Leveraging on Intellectual Property in a Post-Pandemic World
(Written by: Mark Cheng)
As countries around the world prepare to open up their economies following months of lockdown, businesses large and small will need to find their feet as they seek to adjust to the new normal that confronts them.
In what is being described as the worst global decline since the Great Depression of the 1930s, the COVID-19 pandemic and the ensuing lockdowns are expected to knock almost $9 trillion off global GDP over the next two years. Singapore will not be spared, with the local economy bracing for its worst recession, and authorities forecasting shrinking projections for 2020 at between -4% and -7%.
Faced with this harsh reality, many will struggle to adapt. Thankfully, strategic leveraging of a firm’s intangible assets (“IA”) can help enterprises to weather the storm. IA generally refers to valuable assets that are not physical in nature – such as, goodwill, brand recognition, data – as well as recognized forms of intellectual property (“IP”) – such as patents, trade marks and copyright. Given their intangible nature, IA may prove to be a particularly flexible tool to help businesses navigate the post-pandemic world.
One strategy that many businesses are now employing is to digitalize their business model, both for short-term survival, as well as for long-term resilience and growth. The third of a 4-part series, this article examines how IP and IA will play a crucial role in ensuring businesses continue to thrive while making such lateral moves.
There is a Season, Turn, Turn, Turn
The speed of digitalization before the pandemic was already significant, with 60% of global GDP expected to be digitalized by 2022. Post-pandemic however, this rate of growth has reached a breakneck pace, with an estimated 5 years’ worth of digitalization being catalyzed globally within the space of 3 months. Locally, nearly 75% of Singapore businesses have also had to embrace digital platforms as a result of the pandemic.
In order to create more value, firms have therefore had to embrace everything from digital streaming and e-commerce platforms, to cloud computing and digital wallets. Whatever your mode of digitalization, IP and IA will play a critical role in determining the success of your transition:
- IP in Collaborative Partnerships. Many businesses trying to digitalize will be forced to forge partnerships with technology owners to develop new solutions. In these collaborations however, issues of IP allocation are prominent. These include issues on: who owns patents over any inventions created, how secrecy can be ensured from partners, and what partners can do with the know-how acquired. In addition, firms will need to balance the need for open communication – to ensure fruitful collaboration and capability development – against the need for secrecy – to ensure that their own interests in commercialisation and exploitation are not hindered.
- Unclear IP Protection Mechanisms. The process of digitalization will also lead to the creation of new types of IP, including those associated with data and software. However, it is often not clear how and who can protect such IP, as existing legislation has not always kept up with the rapid pace of technological progress. Questions such as “who owns the data and by which law is it protected” and “how do IP laws protect the output of AI and machine learning” do not always have ready answers. In addition, the scope of patent protection that is available for software and algorithm solutions may be limited in nature. Professional legal advice is therefore a necessity to navigate this complex and often murky landscape.
- Increasing Risk of IP Conflicts. One feature of the new economy is that of technology and digital convergence. This means that technologies and industries that were originally unrelated are becoming increasingly integrated and unified as they develop and advance. The automotive industry for example, has seen the convergence of mechanical engineering, telecommunications, robotics, AI and machine learning, and novel imaging and sensor technologies. This convergence therefore increases the risk of IP conflicts, as competitors are no longer just incumbents of the same industry, but potentially enlarges to those of converging industries. Businesses must therefore tread more cautiously, not only to avoid infringing third-party IP, but be more active in safeguarding their own IP against third-parties.
- Protecting and Exploiting the Value of Data. With increasing digitalization, there is also increasing value held in the large volumes of data being accumulated by companies. This may include product sales data, customer records, component prices, supply chain information or other commercially sensitive data such as CAD drawings. The protection of data however, is far from straightforward, as it requires a combination of IT protection measures, database rights, copyright and trade secrets.
- Increased Risk of Counterfeiting and Free-Riding. Embracing digital platforms and e-commerce will help to amplify your brand presence and reach wider customer segments. However, online sales and distribution also make it that much harder to enforce against counterfeits, with the e-commerce industry battling a major counterfeit problem for years. By some estimates, as many as 1 in 5 products sold online are fakes. While regulators and e-commerce operators have rolled out measures to crack down on the problem, brand owners are still required to actively police and enforce their brand. This includes conducting trap purchases, issuing take-down notices, and working with authorities to press charges where necessary.
Margaret Vestager, Commissioner for the European Competition Commission, perhaps said it best when she commented that: “There are only two types of businesses: those that are digital and those that soon will be”. In the current economic climate, this has never rung truer. As firms therefore embark on this journey of digitalization, they must make sure that their sails and masts are reinforced against the challenges set to regale them.
Our team of IP professionals are well placed to advise firms on the unique challenges that they may face – whether it be seeking to protect, use or commercialize their IP and IA. Contact us if you would like to find out more about digitalizing your IP and IA, or if you require any general IA or IP assistance.
In the meantime, stay tuned for part 4 of this series, where we take a closer look at how firms can utilize their existing IA to strengthen their exit value in the event of a sale of the business or their assets.