Patrick O'Reilley, Partner at Finnegan discusses how open innovation fits in relation to the globalization phenomenon

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Video title: Patrick O'Reilley, Partner at Finnegan discusses how open innovation fits in relation to the globalization phenomenon
Released on: August 03, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to D. Patrick O'Reilley, Partner at Finnegan
Open innovation
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at LESI's Conference in London 2011. On this show I have Patrick O'Reilley, who is a Partner at The Law Firm Finnegan based in Washington, welcome to the show.
Patrick O'Reilley:
Thank you very much.
Fintan Walton:
Pat, as well as been a partner of Finnegan you also the past President of LESI, you've been a past President of LES USA and Canada and so you've a lot of experience if I could say in the whole filed of licensing and in the prosecution of IP as I understand it, from your perspective I'd like to talk about open innovation, and the first question from me is really how would you describe open innovation? What is open innovation?
Patrick O'Reilley:
You know it's probably a terminology to define a business plan, a business approach to innovation. It's really a return to the way it used to be in kind of corporations until perhaps the early 20th century used to get their inventions or developments from outside in research institutions or development labs, but in the 20th century they internalized their research they started developing their labs for example and most corporations had huge research and development activities internally, but they believed at that time that you would direct that research better it was also better from a competitive point of view, because they didn't have to compete for that technology and that probably peaked in the 1970's or early 80's and ever since then companies have realized that they no longer can compete doing their own internal research and they've had to go outside and that outside is part of open innovation instead of they not invented hero syndrome now it's looking for technology from outside the company. The other side of open innovation is taking the intellectual assets that they have internally but are not using and leveraging that into money by licensing that technology to others.
Major pharma companies and open innovation idea
Fintan Walton:
So for lots of major corporations getting access to outside innovations under the open innovation idea puts them in a competitive situation where they have to go and competitively seek out innovation and move faster than the competitors, does that in itself fire up innovation to a higher level?
Patrick O'Reilley:
Certainly, because competition that the sources of the innovation the small biotech company, the university they are all generating technology now and they are in the position as the sellers if you will to leverage that technology into some real money and actually see the products, see the marketplace, so the universities have developed technology, they have spin-off companies which then carry it to the next stage and then their goal is to license it or be acquired by a major pharmaceutical company for example, so often there are collaboration arrangements where the small company continues in existence and generates new products for the large company and it's nice synergistic relationship because the small company has all the ideas, the flexibility, the nimbleness to come up with new technology and the large pharma company has the ability to bring it to market and to market it there.
Fintan Walton:
Sure, I suppose one of the key things though is that for major corporations it's much more difficult to let go of their own innovation?
Patrick O'Reilley:
They don't have to, they don't have to let go of their own innovation and indeed they still maintain that innovation, but there many times what they are doing is that bringing in technology that's too early stage from the university for example it's often too early to be marketable and so they still have internal development activity and so they'll essentially taking some of what used to be basic research and transfer them into development activity to bring product to the stage where it can be marketed, so there is a continuing internal development. The problem that they used to have in was that there was a bias against bring technology in because it wasn't developed here and so we don't know what it is, we don't know the genesis of it how can you buy bring in technology when we have just as good technology here also that was the competitive question if you are dealing with an outside source it's not always clear that you would have a 100% control over a market in the particular technology and so that makes sort of challenge I guess.
Fintan Walton:
Yes, I suppose when I said that go I meant from a pharmaceutical company out licensing its technology it's always been difficult and has been difficult for a large company to go through the management process of decision making to say right we are prepared to out-license this particular asset?
Patrick O'Reilley:
I don't know that pharma companies at least in my experience have been too quick to out-license their technology, open innovation now out-licensing aspect of it is perhaps more apparent in the electronics area and the software area than it is in the pharma companies, but some do, some do package there a portfolio stuff that they decide they are not going to pursue in the market and they leverage that and make some money by licensing it to someone else.
Fintan Walton:
Sure, but sometimes there is a platform technology that can be applied to for other companies and sometimes these pharmaceutical companies find it difficult to go through the decision making process to allow that platform to go out into the open market, if I can say that?
