with Canada's very successful Industrial Research Assistance Programme, also known as the IRAP, with which some of you may be familiar. The goal of IRAP is to improve SMEs' industrial research and development, which it does in part through grants, through technical assistance and through the support of a network of 250 industrial advisors located across the country. With regard to the toolkit strategy, the design was guided by three things. First, as part of an approach to developing underlying capabilities, we felt it was important to diagnose the needs at the level 228
7 of the individual firm. The need for such a diagnostic approach is built into what is described as the learning paradox associated with learning capabilities. The learning paradox is, of course, that until you have learnt something you cannot properly specify what it is you need to know. This has the added problem in that firms with limited capabilities also have a limited ability to determine both their own problems and their own opportunities. The second part of our strategy was a decision to be more proactive in developing the toolkit. Finally, we took an incremental approach with regard to an initial focus on the metals and minerals sector. In Canada, metals and minerals processing is generally not seen as being leading edge in terms of technological sophistication. In terms of the relative importance of intellectual property to this sector, it generally tends to be in the middle of the pack, behind pharmaceuticals, for example, but generally it is considered to be ahead of the automotive industry. So it was, in part, simply because metals and minerals was considered relatively neutral in this area and would be a good test case for BIX. One of the reasons we are excited about BIX is that we consider this product to be forging new ground. We say this for two reasons. BIX focuses on the actor (the firm) rather than the output (the innovation). There are very few initiatives in Canada that focus strictly on the firm. Most tend to focus on the product. In that sense, BIX works at a micro, rather than a macro, level. BIX improves performance by helping firms to build idea management and intelligence competencies in an online format. This is a departure from the direct interventionist approach 229
8 common with many policies aimed at assisting firms in industrialised countries. So this brings us to where are we now. BIX was released about a year ago and several elements of the toolkit have been released since then. I would just like to call your attention to BIX s web site address: strategis.ic.gc.ca/bix We would invite you to examine this site at your leisure. It is actually quite involved and we could not do it justice in the time we have today. By all means, do take a look. If you have any comments or questions, there is a feedback button so please provide us with your comments. Next we are going to be involved in some fine tuning and evaluation of the product. First, we are planning on undertaking a survey of a number of companies and organisations. It will be a cross-sectoral survey, involving not only our industry but other sectors outside of metals and minerals. The survey will help us assess how well BIX can address the IP needs of companies, and contribute to their ability to manage information and enhance their business intelligence. To date we have been very pleased with the uptake of BIX amongst our clients in the metals and minerals sector. BIX currently accounts for 20% of all traffic on our sector s web site. Finally, we have presented BIX before and we have received very good anecdotal evidence of the positive benefits of BIX from our clients, and clients in other industrial sectors who see BIX as being potentially useful for their own industries. We expect that the uptake for BIX will increase considerably once there are versions launched for other industrial sectors such as information technology, automotive transportation, aerospace, and so on. So thank you for your attention, and again I thank the European 230
9 Commission for this opportunity. I will hand the microphone over to Jean-François Luc who will provide us with an actual demonstration of Business Intelligence Express. Jean-François Luc This is the moment that some of you have been waiting for during this long introduction but we felt a need to give you more background as to how this experiment originated. We will now proceed with a demonstration and I would like to show you the site map of our toolkit (Figure 1), which I will walk you through. For those of you who are not familiar with site maps, this is basically an organisational structure of the issues, or the web pages, by topics. Starting on the left, we have a section in the toolkit that speaks to the types of intellectual property rights patents, trademarks, copyrights, industrial designs. Once there, users can access guides put out by CIPO 231
10 that explain, for example, what patents are all about. There is also a section in the toolkit that discusses the various uses of intellectual property rights for information purposes, or for business intelligence purposes, in essence making the case for why you should search intellectual property rights. The approach that we have taken in Canada to raise the awareness of firms is to present these issues in a risk management framework. Risk management is always a key concern, as those in the audience who are in business will be well aware, and usually promptly recognised. If we can sensitise businesses about risks they may be exposed to, then we hope to have them adopt intellectual property management practices in their processes. We also have a section concerning the information that can be derived from intellectual property rights for instance, what is it, in tangible terms, that one can expect to get out of this data? We also have a search module, and in the BIX toolkit we have various databases. We have patents and trademarks databases of course, but we also have Canadian companies and products databases. The search module that we have is able to query all of these databases and allow users to navigate from the patent data, to trademarks data, to company data, products data, and so on. This is aimed to reveal the linkages that can be made from these data assets. We also have a link to all the intellectual property rights database sites. Of course, esp@cenet is prominently featured in there. Those are mostly free resources, keeping in mind that the objective of this toolkit is to encourage firms that do not have very good awareness of intellectual property rights to migrate up the value chain to a position where they can then appreciate the value of seeking professional 232
