1on1 with David Hughes for IAM
7 December 2020
David Hughes was recognised in IAM 2020's Strategy 300 as a 'World Leading IP Strategist'. David spoke with IAM on 19 November about his career thus far as an IP professional.
What led you to pursue a career in intellectual property?
I have always had an interest in technology and how it can change lives. My father was a design engineer working on the Snowy Mountains hydro scheme, which at the time was one of the most significant infrastructure projects in the world, so from an early age I saw the link between technology and public good. After I completed my studies in engineering, I was looking to areas where I could apply those skills more broadly. In a sense I stumbled into the IP profession. However, I saw the opportunity that it provided not only to work across a range of technologies but also to make a positive contribution to the impact of those technologies. At a macro level I see intellectual property and innovation as nation building (in the same way that the Snowy Scheme was nation building to Australia). As the knowledge economy has developed the importance of intellectual property at a national level has only continued to grow.
What has been your proudest professional achievement?
I have been very fortunate to work on many interesting and challenging IP matters. I am always excited to be helping clients build their IP portfolios and to navigate freedom-to-operate issues. However, I think my proudest professional achievement is in evolving professional practice. There has been a tendency in the past to view intellectual property in professional practice primarily through a legal/technical lens. While this is vital, it can become misaligned from the economics of business and opportunities can be lost. Bringing an economic lens to IP work better contextualises the problems that clients are facing and brings better alignment to their business needs. Griffith Hack was one of the first firms to look at intellectual property through an economic lens and that has become a foundation for the way that we work. We bring broader, more integrated thinking to our clients’ problems.
How are client demands changing, and how has this affected the way that you manage your practice?
As intellectual property becomes more important to business, clients are looking for partners to navigate the options rather than merely take a passive approach. Clients are also becoming more sophisticated in their approaches. They are looking for value from their service providers. This may include unpacking more general service offerings to focus on specific expertise, using procurement for tenders and creating a balance between in-house and external resourcing.
Our response to these demands is to be more adaptable in our service offering and, where possible, to reduce friction in the relationship. This includes providing cost certainty wherever possible, providing a range of options on service delivery (matched to client needs) and being more innovative in how we engage. For example, we are always looking for new ways to enhance our client experience and to deliver our services more effectively and efficiently through new and emerging digital channels.
How would you characterise the contentious IP landscape in Australia at present?
While the judicial system in Australia is well settled and highly regarded, there is a high level of complexity in contentious IP processes that makes it too expensive and often protracted. The cost of enforcement, particularly in patents, is an impediment for many clients to engage in the process. This is of significant concern. There are some emerging solutions, however, with the courts looking to streamline the process, professional service firms offing innovative fee arrangements and litigation funding.
From my perspective, one of the more interesting developments is the advent of IP insurance to better manage the risks associated with intellectual property. While IP insurance is not yet widely adopted, it has the potential to transform the IP space and provide a more level playing field for parties when resolving disputes by taking the full extent of costs out of the equation.
How do you build trust and understanding with clients to ensure that they make the most informed IP decisions?
The best way to build trust is to spend the time to understand the dynamics of the client’s business that is underpinning any project. Business is a complex system filled with dependencies and without some understanding of these, your advice may be limited. Being an external service provider is a great opportunity as it allows us to provide a different perspective of the client’s business. You can share new knowledge and ideas without being tied to the internal thinking and politics of the business. Also, providing a more holistic approach to intellectual property (by considering the intangible assets more broadly and the economic drivers) helps greatly in making the perspective relevant to the client’s business.
With better-informed and IP savvy clients, you are in a strong position to co-create a solution with them. In this way, advice does not feel imposed and helps to build trust. Further, clients and key stakeholders within their business will have a sense of ownership and purpose around their IP strategy, ensuring longer-term buy-in.
What are the biggest challenges facing your clients at present?
It is clear that intellectual property is more business-critical than ever. The market is more complex, which is being driven primarily through digitisation. This has not only increased the speed of change and transformed how we live and work, but has also interconnected us in new ways and swamped us in data. This is transformational on how businesses operate – how they manage within these new complexities and make sense of the data.