Patrick O'Reilley:
Yes, I think that's true and it's a matter of control once they lose control over they don't know how it's going to come back and point of being used competitively against them.
How does open innovation fit within globalization phenomenon?
Fintan Walton:
Yes sure. So how does this fit, then how does open innovation fit in relation to the changing world that we have? How does it fit within the globalization phenomenon that we haven't and the emergences of countries like China the big countries for an example?
Patrick O'Reilley:
There are probably 1000's of new start-up biotech and pharma companies in China, just in China. I mean they may be two or three people they were trained in the west and went back to China and open a little business all of that is bringing up new ideas all the time and no company can keep up with this in terms of competing with unavailable technology and so they don't want to they can't, so that's there is more and more this available and the worldwide growth of education, the internet communications the reality is if you don't take advantage of the global development of technology you are gonna fall behind.
Patrick's perspective: Challenges over next few years
Fintan Walton:
Sure, and so as somebody who has been a President of both the LES in the US and Canada and President of LESI the international part of the LES, what do you see going forward in the next few years? What are the challenges as you see?
Patrick O'Reilley:
In the open innovation space I think the biggest challenge is to have an efficient process for the transactions that are necessary. I mean open innovation does not mean open source, it does not mean it's free, it just means that a company is buying it's competitive advantages from some outside source so it's still an exclusive relationship particularly in the pharma field and pharma companies are still they want their exclusive space and these transactions with a small start-up company or with the university the collaborations that might result in these relationships all require transaction and the transactions today are sort of one off there each one is uniquely designed and negotiated from anywhere from months to year and that kind of tech transfer process is not going to be, is not gonna last it's got to be more efficient so I think you are gonna see more standardized relationships in order to make it a more efficient process. And the other thing that's necessary because of the geographic sources of all of the technology is that we need some degree of commonality of legal stock system and enforceability of contracts so that you can have, you can rely on a contract with a Chinese company and it will be enforced in China as well as wherever the other party might be and so that we will drift towards that commanality over time.
Fintan Walton:
Patrick O'Reilley, thank you very much indeed for coming on the show.
Patrick O'Reilley:
It's a pleasure.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Patrick O'Reilley
Patrick O'Reilley focuses his practice almost exclusively on transactions involving intellectual property and technology transfer. He counsels large and small clients on many types of transactions ranging from simple license agreements to complex research and strategic marketing collaborations; strategies for exploiting intellectual property to achieve desired business goals; and intellectual property-related agreements, such as employment, consulting, joint R&D, license, marketing and distribution, supply, and collaboration. He also has experience in creating standards-based patent pools. In addition to his transactions-based practice, Mr. Patrick O'Reilley guides clients through disputes arising from technology transfer contracts and helps clients formulate, negotiate, and prepare agreements settling disputes. Mr. Patrick O'Reilley represents clients as licensors and as licensees in all industries that employ technology transactions, including biotechnology, telecommunications, computer technology, pharmaceuticals, and consumer products. Professional Highlights Taught licensing for 20 years at George Mason University Law School and for 30 years as CLE for Patent Resources Group. Designated as a Certified Licensing Professional (CLP). Professional Recognition Listed in Intellectual Asset Management (IAM) Magazine as one of 250 leading IP strategists, 2009 and 2011; and as one of 250 of the world's leading patent and technology licensing practitioners, 2010. Professional Activities Licensing Executives Society International (president 2009-2010) Licensing Executives Society, USA & Canada (president, 2004-2005) The District of Columbia Bar Bar Association of the District of Columbia American Bar Association American Intellectual Property Law Association
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Finnegan: With more than 375 intellectual property lawyers, Finnegan is one of the largest IP law firms in the world. From offices in Washington, DC; Atlanta, Georgia; Cambridge, Massachusetts; Palo Alto, California; Reston, Virginia; Brussels, Belgium; Shanghai, China; Taipei, Taiwan; and Tokyo, Japan, the firm practices all aspects of patent, trademark, copyright, and trade secret law, including counseling, prosecution, licensing, and litigation. Finnegan also represents clients on IP issues related to international trade, portfolio management, the Internet, e-commerce, government contracts, antitrust, and unfair competition.