IP99: panel raises pay-to-evaluate IP issue

IP99: panel raises pay-to-evaluate IP issue
EDINBURGH, Scotland — Without providing definitive answers regarding business practices involving intellectual property (IP), a panel discussion hosted by the Virtual Components Exchange (VCX) at the IP99 Europe conference and exhibition served to highlight the issues, differences of opinion, and opportunities that exist in the emerging semiconductor IP industry.

One of the more controversial issues raised by the panel was a trend for third-party IP providers to seek evaluation licenses in the early stages of engagement with potential re-users of their IP cores.

These evaluation licenses would go beyond the nondisclosure agreements that prospective partners have traditionally signed, and would seek a financial return for the IP provider's time and support while a potential user examines the IP and verifies that it is fit for use or seeks to get it adapted. These licenses could also be used to establish a potential licensee as a serious and trustworthy partner.

The panel kicked off with Bryan Lewis, ASIC and system-level integration analyst at Dataquest Inc. (San Jose, Calif.), who painted a rosy picture of a $140 million IP cores market underpinning a $136 billion semiconductor market in 1998 and growing at over 30 percent per year for the foreseeable future.

"The leading ASIC vendors are the haves with their IP connected to silicon and design methodology," he said, portraying them in a tug of war with third-party IP vendors for control of the system-on-chip industry.

"But the OEM companies have the power. If the OEMs say they want the independent IP industry to happen it will happen. They could be the Sumo wrestler on the independent IP vendor's side," he said.

With the cost of remaining in silicon manufacturing increasing with each process generation, Lewis observed, "not all the leading ASIC vendors can afford to stay in play. We therefore believe design services will go mad in the next few years."

But Lewis said a number of blocking issues remain: "How do you prove up front that you will get what you paid for in a timely manner? What happens when the chip doesn't work? And how do you protect your IP?"

Panelists Dan Caldwell, IP sales manager at Mentor Graphics Corp., and Mark Greenberg, IP licensing manager at Motorola Inc.'s Semiconductor Products Sector, argued that the risk of IP theft is low, so the balance between IP protection and time-to-market should favor the reaching of speedy but rigorous agreements between parties.

"Willful misuse of IP is very rare in corporate environments in the European Union, the U.S. and the Pacific rim," Caldwell said, calling on his experience as a manager of Unix operating system licensing at AT&T.

Greenberg argued that the traditional mechanisms of copyright, patents and trade secrets were usually sufficient. "Technical protection mechanisms such as watermarking and encryption are mainly a disadvantage, although they can prevent tampering with IP," he said.

But the subject of evaluation licenses was raised by Niamh Lavery, legal counsel at Integrated Silicon Systems Ltd. (Belfast, Northern Ireland), who took a contrary view referencing her company's position as a third-party supplier of IP, and therefore a company totally dependent on its IP.

"I disagree. Back-end protection is not enough. We use all of that plus NDAs, evaluation licenses and other mechanisms. Front-end protection is necessary because policing is very expensive and cannot be guaranteed. We have to anticipate rather than react," she said.

Shonaig Macpherson, managing partner of Edinburgh law firm McGrigor Donald, made the additional observation that patent protection may not be relevant in the fast moving systems-level electronics industry.

"Patents and traditional IPR [intellectual property rights] protection may not be appropriate in a mix and match environment like system-on-chip. We reckon it can take thirty months to get worldwide patent protection. Trade secrets and copyright are becoming favored in the biological sciences for similar reasons."

Outside the panel session Andy Travers, chief executive officer of VCX, confirmed that evaluation licenses were something that the VCX may have to support in its Internet-based software that is intended to support the staged disclosure of data between potential IP licensee and licensor and subsequent license contract configuration.

Pierre Bricaud, director of marketing for IP programs at Mentor, also confirmed that Mentor was examining evaluation licensing for its Inventra library of IP cores.

But Paul Webster, a researcher at AT&T Laboratories (Cambridge, England) and a member of the panel audience, warned that evaluation licensing could have negative effect on innovation within research groups.

"Only perhaps one percent of the things we research got to volume but we need to be able to try things out. We can't afford to pay to evaluate cores," he said.