11 advice, and actually then incur the expenses in doing so. We also have links to business intelligence sites for those users who are not too familiar with business intelligence, and the processes. We have quite a neat feature that has been most appreciated by our users to date. That is an alert function which basically allows for selective dissemination of information based on profiles defined by end-users. In the case of patents, for example, one could define a profile using the international patent classification codes, and then upon refreshment of the database, which is usually once a week, receive an electronic notification pointing to any new documents. Lastly, there is a segment in the toolkit which we have called diagnostic. We will be demonstrating the intellectual property diagnostic module in a minute but I just want to alert you to the fact that there is another feature which we wish to upload fairly shortly. This is a patent filing advisor which we hope will assist end-users who really want to do this all by themselves, to identify some of the key issues that should be considered before filing occurs. But let us go back to the diagnostic. On the BIX site, there is a section which explains what this intellectual property diagnostic module is all about. It explains why one should take the time to use this module. It also has some disclaimers because this is a government product and we do not want businesses to make business-critical decisions solely based on it. In essence, the diagnostic itself is a series of questions and the user provides the answers. There are 20 questions and it takes about 30 minutes to complete. The whole idea of this is that once these questions have been answered then the end-user has the option of generating a report card. This can then be used to identify, explain and manage risks. 233
12 Recognising that some users may wish at some point to confirm their understanding of IP before they take the diagnostic, there is also an intellectual property quiz. This is somewhat of a fun way to ask questions to the end-user to verify his or her knowledge about intellectual property. This is very important and has a direct bearing on the quality of the diagnostic, as it is self-administered. Once you click on the diagnostic button you are brought to a series of questions and I would like just to go through some of those with you. The first question is: Has your company signed any contracts with outside parties to carry out research, development, manufacturing, testing or marketing of firm products and technologies? To this question the possible answers are as follows: Yes/No/Not applicable. I will read some of the other questions just to give you an idea of the categories of risks that we address with this diagnostic. Question six is: Do your agreements obligate your employees and consultants to hold your trade secrets in confidence? Again, there are options for answers. Question nine asks: Before embarking on new product development projects, does your company usually carry out a search of granted and pending intellectual property rights to provide background information? Each of these questions, once answered, bring users to a list of useful references that can be accessed through hyperlinks. Basically, after having answered all of the questions, users can then generate their personalised report card, which works as follows. It regroups the issues that are addressed by the questions into risk categories. The first one is technology watch/competitive intelligence. 234
13 Some of you know about the risks associated with this. There is also intellectual property strategy and policies as another group of issues. Protection of intellectual property is another one; then contract and infringement issues the monitoring of infringement, etc. So, once the end-user is at this stage in the process, he can select `intellectual property strategy and policies' and there is a description of what this category of risk means. Then the user would have the option of seeing the score for this category, and also to access information that is on the web that speaks to these risks and hopefully provides solutions on how to manage them or mitigate them. I will demonstrate this on the screen here. In this case we did not answer any of the questions in this section so the score does not appear at the top. Essentially, you are then visualising the questions that were asked and that you answered relating to this category. Then you have an explanation as to the risk to which you are exposed. In this case the question was, `Does your company have registered intellectual property rights in effect, or is intending to seek such rights in the near future, whether it be in Canada or abroad?' If you answered `No' or `Unknown' to this question, then your risk is that maybe you should determine whether this is the result of a conscious decision or whether your company just has not had the opportunity to reflect on it. This is the way in which the diagnostic is built. It is not meant to be critical of decisions or situations found in businesses, but rather to act as an indicator, or a tool to raise the awareness about the risks involved, and then leaving the management decisions to the management team. At this point in the site, you would have had the opportunity of going 235
14 through all the questions. After that you would have a number of options. For example, for patents, there is a very good article on protecting your technology. There is also a review of trade secrets, patents, and their respective relationships. These are all available on the world wide web, of course. This document, for example, discusses the approaches to trade secrets and patent protection, the relative advantages and disadvantages, and so on. It talks about enforcement issues as well. It is meant as a piece that end-users can access to increase their awareness and knowledge about the issues at stake. There is also an article about how to seek cost effective patents, addressing whether, as a business owner, you fear disclosing your invention. So, there is a whole bunch of resources that we have linked to, that have already assisted a number of end-users to grasp these important issues. I want now to refer to the next steps, the further improvements that we are considering at this point. I have referred briefly to the patent filing advisor which is a function we will be implementing in the toolkit very shortly. We will also be working very hard to continue to integrate this toolkit with other innovation and technology diffusion initiatives in Canada. This is very important. Lastly, we are also interested in assessing the feasibility to address other underlying capacities for innovation at the firm level using the BIX concept, whether they concern organisation and processes, or managing the competency base, for example. Those are all issues that we will be looking into in more detail. We will be happy to provide anyone who so wishes with a copy of our presentation during the course of the conference. SOURCES 236
15 Canadian Intellectual Property Office (1994). Marketing Awareness Survey Report (Coopers and Lybrand Consulting Group). Canadian Intellectual Property Office (1998). Results from the Technological Information Service (internal report). European Commission (1997). Quick Scan Statistics and Report on Results of the First Round. Fuld, Leonard N (1995). The New Competitor Intelligence The Complete Resource for Finding, Analyzing and Using Information about your Competitors, Wiley & Sons. Kahaner, Larry (1996). Competitive Intelligence: from Black Ops to Boardrooms How Businesses Gather, Analyze and Use Information to Succeed in the Global Marketplace, Simon & Shuster. Industry Canada (1998). The Innovative Company (Arthur D Little International). OECD (1997). Diffusing Technology to Industry: Government Policies and Programmes, Paris. Thuriault, Ben et al (1997). Developing Firms' Technological Capabilities, Technopolis. 237
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