IP + Licensing = Opportunity, Innovation, and Customer Value
Sep 15, 2009
Horacio Gutiérrez Discusses the Importance of Intellectual Property
Updated March 24, 2010
For Horacio Gutiérrez, the leader of Microsoft’s worldwide IP and licensing group, the role of intellectual property (IP) is especially important in the current economy. “The IT industry has a responsibility—now more than ever—to help customers get the greatest value from their shrinking resources. Today, sharing inventions by licensing IP enables collaboration, accelerates innovation, and provides more choice for customers.”
In addition, sharing IP helps IT vendors enhance interoperability so that customers’ diverse software and hardware work together effectively. “This is especially important for customers running ‘mixed source’ environments that combine open source and traditional proprietary software,” explained Venezuelan native Gutiérrez, speaking from Microsoft’s headquarters in Redmond, Washington.
IP: Spanning the Industrial and High-Tech Revolutions
IP incentive systems—including patents, trade secrets, copyrights, and trademarks—are essential drivers of innovation and economic growth around the world. In the United States, Congress established a patent system in 1790 to, in the words of the U.S. Constitution, “promote the progress of science and useful arts.”
The patent system provided the legal cornerstone of the 19th-century industrial revolution and spurred such transformative inventions as the light bulb and the telephone. Today, IP provides the IT and other industries with a foundation that fosters collaboration, competition, and innovation.
An Era of “Open Innovation” Driven by IP Licensing
Gutiérrez noted that in past decades technology companies hoarded IP for the most part, using it to exclude others. As a result, IT customers had to unify their systems around the hardware, software, and services provided by a single vendor, such as IBM, NCR, or Digital. That paradigm has changed dramatically over the last fifteen years, Gutiérrez explained.
“Innovation has been accelerated and made more efficient through a process of ‘open innovation.’ Essentially, what the industry has found is that it makes no sense for one company to rely solely on its own internal R&D and inventions. Instead, companies draw on internal and external sources of ideas.”
The most common way that companies access and share IP is through licensing. In 2003, Microsoft announced that it was “open for business” and greatly expanded its licensing activities. Since that time, Microsoft has entered into more than 500 inbound and outbound licensing agreements with a range of leaders in the hardware and software space, as well as with companies of all sizes and from all geographies.
“We believe our IP licensing program is a win for the industry, for customers, and of course for Microsoft. Through our licensing program, Microsoft shares the fruits of our investment in R&D with companies of all sizes across the world, enabling them to pass those innovations to their customers. Licensing creates opportunities for us as well as other companies and increases choice in the marketplace.”
We asked Gutiérrez for an example of how Microsoft licensing efforts can lead to more collaboration and innovation in the marketplace. “Our IP Ventures Program is a great example of our unique approach to IP as a means for greater collaboration. Sometimes Microsoft Research develops IP that does not fit into our immediate product plans. So instead of shelving the results of this research, we work with venture capitalists, entrepreneurs, and government economic development agencies to create new companies and new products based on Microsoft IP.”
In the past 12 months alone, Microsoft has launched four new companies that are offering four new products into the market. This unique approach has garnered positive attention and Gutiérrez mentioned that the Harvard Business School is currently working on a case study about the program and its successes.
IP and Open Source Software
We asked Gutiérrez if licensing is the only way that Microsoft makes its IP available to others in the industry. “Licensing is just part of the story,” said Gutiérrez. “We also make many of our innovations freely available through initiatives such as the Open Specification Promise. ”
In February 2008, Microsoft also announced a set of Interoperability Principles . As a result of this company policy, extensive documentation on Microsoft’s use of key innovations is freely available to anyone, including developers of open source software.
But doesn’t the open source community oppose IP? “IP systems are not incompatible with open source software,” explained Gutiérrez. “In fact, IP is the glue that has cemented collaborations between Microsoft and open source vendors such as Novell, Turbolinux, Xandros, and others.”
Mixed Source Environments, Interoperability, and Economic Value
When considering IP, Gutiérrez takes a pragmatic approach. “Most businesses operate in a mixed source world. They choose solutions based on real-world criteria—functionality, set-up and ongoing costs, and so on. And they want different, complex technologies to work together, to interoperate. Implementing industry standards is important, but direct collaboration and IP sharing are essential as well.”
For Gutiérrez, tight economic times have underscored the importance of interoperability and vendor collaboration. “Enterprises fundamentally want more value—from what they spend today as well as from past IT investments. IP-driven innovations, such as enhanced virtualization, and advances in interoperability are helping deliver this value. For our industry, IP and licensing agreements help us put the customer first.”