Clients need to respond to these evolving market conditions and technology disruptions to survive. They need to act quickly, embrace a digital world and often adapt their own business models and structures. In our IP practice, these changes are causing our service offering to evolve. In industries such as mining, agribusiness and construction, digitisation is causing our clients’ technologies to cross traditional boundaries. This requires our practices to bring multidisciplinary teams to develop clients’ patent and IP positions. Clients are also wanting to collaborate more as part of their R&D effort and this can shift the emphasis of IP rights from being a defensive tool to one which enhances liquidity in the underlying assets to foster collaboration. At an organisational level, clients are having to adapt as they respond to the social impact of technological change. This raises interesting issues on how they manage their intangible assets. For example, as employees become more mobile, it drives a need to codify staff know-how to allow it to be better captured as a business asset. The speed of change is also putting a strain on the traditional IP system and clients are looking to complement their registrable rights (eg, patents and designs) with soft IP assets to protect their innovations.
"Clients need to respond to [these] evolving market conditions and technology disruptions to survive. …In industries such as mining, agribusiness and construction, digitisation is causing our clients’ technologies to cross traditional boundaries. This requires our practices to bring multidisciplinary teams to develop clients’ patent and IP positions."
How do you measure the success of an IP strategy?
In essence, a good strategy should provide a competitive advantage that is decisive, durable and defendable. The success of an IP strategy is measured by how effective it is in meeting the objectives of the business. I do not think there are any absolutes that can be used to define success as it is always contextual. Our approach is to consider intellectual property in its ability to create value, which may be more than its ability to generate future income. It usually comes back to an organisation’s purpose and how the intellectual property can be directed to support that purpose.
In considering the hallmarks of a successful IP strategy, it is vital that the intellectual property is underpinned with an understanding of the broader intangible assets of the business and the dependencies of those assets. This will unpack what the key value drivers are in the business. It also needs to be seen in the context of the market. Finally, the IP strategy needs to be formulated with an understanding of the organisation’s ability to deliver on that strategy.
What would you say are the most important steps of any asset valuation process?
The value of intangible assets is multifaceted. It requires an integrated assessment of the market landscape together with functional, legal and economic characteristics of the subject’s assets.
Many corporate strategy theories relate to the importance of a business establishing and maintaining a competitive advantage. The basis underpinning a competitive advantage is often based on the intellectual capital of the business – whether that be registrable IP rights (eg, patents, trademarks and designs) or other rights such as copyright, know-how or confidential information. A thorough understanding of the IP rights and their effectiveness in providing a real competitive advantage (rather than just a perceived one) is a critical factor in understanding asset value and sustaining competitive advantage.
If you could make one change to the Australian patent regime, what would it be and why?
There are some aspects of patent law relating to eligible subject matter in Australia that need addressing (as it has put us out of step with the rest of the world), but if considering one change to the regime, then I would look to make a step change in how the patent process is utilised.
For most clients the patent system is opaque, difficult to navigate and uncertain. Reducing that complexity and uncertainty for users could unlock competitive advantages and foster innovation. To make this step change requires collaboration between the IP office, inventors and IP service providers to reimagine the examination process so that it can become better integrated into a business’ development process.
The complexity of the patent system stems largely from difficulties in searching patents. Drawing on digital advances such as machine learning, there is an opportunity to reimagine the patent registration process from a compliance process to one that may aid technological development with more direct feedback on the rich technical resource of patent literature.
What advice would you give to someone considering a career in IP law?
My advice is to spend time to deeply develop your skills and knowledge in intellectual property. This is a foundation plank and provides highly privileged knowledge. From that position, broaden out to understand the economic context that is at play with intangible assets. These are the assets that are driving more than 80% of business value. This will inform and support your professional IP advice, deliver more client value and have an impact on innovation.
*This article was originally published on IAM-Media on 19 November 2020, view here.