Company IP profile: Shell taking the softer approach

Imagine, if you can, having to protect the technology behind vessels used to clean and liquefy natural ocean gas, machines that work way down into the depths of the ocean, and software that analyses geological formations miles beneath the earth’s surface.

That’s the task of David Koris, general counsel for intellectual property at Royal Dutch Shell, better known simply as Shell.

Koris oversees the oil company’s global operations from its headquarters in The Hague, the Netherlands.

And global the task is. Shell currently has drilling operations on all seven of the earth’s continents, including Antarctica, as part of its quest to provide oil to the world.

As of 2014, Shell was the fourth largest company in the world by revenue, generating $421.11 billion.

Contrary to what you might expect for such a dominant global force, Shell’s primary IP focus is leveraging greater value from its rights, as opposed to enforcing them around the world.

But with so many different technologies the company is faced with a tricky choice when deciding what form of IP protection to pursue.

Patents or trade secrets?

One internal debate that the company is having is whether it is better placed to opt for patents or trade secrets to get as much revenue and use from its IP as possible.

“There may be commercial reasons to have a balanced mix of patents and trade secrets or a mix where one form is emphasised more than the other,” says Koris.

“A prerequisite of a trade secret is to keep the secret out of the public domain,” he explains.

“Where the technology will be disclosed to the public in the normal course of use, the IP of choice for these technologies is often patents, but where the business plan permits highly valuable technology to be accessed only by Shell in its normal course of use, then the information may be held as a trade secret,” he adds.

Another contributing factor is the area of the world in which the technology will be deployed.

Koris says that where technology is used in regions where laws, regulations and enforcement practices are still at an “early stage of development” it may require that only trade secrets be used.

“An important factor in the effective utilisation of trade secrets is whether the organisation supports a high level of discipline and training in its information and security management practices,” he adds.

“The long-term business plan is a primary factor in this decision.”

To help with its goal of leveraging value from its IP, Shell has split its activity into four sectors: core services, partnering services, strategic services and stewardship services.

Under core services and partnering services are the company’s “traditional forms” of IP practice, including creating assets and providing legal advice on all forms of IP, whether they be patents, trademarks, trade secrets, copyright, designs or domain names.

“Our team provides advice and support in general contracting and procurement, technology development, large project agreements, and acquisitions and divestments,” Koris explains.

Partnering involves working closely with the company’s technology team to ensure that the technology deployed by Shell respects third-party IP rights.

“The IP team takes a lead role in information management and security overseeing Shell’s confidential information, know-how and trade secrets in a manner which preserves their value in line with defined IP strategies,” he adds.

As part of its “strategic services” efforts Shell focuses on understanding the patent landscape for certain technologies, as well as benchmarking companies in business areas to advise on targets and businesses plan objectives.

“Creating IP strategies which reflect the long-term objectives of relevant business plans is an important deliverable from this category of services,” he says.

The company’s “stewardship services” centre on developing its IP portfolios.

“If you look back at the historical role of a steward on a large agricultural estate, the steward was expected to manage the affairs of the estate including the planting and harvesting of crops so that an optimal return could be realised in the marketplace,” Koris says.

“Shell’s IP team performs a similar role in guiding and developing the various IP portfolios to ensure the technical focus, size, scope and mix of IP assets being developed are achieved.”

Stewardship also includes the development of commercial proposals and the calculation of the value of the associated IP assets.

“These commercial proposals may cover a wide range of objectives from facilitating partnering relations in technology development to generating royalty income through licensing to third parties,” Koris adds.

A robust protection

With these four goals it would appear that Koris has a lot on his plate and although a large portion of his time is focused on how “partnering” and “strategic” developments can help to monetise Shell’s IP, Koris is also aware that on occasion the need for litigation will arise.

WIPR was given a taster of how Shell views potential litigation at the International Trademark Association conference in San Diego in May.

Sian Bowen, the company’s managing counsel for trademarks, said during one of the sessions at the event that before the emergence of social media there were just two parties in a discussion about alleged infringement, adding “we were taught at law school to be aggressive”.

"Through partnerships between government and business and in some cases business to business, best practices can be shared in areas of product verification, investigation and enforcement."

But she went on to argue that “the softer approach” does yield positive results.

She added that trademark owners should “take the emotion out” and “keep a cool head” when they see something that annoys them. Before conducting litigation IP owners should consider what it must be like to receive cease-and-desist letters and look at what the actual harm is, she said.

Koris tells us that the comment should not be taken literally.

“The comment about utilising ‘a softer approach’ should be understood to mean that Shell takes a practical business approach in coming to a decision about its enforcement practices for IP rights,” Koris explains.

He adds that due to the “considerable value” of Shell’s IP it will still consider “aggressively enforcing” its rights against potential infringers, whether it is for patent or trademark infringement or trade secret misappropriation.

“Shell has a robust brand protection strategy and carefully polices its rights.

“However, sending aggressive cease-and-desist letters will not necessarily yield the best results in every jurisdiction with every potential infringer. Where possible, Shell prefers to resolve disputes through negotiation.

“We touched on the role of the ‘IP steward’ and the delivery of core services and partnering services in creating assets, and ensuring that the IP rights of other companies are respected.

Shell expects the same treatment by other companies regarding its IP assets.”

Fighting fakes

One of the most problematic types of infringement, according to Koris, comes in the form of counterfeiting which, he says, is an “ongoing problem faced by many international oil companies”.

“Counterfeiting represents a serious business risk of market share loss to Shell’s lubricants business and potential long-term damage to the Shell brand, our products, our profits, our customers and our reputation. As the industry leader, Shell is an especially attractive target.

“Our strategy is to focus on select markets and product categories, and use a combination of effective technology measures and consistent enforcement processes to deter counterfeiters from targeting Shell products,” he adds.

Koris says the objective of Shell’s anti-counterfeiting programme is to recover lost market share from counterfeiters, and protect its customers from the adverse effects of using counterfeit Shell products.

“By enhancing our anti-counterfeiting measures, we aim to make it more difficult for counterfeiters to target Shell products,” he explains.

“Fighting counterfeiters is a difficult exercise and a recognised problem common to developed and developing markets. Through partnerships between government and business and in some cases business to business, best practices can be shared in areas of product verification, investigation and enforcement.

“Counterfeiters have no desire to provide quality products and therefore have very low costs. They also direct all their effort to mislead customers into believing they are buying genuine products,” he adds.

According to Koris, the most problematic markets include China, Indonesia, Pakistan, Colombia and Russia.

There is no doubt that Shell has faced its fair share of criticism. This was exemplified when the company’s recent attempt to send an ice-breaker to the Arctic was temporarily stalled when a group of environmental activists abseiled off a bridge in Portland, Oregon in a bid to block a Shell vessel from leaving the city’s port.

But in the IP world its challenges are of a different nature, and the company must always be on its guard to protect its assets. Its four sectors—core services, partnering services, strategic services and stewardship services—do not make direct reference to litigation, and although the need for it does sometimes arise, it is not Shell’s first port of call.

While it may be a globally dominant brand and have every right to vigorously enforce its IP, Shell’s ‘softer approach’—even if that means adopting a practical strategy—is refreshing