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Interview: Martin Bowen, General Counsel, Dyson (International General Counsel, January 2014)

1/19/2014

The Dyson brand is a proudly British institution and common household name, not least because its iconic vacuums can be found inside many home storage closets. Inventor and founder Sir James Dyson is the visionary who was once frustrated at the performance of traditional bagged vacuums, before being inspired by the use of industrial cyclones to remove sawdust in a sawmill. Over 5,000 prototypes later, the first bagless vacuum hit the market in 1993.

The evolution and journey of the Dyson brand could be argued as closely aligned with that of the role of the GC. Beginning as a vacuum company over 30 years ago, the firm has since transformed into a global technology player with multiple threats from many borders, not least from companies testing the limits of their intellectual property.

Heading up Dyson’s legal team to assess and deal with these threats is General Counsel Martin Bowen, who was been with the company for 15 years.

“When I joined, we mostly did business in the UK; around 80% with 20% overseas, says Bowen. “Now we’re completely the opposite, we’ve grown tremendously and it’s been a wonderful journey to be a part of.”

Bowen, who said he would have liked to become a landscape photographer if he wasn’t in the legal business, studied Law at the University of Leeds and completed his LDC finals in Bristol, before joining Osborne Clarke where he trained as a litigator. Despite enjoying his time in private practice, over time he gained alluring glimpses into the corporate technology sector from working with manufacturing clients, which turned into a temptation he couldn’t ignore.

“Being a litigator you get a snapshot of what they were doing or a particular issue, but you never got close to the commercial heart of the business; those were the issues that really interested me. Not long after that I was approached to join a fledging legal team of just three lawyers at Dyson in 1998, I took the plunge and have never regretted it. I now get that wonderful mix of really good high-quality work in an innovative company, but at the same time establish a position where I can have a say on commercial issues as well.”

Much like the complex segments integral in any Dyson vacuum, Bowen’s day-to-day is fairly compartmentalised, beginning with him speaking to his team out in South East Asia and dealing with any issues stemming from their manufacturing operations. “We are a significant player in the Malaysian economy, spending hundreds of millions of pounds,” says Bowen. “That takes a lot of my team’s time. The main bulk of my day is taken up by the main HQ team here, with six lawyers who support the head office functions and the European business including GB and Ireland.”

Bowen is also a member of Dyson’s executive team and serves as group company secretary, working on business issues not just from a legal perspective but also from an overall business objectives standpoint.

“I also do work to compile relevant material for board meetings and the usual company secretarial bag, in the afternoons the Americas wake up – we have a significant operation in Chicago, and a dedicated team of four US lawyers working there.”

The US is by far Dyson’s largest marketplace, commanding a 25% share of the upright vacuum market. “It’s very competitive, where the competition is constantly looking to emulate the innovation that Dyson has on offer that can be challenging. It’s also a relatively bureaucratic place to do business, so there’s lots of grunt work to ensure we remain compliant to do business in the US states in which we operate.”

Dyson’s prolific defence of its IP over the years has been widely reported in mainstream news media – once the firm went international it faced all manner of opposition, in a world where change and innovation bred traditionalist opposition and cheaper alternative knockoffs.

“For us IP is absolutely at the heart of the business, and we have a team of over 20 individuals working to support the hundreds of engineers based here in Malmesbury, all of whom are working on new technology and innovative tech that will need protection. We’re not afraid to go out there into the market and protect the position we have created around our technology.”

Bowen believes that one of the biggest learning curves Dyson has had to face in the last 24 months is the transition from a vacuum cleaner manufacturer into a technology brand. The introduction of their portfolio of pioneering fans such as the “bladeless” Air Multiplier really started to test their abilities.

“The fan products have been much more susceptible to copying and we’ve been involved in a massive effort to stem the tide of copycat products that are emanating from China. We’ve dealt with close to 1,000 cases of infringement during that time and I’m very happy to say through some diligent work from my team we’ve managed to bring down these occurrences massively. But despite our efforts, very resilient, diligent and creative organisations are prepared to go to very extensive lengths to copy our products.”

