The Aerospace and Defence Update – Dr Bobby Mukherjee, BAE Systems plc
Nigel Swycher CEO, interviewed Dr Bobby Mukherjee, Chief Counsel, Intellectual Property and Technology Law, BAE Systems plc about the impact of new technologies on business strategy, litigation and collaboration.
“Cipher has been world class for us. It’s easy to use, it provides very powerful visual representations of what we own and importantly what our competitors have.”
What impact do you think technologies such as robotics, autonomous, cybersecurity, drones will have on your business strategy?
It’s important to recognize that there is an intensely competitive landscape in our sector and when I talk about competitive pressure, I look at it from two angles. The first is in terms of the new products that are coming into our landscape. Secondly, we have new players coming onto the scene.
Robotics, autonomy, cybersecurity and drones are key areas for us and for our competitors. It’s important for us to stay ahead of the game, not to be complacent. It’s important for us to understand which areas are key to our business strategy. What are the business priorities? What are the product strategies and the capability gaps? From that what are the technology areas and intellectual property drivers? I think it goes in that order.
IP strategy in isolation doesn’t mean anything. It has to be anchored in the wider business product strategies and that means working very closely with your key stakeholders across the company, your technologists, your business development people and so forth.
Which other technologies do you see as being disruptive?
Developments in human machine interfaces. When we talk about autonomy, the reality is that there will be more combinations of human machine interfaces. The barriers to entry are very relevant in that regard. We know that companies like Amazon are working in this field, so with respect to the movement from traditional to non-traditional players, it’s really important that we understand what the landscape is, and what IP rights are out there, not just for the traditional players, but also for the non-traditional players.
Additive layer manufacturing (ALM) is also a key area. We are active in that area, and there are a lot of other people who have done significant work in ALM. There are other areas such as energy storage and management.
Again, if you look at our operations across the enterprise, one of the challenges we have is leveraging that capability across the enterprise in the most effective way and ensuring that we don’t have duplication of effort and investment. It’s remarkable what we do in terms of the world-leading capabilities for not only governments, but also for our commercial customers.
How have these changes in technologies fed into a change in your patenting strategy?
We have always been able to articulate our patenting strategy over the years in terms of understanding what are the key technology areas that we should be focusing on and biasing our patenting towards those areas. The patenting strategy has of course a geographical dimension, as well as a technological dimension.
We are building our portfolio within the constraints of our budget, but we also prune where we decide there is no longer any value. Active portfolio management is a key element of this.
In order to have a coherent patenting strategy, you have to be clear about the business technology strategies. One of the ongoing debates is how many patents should we be filing? What is the right portfolio size for our organization? We have to create the right portfolio for our business, and we have to use it to drive business value. That is the underlying requirement. If we do not drive business value using our intellectual property portfolio, there is no point.
So, the notion that we must have 50 patents filed every year or 150 or 200, is a red herring. I would argue it is all about business value and it’s about articulating that business value. How we measure that value is a separate question. It may be licensing, it may be leveraging the patents in campaigns to help with business. It might be enabling a freedom to operate strategy. There are all sorts of ways we can use our intellectual property for business advantage.
How does BAE Systems measure and report the value of IP to the business?
We are on a journey. We have a remarkable diversity of businesses from electronic systems and applied intelligence at one end, which are pretty fast moving, to the maritime, submarines and air business at the other end.
The strategies involved in each area will be different, according to the different technology lifecycles. The value point is something as a profession we can miss, because it is quite difficult to capture that value in tangible terms, but that is not a reason for us not to try and address that question.
Looking at it simplistically, sometimes the value comes from figuring out what happens if you don’t do what you’re going to do. There was one example where we knew that if we did not clear the way, we may have been prevented from delivering a key piece of kit on a major platform. The value was delivering the platform. Unless you think about what would happen if we did not do what we’re proposing to do, the value does not emerge.
We need to get into that mindset in respect of every activity we do because that will help us to focus on the priorities, on the things that are really important. If we can’t figure out what the value is maybe there isn’t any value and maybe we shouldn’t be doing it. I think that is the right approach and it makes the message much clearer when you present it at different levels of the organization. Otherwise we could be viewed as a peripheral part of the organization that has no value to bring, which could not be further from the truth.
Has the increased pace of technology led to greater focus on technology collaborations, licensing and M&A?
Yes. It has for us and it goes back to the strategy point. In order to have a focus on where to target, you need to have clear product technology strategies. What are we developing in-house, what are we going to be collaborating on and with whom? Are there areas in which you want to acquire a license?
