SIEMENS: customized and regional IP strategies

2008/04/01,By Athena Ma, China IP,[Comprehensive Reports]

Siemens is a global powerhouse in electronics and electrical engineering, operating in industry, energy, and healthcare. The company has approximately 400,000 employees developing and manufacturing products, designing and installing complex systems and projects, and tailoring a wide range of solutions for individual requirements. For over 160 years, Siemens has stood for technical achievement, innovation, quality, reliability, and internationality. In fiscal 2007, Siemens had revenue of €72.4 billion and income from continuing operations of €3.9 billion (IFRS).

Siemens IP dates back to its roots. Siemens' founder, Werner von Siemens, was an inventor who created the company with his inventions. His two most prominent contributions were the pointer telegraph, the most advanced communication device of its time, and the dynamoelectric principle. Werner von Siemens was also IP minded. In the second half of the 19th century, Germany was in the process of catching up with the leading industrial nations of the world. Werner von Siemens, together with politicians and other leading industrialists realized that to protect their ideas,z an efficient and highly enforceable patent law was necessary. 

To understand Siemens IP strategy, the journalist of China IP interviewed Dr. Kai Brandt, the Head of Corporate Intellectual Property and Functions of Siemens Ltd., China.

1. The responsibility and position of IP Department of Siemens

1) Safeguarding IP goals and IP strategies are always aligned with the business strategies of the customers, the Divisions of Siemens

Dr. Brandt stated that, "The mission of our IP department is to support Siemens' Divisions to build up, protect, use, and market their IP assets. Therefore we:
 focus our patent work consistently on the operating business;
 use patents to provide essential, broad-based protection for innovations and the associated competitive advantages;
 safeguard intellectual property and room to maneuver in product development with a high quality, competitive patent portfolio in line with market trends; and
 consistently exploit opportunities to leverage intellectual property and always actively identify and pursue infringements.

To achieve these objectives we work in close partnership with Siemens various business Divisions. In fact, one IP department in Corporate Intellectual Property mirrors each of Siemens 15 Divisions. Using this structure, our IP goals and IP strategies are always aligned with the business strategies of our customers, the Divisions of Siemens.

Close contact with the Divisions is also important to achieve an in-depth knowledge of each Division's technologies. Technology competence is a key to good patent work and goes far beyond simply understanding your customers' inventions. It also includes watching and understanding competitors' technologies and the industries' technology trends. Only by knowing these technology movements can an IP department focus on the right technology segments and proactively generate key IPR in cooperation with research and development."

2) A matrix of technical excellence from the Division's IP departments with their global responsibilities and legal excellence from the regional IP departments

According to Dr. Brandt, with the global responsibility for the IP assets of one Division, the associated IP department can also provide support for shaping the Divisions' patent portfolio. The complete overview about which inventions are generated in the Divisions' R&D sites around the world, allows for combining and fitting patent applications to achieve the desired overall portfolio structure. This is a challenging task considering that in Siemens approximately 32,500 R&D employees are located in over 30 countries at 150 R&D locations.

Dr. Brandt added that, "This global in-depth technology capability is not only relevant for the shaping of prosecutions and portfolios, but also plays an important role in enforcement. First, its IP department is the Division's one-stop-shop for finding which intellectual property rights are available against a possible infringer. It will provide the necessary knowledge in defining the precise scope of protection and later on defense of the applied intellectual property rights against invalidation actions.

For such enforcement, the regional IP departments, like ours in Beijing, support the Divisions' IP departments with their worldwide responsibilities. We are the in-house counsel for local laws and regulations. Thus a matrix of technical excellence from the Divisions' IP departments with their global responsibilities and legal excellence from the regional IP departments is generated.

Besides such support in enforcement cases, it is the chief task of our regional IP department to acquire invention disclosures for inventions made by our R&D colleagues here in China and transform them into intellectual property by preparing, filing, and prosecuting patent applications."

2. Customized IP strategies and regional IP strategies

"Siemens' Divisions are manufacturing products from circuit breakers to magnetic resonance scanners. Their solutions range from immune diagnostics and molecular analysis to airport logistics. As could be easily understood there cannot be a one-size-fits-for-all IP strategy." Dr. Brandt said.

