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When Hewlett-Packard announced in March 1999 that it had decided to split into two companies, it created a whale of a problem for the company’s in-house IP department. HP held thousands of active patents. They had to decide which patents would go to Agilent — the new spin-off dedicated to measurement and testing equipment — and which would stay with HP. Fortunately for Hewlett-Packard, the man in charge of the company’s patent portfolio was Stephen Fox, associate general counsel and director of intellectual property. Under Fox’s leadership, HP had spent the previous decade revising and refocusing its patent strategy. As a consequence, the company’s patent portfolio was exceedingly well documented and (relatively speaking) easy to review and sort out. But it wasn’t a job to take lightly. “It was a very big challenge and a very big project,” he says. “It involved taking a look at the accumulated patent rights since HP’s inception.” What’s more, Fox explains, lawyers couldn’t begin work on the patent division until after the split was announced. News of the Agilent spinoff was kept hush-hush except at the very highest levels. Nevertheless, says Fox, most of the job was finished in first six months –between March and September. In three more months, the rest of the work of organizing, assigning, and licensing the patent rights was done. PATENT JUGGLING ACT Fox’s patent juggling act does not surprise those who have seen him in action. Bruce Berman, editor of “Hidden Value: Profiting From The Intellectual Property Economy,” says that Fox is “emblematic of a new breed of intellectual property directors and chief patent counsels at Fortune 500 companies.” If Fox represents a new breed, it’s not because he’s new on the scene. He’s been a hands-on IP lawyer for HP for over 30 years. Fox picked up an electrical engineering degree at Northwestern University, but he decided that he didn’t want to be an engineer. After briefly considering an MBA program, Fox opted instead for law school. When he graduated in 1968, Fox joined HP and has never left. “I’ve been here a long time and watched things progress,” he says, “from a more narrowly focused patent activity to broader, more entrepreneurial view of the company’s IP holdings.” By the 1990s, Fox both had some clear ideas about how to leverage HP’s patent-generating expertise and the clout within the company to implement those ideas. One measure of his success is numerical. In 1990, Hewlett-Packard was granted 218 U.S. patents. By 1999, that figure had risen almost 400 percent to 850. Perhaps as a result of the sudden growth in patent prosecutions, HP was one of the first companies to do patent prosecutions on a fixed or capped-price basis. (Other large companies like IBM and Motorola have now taken to this practice). “The result is that less and less of this type of business is going to large firms, and instead going to small firms and solos,” says one patent lawyer who has worked extensively with major tech companies. PUBLISHING HOUND Fox’s theories about aggressively developing HP’s patent holdings did not go unnoticed in the larger IP world, not least because he began in the mid-1990s to publish articles about them. “Back in 1994, I first formulated the concept of patent portfolio management [that was centered on] broad, futuristic, preemptive technology-gap filling strategies,” Fox says. His work soon came to the attention of economist Patrick Sullivan and his colleagues at Berkeley’s Law and Economics Consulting Group. Fox’s article, “Intellectual Property Management: From Theory to Practice,” became a chapter in Sullivan’s influential book Profiting From Intellectual Capital. INCENTIVIZING EMPLOYEES Kevin Rivette of Aurigin Systems, a company that sells IP portfolio management software, says that even in the early 1990s, Fox “had a pretty complete vision of how he was going to integrate intellectual property strategy into almost all the operations of HP.” One of his key successes has been making sure that employees bring inventions to the attention of the patent lawyers. “An employee is working on a project, and he doesn’t know what he has is an invention,” Fox explains. The employee needs to be pushed or lured into taking that “know-how, or show-how, or whatever that is in his mind” and “configuring what he knows under the … laws of intellectual property.” At HP, this meant putting in place a cash-incentive system for employees to write down their ideas — often after hours. “Back in the early days,” Fox says, “there wasn’t a whole lot of incentive for [employees] to take the time to sit down and write up what they know and tell somebody about it.” Rivette says that a key aspect of Fox’s vision for HP’s intellectual property holdings is Fox’s insistence on “maximizing the extraction of value” from the company’s patent holdings. “That takes many forms — not just litigation,” Rivette says, but also joint ventures and licensing opportunities. With the Agilent spinoff behind him, Fox says he looks forward adding to the company’s patent empire rather than dividing it up. Asked to sum up his focus, Fox points to the single word that has recently been added just under the widely recognized HP logo. That word is “Invent.”

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