It all fits into that bigger picture, and as the competition is increasing, it’s inevitable that there will be more consolidation and more collaboration. We have certain programmes where we are partnering with particular players and in other programmes we are competing against them.
It is so important to have the right IP plans in place, and to know where we’re going to be collaborating and what are our likely targets for technology bolt-ons or acquisitions. This is a very important area for all of us and will become more important as we move ahead.
How do you think A&D will change under the influence of new technologies?
It will heavily gravitate towards more technology influence. Our company as an engineering company has a very rich legacy. You couldn’t produce another BAE Systems even if you tried, that is a statement of fact.
Looking ahead, I think there is a recognition that we’re going to move to the technology space more and more. This is borne out by the appointment of a Chief Technology Officer in January. We have world-class capabilities that we deliver onto platforms, and the magic is the way we put those things together. This is what differentiates us from the competition.
There is a real excitement as we evolve into more of a technology company. It’s exciting to be part of this process because IP links into all the other parts of the organization and beyond.
A&D is a very large sector, but litigation levels are low. Do you think that high tech will impact your IP risk mitigation strategies going forward?
Yes, because there will be new players coming in. If you look at an area such as head-mounted displays, there we have the traditional players but we also have the well-known display makers, designers, who in terms of track record are involved in a lot more litigation, so we have to be ready for that.
It’s important to make sure that we have appropriate IP portfolios supporting our position. It goes back to the value and the risk. We spend a lot of time mitigating risk of IP value loss, and that will not change. IP litigation has historically been at a low level in our sector. That doesn’t mean that it won’t go up. Inevitably as competition increases, there will be more risk of it and we should be ready.
Do you still see NPEs, patent trolls, as a risk?
We do get troll-type approaches, and we deal with each one on its merits. If they don’t have a case, I will not pay them to get them off my back. Under my watch, that’s not what we will do. In an ideal world, we wouldn’t have a troll problem, but that’s not the situation.
What’s your view of the importance of communicating IP issues to the Board?
It’s extremely important to communicate with all levels of the organization. It’s not possible to achieve optimal IP management or maximize returns for the business from IP without engaging at the top level and at the grassroots level. To do that you need endorsement from the top, which we have.
It’s important not to obfuscate, not to make things sound more complicated than they really are. Cut to the chase, bring it to life with real examples, tailor it according to the business needs and that’s what we do. We have the dialogue and we learn from our business colleagues, and hopefully they learn from us. But it’s important to have a culture of continuous improvement because unless we do that, we can’t move forwards. Communication is key. Visuals are powerful. We have dashboards presented to the Board every month. This draws people in and they question and probe. It’s all about engagement and having the discussion.
If you don’t have the dialogue, you can’t achieve your objectives. You need to be part of the strategic dialogue. In the past IP people have often been isolated. They are often viewed as being part of an esoteric function who don’t have much to offer to the broader construct. That couldn’t be further from the truth. We have a strong team here with a commercial focus as well and all of these things come together. It’s important to develop those soft skills and communication is a key part of that.
In summary, whether you are communicating with the board or whether you communicate to an inventor or a business development manager, use plain language and develop a common language. Let’s make sure we’re all talking the same language and get the basics right.
How do you communicate the importance of patents to R&D and engineering?
Let me give you an example. Sometimes we get questions from the business like “what are you doing with this patent, why are you not monetizing it, why don’t you sell it?” My answer is that the patent is the IP right protecting the technology. You need the technologist involved in the dialogue to decide whether or not it’s something that should be sold and for what value. It makes no sense to just say that the patent is the preserve of the patent attorney.
Many patent attorneys may think that they are the High Priests, but they are not. This is all about protecting the technology, and patenting is one way of doing it. It’s a strategic decision and it has to be made in conjunction with the business. We should have a seat at the table, but let’s not forget why we’re here – to create value for the business.
You’ve been a strong supporter of Cipher. How does better information help and how has Cipher supported you on that journey?
Cipher has been world class for us. It’s easy to use, it provides very powerful visual representations of what we own and importantly what our competitors have. This is feedback on Cipher that we’ve had from my own team and the business. We’ve talked to our key stakeholders in the business and asked them to try it out, and see how useful it is: are there things that you don’t know, which you could find out by using this tool? The feedback from virtually everyone has been that Cipher provides valuable insight. It’s really important to understand the landscape and what is going on, because that is a vital element to the wider strategy.
It’s about having the right strategy, the right organizational layer, the right resources, about knowing what landscape you are operating in and where you’re going and that feeds into all the other things we’ve touched on earlier. It’s important to engage with people in the business and get that feedback, to work closely on these things and not to operate in isolation. We’ve really enjoyed being a partner with you.