1) Closely aligned to a customized IP strategy is the Division's business plan

Dr. Brandt stated that, "Different Divisions have different IP positions with respect to their competitors, different IP goals, and different resources for achieving these goals. In some areas we prefer to go for exclusivity. Proprietary IP induces alternative ideas, differentiation of enterprises, and healthy competition in the marketplace. In other areas, IP shared under fair conditions fosters sharing development results in a community and collaboration that integrates innovation of different stakeholders. In certain areas, we make our IP available without charge to promote our new technologies as more cost effective alternatives to established technologies.

Therefore we provide for each of our Divisions a customized IP strategy which is closely aligned to the Division's business strategy. However, it is also important to align the IP strategies of the different Divisions with each other to leverage synergies and create added value for Siemens as a whole. Here the integration of the IP departments for the Divisions into our one Corporate Intellectual Property department is the key competitive advantage.

This combination also creates a tremendous diversity of knowledge within Siemens Corporate Intellectual Property, which makes this department one of the world's most exciting places for IP."

2) Siemens requires a regional IP strategy tailored to each Division

As to the regional dimension of Siemens' IP strategy, Dr. Brandt noted,"multinational companies in particular must protect their inventions in the world's most important markets if they are to compete effectively. This means that corporations like Siemens need to manage their patents actively and globally in order to turn their ideas into profit. This requires an IP property strategy tailored to each Division."

Winfried Büttner, head of Siemens Corporate Intellectual Property and Functions, explained, "All internationally active companies know from daily experience that globalization presents just as many new challenges as it does new opportunities. Global competition is also forcing more intensive collaboration and networking, especially in innovation management. A local presence and a regional IP perspective are key factors in establishing long-term patent protection in the regional sales markets where the sales are actually generated."

3. Standardization

From cars to communications, standards are the key to radically cutting the cost of development—and ushering in a new world of efficiency in which consumers benefit from a widening spectrum of new, affordable functions and services.

Referring to the standardization, Dr. Brandt commented, "In Siemens, we started with our internal standardization activities more than a century ago by creating safety standards for safer working conditions for Siemens' employees. The connection between standards and IP appeared in a very different light when the second and third generation of mobile communication standards was to be developed. The tremendous costs of these developments were only shouldered by the industry, because an IPR policy could be established which draw a number of key players into the development of these standards by providing an adequate return on this investment. Today an even bigger number of companies participate in this success story by selling products based on the developments of the pioneering enterprises under fair, reasonable and non-discriminatory licensing conditions.

Due to the intensive discussion in the IT&T world, the connection between standards and intellectual property rights now becomes more and more prominent for other technologies. However solutions which were found for IT&T are not always transferable. Depending on network externalities and internalities as well as the intention of the standardization process – e.g. pushing cutting edge technology vs. safeguarding basic security levels – different IPR policies have to be chosen. In Siemens Corporate Intellectual Property we handle almost any of them."

4. Innovation and the "Pictures of the Future"

1) Siemens is one of the most innovative companies worldwide
There is also a historic quote from Werner von Siemens, which already pointed out that innovation is our lifeblood at Siemens, "I believe that one of the main reasons behind the success of our factories is that most of our products are based on our own inventions."
Dr. Brandt said, "This strong linkage between innovation and IP at Siemens can still be seen today, where Corporate Intellectual Property, the IP department of Siemens, is linked to Corporate Research and Technologies, Siemens' corporate R&D department, under the joined roof of Corporate Technology. With about 50,700 patents, Siemens is one of the most innovative companies worldwide. In fiscal 2007, Siemens researchers submitted 7,900 invention disclosures. We filed 4,900 patent applications. On average, we generated 32 inventions and 23 patent applications per workday."
"Siemens pushes innovation to shape the future for the benefit of our customers and shareholders. Intellectual property rights are a significant force behind innovation. They provide strong protection for our inventions. We actively make use of our intellectual property to keep the lifeblood running that boosts economical and ecological progress." Dr. Brandt emphasized.

2) Pictures of the Future
There is no doubt that innovation has always been one of the most important elements in Siemens' business strategy. Innovation helps to cut costs, increase sales, and achieve higher earnings. Nowadays, those who fail to launch the right new product in the market at the right time will suffer even more than before. How does one come up with new solutions, and can innovations really been strategically planned?
Regarding a navigation system for the future, Dr. Brandt introduced the Pictures of the Future (PoF). According to Dr. Brandt, the PoF, a method developed by Siemens Corporate Technology, is an essential tool for reliability in assessing these trends. It makes it possible to design scenarios from which they derive trends and developments in the business areas and identify new business opportunities. Identifying technologies with major growth potential, recognizing technological breakthroughs, anticipating future customer needs and new business opportunities — experts at Siemens Corporate Technology are doing all of these things in a systematic process designed to make the company a leader in many business fields.