Dyson’s bid to break the Chinese market began in November 2012 to cater for the booming demand for household appliances, and protecting their products in the East hasn’t always been smooth sailing. “While we find the Chinese court system very good on IP matters, sometimes enforcement of judgements and recovery of damages and making sure the organisations in question see the consequences of our efforts still sometimes a little lacking.”

Protecting IP across multiple borders requires procuring the best local expertise available to complement an already experienced in-house team, which is the main driving factor for Bowen when reviewing Dyson’s external legal panel.

“We review our panel pretty regularly – a lot of our work tends to be very specialised,” says Bowen. “To that extent we’ve built up relationships with a number of law firms around the world, but we’re always looking to open up our panel to others that can offer us something different, something we haven’t experienced before. We’re very open to trying different methods of making sure we get the right organisation in place to help us.”

Bowen recalls a litigation action on a Chinese firm that allegedly copied their design, deducing that the best approach to finding a law firm was by formal tender, much like the procurement of any other service or equipment. The unorthodox process was given over to Dyson’s in-house procurement team to manage. “It was a different approach – some of the law firms that we invited to participate were rather surprised but all of them engaged in it wholeheartedly. The firm that we initially expected to secure the project turned out not to win in the end according to the parameters we set. This was a pleasant surprise because subsequently we’ve enjoyed a very good relationship with the winning company.”

Today Dyson is assisted by an international array of legal service providers, with Kirkland & Ellis providing main advisory services in the US regarding IP, advertising and general business issues such as HR. In the UK Wragge & Co have a prominent relationship with the company, offering IP counsel. Ashfords are also instructed for employment work and TLT in Bristol for business matters, whom Bowen attests as having a strong commercial litigation team. Dyson have also consulted with Slaughter & May on tax and governance issues for the last four years.

“In Europe we use a whole panoply of law firms, some big, some small – I’d struggle to recall them all, but I think it reflects our very particular requirements in each country and our very particular requirements within the disciplines in which we operate so we look for experts, and that often means we’ll use very small outfits but with expert individuals.” Case in point – in Germany the firm instructs Alexander Howden, a sole practitioner but with excellent IP and advertising law skills, traits that have fostered a twelve-year working relationship, according to Bowen.

Looking ahead to the near future, Bowen deliberates on the legislation coming into play, particularly in the development of the IP Bill and its undertaking of criminal liability rulings for IP infringement. “While we don’t think that it’s going to be possible to avoid those criminal sanctions being part of the law, we believe some great thought needs to be put into how they will be applied and how they will deal with inadvertent infringes as opposed to deliberate infringements,” says Bowen.

The real worry is the looming prospect that a company’s board of directors could now be culpable for criminal sanctions under these new rules, which is a high risk scenario for a firm such as Dyson, which files many patents in many countries annually. “That’s extremely worrying and I’m not sure the implications have been thought out, especially in the context of a larger business like ours.”

Bowen goes on to state that this is a concern shared by the UK IP Federation, with Dyson being an active participant in the lobbying around this theme. Nevertheless, is IP law evolving to make life easier for the firm’s General Counsel?

“We’re pretty happy with the service we get from the various IP authorities and the courts, though things like the IP Bill, the single European patent and the single EU IP court do present challenges. Those in industries which generate a lot of IP have a duty to make our voices heard far more effectively than perhaps than we have in the past and to speak out earlier because I think we do have a very particular perspective that can contribute the debate on these issues.”

When asked what regulations he would like to see changing, he’d most prefer to see an easy to use, effective EU approach on patent infringement and adjudication on patent issues, minus the bureaucracy.

“I don’t think we’re going to be getting that from the current proposals, so I would cause the current proposals to stop, hit the rewind button and maybe think again about the user of this new court system – how are they going to navigate it, how certain are the decisions and how enforceable are they going to be, depending on the route through the court mechanism that the particular problem has taken.”
Not one for resting on their laurels, Dyson has continually gone back to the drawing board with their innovative products, in an attempt to simplify their use and increase effectiveness. They recently launched the Dyson Cinetic, a vacuum which negated the need to wash the housed filters (used in their traditional bagless devices). With some 1,500 scientists and engineers on their payroll, risk management at all stages of product development is another important part of the legal team’s remit.

