Creating an IP Strategy and Acquiring Support from Your Executive Team: an Interview with Lisa McFall, Head of IP at Workday

By Damian Durrant

Lisa McFall is an IP star in Silicon Valley.  After litigating patent, copyright, trademark and trade secret matters at Wilson Sonsini Goodrich & Rosati for a decade, she went in house at Yahoo! and ran its IP litigation and conflict management program for five years. She left in 2009 to co-found Ovidian Group, an IP strategy consultancy later acquired by Pendrell. In 2014, she became the Head of IP at Workday, a ground-breaking provider of enterprise cloud applications for finance and human resources.

Her comments are her personal views, and not necessarily representative of Workday. (Disclosure: Workday is an IPfolio customer). We were very happy to speak with her about the process of creating an IP strategy and obtaining executive team support.

We’ve spoken with several IPfolio customers about the process of creating an IP strategy. Each spoke about how IP strategy must support the overall business strategy.

I certainly agree, and think it is important to distinguish between IP strategy and an IP program.

Many companies have IP programs, characterized by annual patent filing targets, patent review committees and patent incentive programs.  A company can maintain an IP program for a very long time without ever asking if it is filing the right number of patents on the right technologies in the right places, or whether the inventions it is harvesting are strategic and serving a specific business purpose.

In many companies I’ve seen over the years, IP teams are somewhat separate, and interface primarily with engineers and technologists.  They don’t necessarily interact with business leaders or the executive team.

When companies operate in this mode, their IP portfolio can become disjointed from the business. When the business then turns to the IP team and asks: “do we have patents that cover xyz competitor, abc technology, or that we can use in 123 licensing discussions?,” the answer may not be what the business expected.

So what’s clear is that an effective IP strategy must be integrally connected with the company’s business and technical strategy?

It’s definitely clear, but not always easy to achieve. To help IP practitioners think about IP strategy, I always start with Carl von Clausewitz, a military theorist who believed strongly that the role of the military is to achieve specific political objectives.

His most famous quote is:  “War is simply the continuation of political intercourse with the addition of other means. We deliberately use the phrase ‘with the addition of other means’ because we also want to make it clear that war in itself does not suspend political intercourse or change it into something entirely different.  In essentials that intercourse continues, irrespective of the means it employs. The main lines along which military events progress, and to which they are restricted, are political lines that continue throughout the war into the subsequent peace.”

What Clausewitz is saying is that politics is always the driving force.  The military may be called upon, but if so, it is simply an extension of the political action.  The waging of war is not an end in and of itself.

Applying this to IP, a company’s IP portfolio exists to protect and serve that company’s specific business objectives. When a company decides to leverage its patent portfolio, it does so for a specific business reason.  Understanding what those business objectives or reasons might be, anticipating what patents a company might need to advance them, and how to leverage those patents to achieve the desired result is the core of a thoughtful and effective IP strategy.

I’ve often heard that the definition or measure of an ideal IP strategy is an expression of a quantitative reality with a large amount of qualitative nuance.

Everyone’s IP strategy should be nuanced depending on the nature of their company and its position and role in their competitive ecosystem. My articulation of the ideal IP strategy is:

In a perfect world, a company will have the right number of patents available to leverage in the right country against the right party at the right time.

Reaching this “perfect world” is almost impossible, and it’s why many companies choose to build huge patent portfolios.  If you have thousands of patents, chances are you’ll have a number of patents available for whatever situation arises. Its a blunt instrument. However, for most companies, building a massive patent portfolio isn’t practical or rational.

Instead, companies can increase the odds of having the assets they need available by basing their IP strategy on a careful study of their competitive ecosystem, anticipating the most likely sources of business friction and considering the best way to create or obtain patent assets that will be relevant in that situation.

How do you start defining your path?

You start by thoroughly understanding your competitive landscape. Who are your direct and indirect competitors?  Who are your most important suppliers and partners?

You also have to think about which competitors are up and coming. If you think you are a disrupter and the rising star of your industry, you might not always be in that position.  If you are successful, eventually you will be the incumbent. There will be new players that are going to compete with you for your market share.

Additionally you must understand your competitive advantage.  How do you distinguish your products and services from those of your competitors? You might want to patent as much of that as you can.

The amount of information that IP strategists must collect and evaluate when drafting a strategy they can present to the board is considerable. In your experience, what can a Head of IP do to increase the chances of obtaining executive support?

It really depends on your executives’ personalities and experience with IP.  Knowing the learning curve they may be facing is important. In my experience, executives who understand the value and power of IP really like to engage in strategy discussions. They understand that the Chief Intellectual Property Offier (CIPO) is the General whose weapons will protect their business strategy.

It’s also helpful to think about the cost of your IP strategy from a high level business perspective. Consider how your company is doing overall financially. Do you need a large increase immediately, or can you ramp your IP spend gradually?  You can achieve a lot with a modest budget if you know how you are spending every dollar, and know that every dollar spent is creating a valuable asset.  On the flip side, under investing now may cost the company a lot more money in the future.

Consider presenting alternative budgets to your business leadership, laying out some different scenarios for how IP may be leveraged in the future.  For example:  “If all goes as planned, we require $X so we can achieve Y, but if one of our assumptions is wrong, and we get an unexpected attack, we will likely have to spend $Z to address the problem.”

Articulating the assumptions underpinning your strategy is key to engaging your executives and other stakeholders.

How do you present your IP strategy? What’s the format?

It’s a plan, so present your IP strategy as a business plan. You have specific objectives and a roadmap.

You might say: “Here is the current size and composition of our portfolio. We have these gaps. We can fill these gaps by buying this many assets, in this time frame. Here are the resources we need and here is the cost.” And you must have data to support this plan.

Lisa I am sure there is so much more to say, but we thank you very much for your valuable time and we look forward to perhaps exploring some of these subjects again with you.

[This post originally appeared at IPfolio.]