5. Siemens in China
1) Siemens' IP strategy for China

"Our IP strategy for China reflects the steep economic growth and the dynamics of this country. Building up the patent portfolio in China has been strongly accelerated. Filings increased by more than 20 % in the last fiscal year and special attention is paid to fast enforceable intellectual property rights like trademarks and design patents. Another cornerstone of our IP strategy is taking action against product piracy for the sake of our customers.

The most exciting IPR experience for me has been seeing China developing into an innovative nation. The Chinese government realized early that this is a necessary step to keep economic growth at a reasonably high level during the next decades. During my time in China, I have seen a lot of examples of promoting IPR and strengthening IPR protection, such as the action plans on IPR protection, awarding independent IPR at the Shenzhen Hi-Tech Fair, the ‘Copyright and Me' campaign as well as financial support for filing patent applications." Dr. Brandt said.

Besides, Dr. Brandt says that Intellectual Property is a key factor for innovation. He quoted words by Prof. Gang Wan, Minister of Science,and Technology, "Patent protection is the respect for human work. Whoever created a patent and worked hard for it must be able to protect the result. If someone steals it, he violates a fundamental right."

"The most challenging task for IPR protection is to firmly establish this kind of thinking in people's heads and wallets." Dr. Brandt said.

2) IPR protection and the Fight-the-Fake initiative

For a successful enterprise, it is unavoidable that its products are copied or counterfeited. Dr. Brandt explains, "Many products in the area of electrics and electronics, e.g. switches and circuit breakers, have to be designed to provide a high level of security during operation. Malfunctions cannot only cause high financial damages, but will even put human health at risk.

With our Siemens brand, we guarantee the high level of safety and quality, which is required for such products. Our customers have a strong confidence in our brand. One chief objective of our IP work is preventing that this confidence will be diluted. Therefore, we are going after counterfeits wherever we find them. Under our ‘Fight-the-Fake' initiative, we use a network of law firms as well as our own sales channels to identify product pirates. Thanks to the great support of TSBs and AICs we are often able to shut down such operations within hours.

There are situations where we will contact the infringer first for negotiations. However, sometimes it is obvious that there is no way to solve the issue by negotiations. This is for example, the case, if the business model of the infringer fully relies on copying products. Furthermore, if we find counterfeits having an impact on the health of human beings, we will not contact and negotiate with the infringer first, but eliminate the counterfeits immediately."

3) Cooperation with Chinese higher education institutions

"For Siemens the effective and efficient collaboration between public research and industry is of utmost importance. This requires high-level management support on both sides, a spirit of partnership, intensive communication, mutual understanding and trust. The Center of Knowledge Interchange (CKI) relationship is the highest level of cooperation for Siemens with higher education institutions.

Started in 2007, Siemens embarked on a worldwide effort to increase its university cooperation programs with top universities outside Europe. Tsinghua University and Tongji University were the first two schools that Siemens selected for building the CKI relationship in China. Prof. Gang Wan, Minister of Science & Technology of China, and Dr. Annette Schavan, Federal Minister of Education and Research of Germany attended the signing ceremony with Tongji University in April 2008. As part of the CKI program, the 5-year framework agreement, valued at multi-million RMB each year, is focused on R&D collaboration with the University covering a wide spectrum of topics, including high speed train technologies, water purification, CO2 capture, clean imaging, intelligent traffic systems and other areas of mutual interests. Several research projects have already been signed off and started under the framework agreement." Dr. Brandt said.

Assigned as the Siemens Ambassador to Tongji University, Mr. Peter Herweck, Executive Vice President of Siemens Ltd., China and President of Automation & Drives Group praised the cooperation, "This CKI relationship is a good vehicle to increase mutual cooperation with a methodical approach. As China is playing a more and more important role in Siemens' global network of innovation, this cooperation will create new opportunities for us to leverage the research advantages and talents resources of the University while inject new momentum to the joint R&D cooperation between the two parties. This is a win-win scenario."


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