“Our group is embedded throughout the process both in terms of ensuring we have an independent voice on safety issues, which as a consumer technology company is a high priority for us, all the way though to claims development and substantiation. It’s important for us to be embedded – each lawyer in the team is allocated projects to shadow and monitor; they become the eyes and the ears of the wider team as the product goes through its development process and into manufacturing.”

Unsurprisingly, Bowen says that his role as GC has changed massively post-recession. “When I went in-house and joined Dyson the skills of lawyers within business were interpreted very narrowly – we were not seen as particularly welcome at the business decision-making table, we were seen as a necessary evil. I think one has to be fairly resilient to try and deal with sometimes the overt way in which colleagues will try and limit the legal teams’ involvement in issues.”

However, he argues that those counsel who now set out to truly comprehend every aspect of the business, build relationships
at all levels earn their place at the boardroom table.

“We’ve enjoyed tremendous growth and success, and there’s been a growing recognition of the skillset that in-house counsel can bring. My team now has an equal voice with other teams on wider business issues, but that’s something which has come through matching up the legal teams’ goals with the business goals over the last 15 years, and a demonstration that because we understand them, the advice that we can really affect the overall commercial result. I see that as one of the things I’m proudest of during my time at Dyson, and I know from speaking to contacts and colleagues this isn’t always the case and that some still struggle to get their voices heard.”

The aforementioned Cinetic is only the first of a new wave of Dyson products on the way – another is said to be a ‘silent’ hair dryer dubbed the ‘Hairblade’, according to recently published patents. Dyson’s game is to expand horizontally and disrupt current technologies – naturally this brings new risk, and the opportunity for the company’s legal team to expand.

“We’ve got very ambitious plans to grow in size over the next five years and build on our reputation for innovative products,” says Bowen. “We have a whole staple of new products due for launch over the next two years that are very exciting and it will expand the reach of Dyson as a brand. We will also expand to meet the requirements of the business…we try and do as a much [legal] work as we can in-house, I don’t regard my team has simply post-boxes, they add value. I think that there will be a focus on investment in the in-house team as opposed to focusing expenditure externally because I think that’s the most efficient way for us to deliver what the business wants.”

With such grand plans, Bowen foresees there will be challenges for the near future, specifically in sourcing home-grown employees, in a country that is struggling to nurture domestic engineering talent.

“The main challenges involve getting the right resources to meet our ambitious plans – we are growing and expanding especially in the engineering and R&D parts of the business,” says Bowen. “We are continually trying to attract young engineers into the business to feed the development of the big ideas we have. It’s a struggle because as we’ve grown we’ve become an organisation that competes with the best out there for engineering talent. Investment in engineering education in this country is something that needs to be developed and sustained.”

Bowen compares the situation with Far East territories such as China and Singapore, where heavy investment in engineering has produced a high yield of skilled workers. “We want Britain to become a similar powerhouse for engineering graduates in the future.”

He might be getting his wish, as outsourcing experts are now reporting a rise in the costs of offshored labour and overseas transportation. Companies are already starting to bring certain business functions home, moves that also play into addressing corporate social responsibilities by providing employment for native workers.

Despite the imitators and challengers, the company has the world at their feet. With the growing demand for quality consumer appliances and the recovering economy, Dyson is poised to clean up as an innovative technology brand.

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The data centre: an asset for business growth and agility (International General Counsel, January 2014)

1/5/2014

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As Europe begins to show the signs of economic recovery post-recession, lowering overheads and improving margins are still very much on the agenda. But a company which approaches a data centre build with the same cost-cutting approach could see its growth stagnate in the long term.

In designing a data centre, CIOs are tasked with the unenviable job of looking after the bottom line in a multi-million pound complex build. Couple this with largely new and complex terms such as big data, cloud computing and virtualisation; new concepts that companies are barely starting to mobilising around. This can stall the willingness to invest beyond a ‘fit for purpose’ only design, but those who do make the leap of faith into these new innovative concepts can find themselves having the competitive edge in a re-growing economy.

Global spending on IT is estimated to be as much as £1.28 trillion in 2014, according to analysts at Worldwide Predictions 2014, fuelled by the rise of mobile data. Due to the exponentially rising demand to cater for mobile and data-hungry customers worldwide, there is a real need for housing information securely where it can be accessed quickly with minimal service disruption.

Data centre growth to sustain this need has been meteoric – investment will reach $148 billion next year according to analysts Gartner. Internet giant Google alone will spend $4 billion annually on its proprietary data systems. The Uptime Institute recently published a report stating that 36% of data centre organisations are receiving large year-over-year budget increases.
Due to the sizes, costs, unique needs plus the advantages that a location can bring, it can be fair to assume that no data centre can be exactly alike; they can be huge installations with dimensions that rival the size of the largest supermarkets, or located over a hundred feet underground under tough limestone bedrock. Some are converted WW2 bunkers, and others can even withstand the blast from a nearby nuclear detonation.

Given that the need for many companies to understandably keep the location and details of their data centres confidential, there is no way confirming how many actually exist, but analysts estimate there are over 500,000 worldwide.

Google opened its latest data centre recently in Taiwan, the first of several in Asia to cater for the booming rise of internet traffic in the Far East continent, home to half of the world’s population. India alone has seen internet users double to 200 million in just two years.

Companies are quickly following suit and co-locating with shared data centre providers or building dedicated data centres in order to offer digital services to new and emerging markets, but it’s quickly turning into a minefield.

We inhabit a world where a customer simply won’t tolerate not being able to log into their account, or that the information they need is offline because a web server is undergoing maintenance. Near-limitless data that is readily available uninterrupted on a 24/7, year-round basis is now the absolute prerequisite, and unfortunately in this era of information on tap, the user sees it as their God-given right.

Data and transaction processing should now be regarded as a second lifeblood of companies that need to be seen as having a consistent online presence. Any disruption to a data centre even for a few seconds causes major damage to not only a firm’s operating ability but their reputation.

RBS has had to deal with a high volume of consumer complaints in the last few years, following several instances where customers haven’t been able to access their savings, leaving many out of pocket, with the blame pointed at the outsourced cost-cutting legacy IT systems built under Fred Goodwin’s reign.

On average, organisations lose around £85,000 for every hour of data centre down time, according to research. Conferring from 2012 sales, internet commerce giant Amazon would be out of pocket £700 for every second its Amazon.com site went down.

In conceptualising and designing a data centre, unfortunately there is no shell scheme (or at least there shouldn’t be) or silver bullet that magically solves a large firm’s IT and data requirements.

Server virtualisation and data centre experts need to work closely with ITOs in order define the specific parameters and requirements a company needs.

Co-location facilities are the industry norm for most mid-size businesses wanting to offload the ‘heavy-lifting’ of data provision onto the experts, with the logistical support taken care of, leaving IT personnel to worry about on-site facilities.

For the large multinationals dealing in information processing and security and performed on a massive global scale could consider investing in their own dedicated data centre, which would make logistical and financial sense given the critical need for speed, responsiveness and importance of their information.

Kerry Partridge, Cisco’s Head of Business Development for Data Centre/Virtualisation, EMEAR, says: “I like to compare the build-your-own data centre versus co-location decision to that of buying a home versus renting an apartment. The home has a greater start-up cost and you're taking on the responsibility to maintain everything, but you're then also allowed to make any changes you want. The apartment (co-location) has little initial cost, your monthly costs are higher, someone else has to maintain it, but you're limited to what changes you can make to the environment. For many businesses it makes great sense to own and operate their own data centre, for others it doesn't. The three key drivers would be cost, security and risk.”

Data centres are also well-known for having gargantuan running costs: the average expenditure per year to operate a large centre is somewhere between £6-15 million depending on the scale of the operation. Yet only around 45% of this goes towards infrastructure: hardware, software, power provision and networking. The majority is spent on heating, cooling, property and labour. Intel suggests that data centres are responsible for 1.5% of global electricity usage.

Power Usage Effectiveness (PUE) has become the industry standard for measuring energy efficiency across data centres. A PUE of 2.0 means for every watt of power dedicated to computing, an additional watt is used for cooling and power distribution. Therefore, a PUE of 1.0 is the end goal in assessing a datacentre for 100% optimum efficiency.

There are several methods of mitigating an unnecessary drain on PUE and hence help ensure a cost-effective strategy. Site selection perhaps plays the most important role – physical proximity to your markets is a good way of helping to ensure fast, reliable data connections, but prohibitive real estate costs might be an issue within large metropolitan areas. Meanwhile, access to people with the right skills to maintain data centres is another factor. Data centres have begun to proliferate in areas like Scotland, Iceland and the Nordics, with colder climates which help lower energy consumption in the server cooling process.

Other businesses might need to take into account legal perspectives such as the storage of data. Partridge says: “Certain countries or industries can have legal restrictions that data must be held in a certain country or location. However, it is possible for the applications to be offshored, so the physical data centre and the applications are run in two different locations. That said, local service may be required for latency-sensitive apps. For most enterprises, the location of data centres is determined by corporate cost, convenience and reliability. No site is ‘perfect’, so you need to prioritise based upon the needs of your project.”

Green solutions in the build of a data centre can help to lower running costs, which may also be driven by environmental legislation and corporate social responsibility. Adherence to the Leadership in Energy and Environmental Design principles look to self-sustaining options in the building, such as the use of insulation schemes, outside ambient light or using free-air cooling over mechanical where possible.

Virtualisation will play a key role in data centres according to a report by Market Pulse surveying IT executives, 79% of EMEA and 90% of US respondents said it was the most disruptive technology in IT strategy. On a basic level, virtualisation refers to the methodology of separating an operating system and its resources from its hardware, hence allowing for multiple systems to run on a single computer. Software as a Service frameworks typically come from virtualisation models. Multiple benefits include reduced power, cooling and hardware costs, and more flexible testing and disaster recovery.

Partridge says: “Virtualisation today is reducing Cisco’s space requirements by a factor of four and power requirements by a factor of two. Virtualisation also avoids using dedicated equipment for individual tasks – automation is made easy and resources can be shared within the data centre more effectively; the advantages of this are flexibility and cost control. Unified data centres bring together the best of server, storage and network as a fully virtualized integrated environment, and a good example of this would be Cisco’s Unified Compute System.”

During the framework outlining process, in order to minimise the aforementioned outages, the options to protect the systems and place contingencies need considering, in order to preserve data reliability and physical security.

“To control costs, you can’t afford much duplication of resources, so this really comes back to the value and importance of the application,” says Partridge. “There are three elements that a company should consider when assessing what measures to put in place. Firstly, what should we protect; secondly, the costs that we are willing to put against this. And thirdly, what is the Recovery Point Objective – how quickly do we need it back should it go down? For example, a bank would place a very different emphasis on their corporate website when compared to their ATM systems across these three categories.”

In this era of big data, mobile and wearable devices and cloud computing, the rationale behind the conceptualisation of a data centre needs to go above and beyond simple cost-driven goals.

Ultimately, not only should a build be situated in an area where geographical benefits can be taken advantage of, but their design should enable a business to have a competitive edge while also giving ample opportunities for rapid growth and quick response to changes in the marketplace. BDMs should symbiotically work in with CIOs to balance IT time and budget measures with the potential for generating business revenue and driving innovation.

Partridge concludes: “Almost every business now runs on some sort of IT, and the data centre is at the core of this. A data centre handles and transforms data, turning data into actionable business information. Better, faster, more available data centres enable a business to act and react, to take advantage of opportunities or stem losses, faster and better and more reliably; and to make daily decisions more effectively. Take Amazon, they were founded as an online book store and have now used their data centre to grow a huge cloud hosting business.”

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Interview: Martin Bowen, General Counsel, Dyson (International General Counsel, January 2014)

The data centre: an asset for business growth and agility (International General Counsel, January 2014)

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