O

rganisational intellectual property (patents, trademarks, trade secrets, confidential information etc.) can be utilised in different ways either internally by the owners or externally by licensees or third parties. This internal or external utilisation of IP comes with opportunities and challenges to businesses and institutions. These IP related opportunities and challenges require appropriate policies and procedures to avoid the financial costs that come with inappropriate use of IP or IP related disputes.

Well-conceived and well implemented corporate IP policy and procedures are a critical internal element of an organisation’s overall IP Strategy and these (should) become the basic rules that the organisation follows in handling IP

There must be a consistent and effective process of recording, evaluating and protecting IP within an organisation. Template based IP policies are usually a starting point for most organisations but successful IP policies and procedures are those that are well crafted and fully integrated across an organization in line with its vision, strategic goals and a full understanding of the respective industry. Besides an organisation’s vision and strategic goals, a corporate IP policy should be tailored to its industry and specific business approach.

Some key elements of a corporate or institutional IP policy

Among several elements, a corporate or institutional IP policy should include and address the following key elements:

• Important Definitions
• Aims of the policy
• Ownership and use of IP (Employees and 3^rd Parties)
• Internal IP disclosure Procedure
• Departmental Roles
• Commercialisation/Licensing of IP and how revenue will be shared
  • between the organisation and its employees/researchers/inventors,
  • between departments within the organisation, and
  • with research partners or sponsors of R&D.
• Internal Training and education
• Monitoring and Evaluation of IP Policy

Aligning IP Policy with strategic goals

The IP policy should provide a consistent framework within which an organisation’s IP is developed and managed for its benefit, the creators and the public at large in line with the vision and strategic goals. For IP intensive industries, IP creation and utilisation is an essential function of an organization whereas other organisations might consider it as a subordinate function.

In either case, IP remains critical in maintaining business value and competitive edge. As a result, the development of an organization’s IP policy and procedures should always encompass the role of IP in the organization’s strategic business planning, risk management and employee training and education.

As part of the strategic goals, the growth plan of an organisation should also be considered and several questions answered.

1. How is the organisation going to grow in various markets?
2. How is organisational and third party IP going to be handled in those markets?
3. Should the organization consider joint ventures or strategic alliances, how should the organization handle jointly developed IP?
4. If jointly owned, which party will own which rights and where to any new IP resulting from that combined effort?

The range of questions is non-exhaustive and depends on an organisation’s approach to using their IP for strategic purposes.

Making it your own: Creating an organisation and industry specific IP Policy

An IP Audit is one of the internal elements of the IP Strategy which forms the basis of the overall IP Strategy which is best used as an initial step to feed into the development of an IP policy. Successful corporate IP policies and procedures are to a larger extent hinged on the organization’s culture of addressing and respecting the ownership and use of IP, whether created internally or owned by third parties. An organisation’s culture has significant influence on the successful implementation of a corporate IP policy.

The ability to have an organisation or industry specific IP policy is largely depended on how IP-intensive that specific industry is. For IP-intensive industries with a significantly higher investment in R&D, the policy approach has to be strict since the core of their industry is IP. A good example is the pharmaceutical manufacturing industry. On the other hand, non-IP-intensive industries would have a different IP policy approach.

As indicated above, a template based approach might be a starting point. However, without a full understanding of the specific industry and the particular importance of IP, an organisation will end up with a half-baked product that does not allow extraction of maximum value from IP.

Internal Training and Education

Having a well-developed corporate IP policy is an initial step, having the policy fully understood and embraced by employees is the next crucial part. Training and education is an essential element of implementing an IP policy to clear all IP-related misunderstandings and misconceptions. These misconceptions can result in mistakes which usually lead to IP infringement, misuse, or misappropriation.

Some organisations do have dedicated internal IP departments or Innovation departments which will spearhead the training and education. For other organisations, the human resources department takes the responsibility for implementing IP training and education with the IP Department having an oversight.

For best results, it is recommended to have guidance and assistance from experienced IP consultants who will work together with your in-house counsel and responsible departments’ managers. IP policy related training and education should be organisation wide covering all departments where any form of IP is created or used

Monitoring and evaluation

The corporate IP policy has to be monitored on an on-going basis by the responsible department depending on the agreed departmental roles.  The corporate IP policy monitoring and evaluation periods may vary per organisation but it is recommended on an annual basis and appropriate adjustments and amendments may be done from time to time.  For the purposes of consistency and alignment with previous training and education, IP policy amendments and adjustments should be properly communicated and shared with staff members. The policy itself should also prescribe the appropriate procedures for implementing any changes.

Conclusion

A well-conceived and properly implemented corporate IP policy should provide a consistent framework within which an organisation’s IP is developed and managed for its benefit, the creators and the public at large in line with the vision and strategic goals. Depending on the organisation’s size, industry and strategic goals, the complete process might be quite an expensive one. However, the corporate IP policy process can still be achieved in stages, which in most organisations already exist but are not properly documented.

How can we help?

At PalladiumIP, our aim is to help the organisations to put in place best internal practices for the creation, protection and management of intellectual property. Our priority is assisting clients to better utilise their intellectual capital and implement more effective internal IP management policies and procedures.

W

hen it comes to mergers and acquisitions, many business leaders tend to value a business based on specific assets, mostly tangible assets like office buildings, employee count, office furniture, equipment, and so on. 

There is nothing wrong with assessing these assets, but neglecting intangibles like intellectual property can have devastating consequences in the future. Here are four (4) of the most common intellectual property issues in mergers and acquisitions:

01. Issues Surrounding Intellectual Property Ownership

Issues Surrounding IP Ownership are perhaps the most common IP problems in merger and acquisition transactions. This issue, or if we may say, negligence, comes in different forms. For example, a business leader interested in acquiring another firm will take all the required time to audit the accounts of the seller as well as identify physical assets owned by the seller. 

However, he or she may not carry out due diligence to identify the IP assets owned by the seller as well as assets that the company co-owns or cross-licenses with third parties. Having a thorough knowledge of the ownership structure of the seller’s intellectual property can put you in a favorable negotiating position.

Moreover, knowing the IP assets owned by a firm, their present and future commercial values, and the extent of exclusivity accruable from the assets will determine the nature of agreements to be drafted.

02. Issues Surrounding Employee and Contractor Rights

In most jurisdictions, ownership of intellectual property rights vests with individual creators such as employees, external consultants, contractors, agents, etc.

Although having a definitive transfer of ownership agreement takes care of this legal loophole, most employers and companies still neglect to take the necessary measures.

Even in common law countries where the “work made for hire” doctrine applies, the ownership of intellectual property rights for any work produced outside the scope of employment remains with the creating employee unless such rights are transferred to the employer through a written agreement.

Thus, to avoid potential conflicts with employee inventors or creators and contractors, it is best to obtain IP assignments from anyone involved in the creation of target IP assets.

Also, effort must be made to resolve pending and potential disputes before consummating the transaction.

03. Open and Potential Disputes

We have seen many instances where a company acquired a new business or business unit intending to add an asset to their business but end up inviting future lawsuits. During mergers and acquisitions, it is essential to carry out IP searches with relevant authorities to identify assets owned by the seller.

However, searching IP databases isn’t enough. It is vital to ensure that the target IP assets are not being infringed on. In the same vein, it is necessary to ensure that the target IP assets are not infringing on a third party’s rights. In the event that there is an infringement on any of the target intellectual property or a violation of a third party’s intellectual property rights, steps must be taken during the merger and acquisition process to avert future lawsuits. 

For instance, standard “non-infringement” representations, warranties, and indemnification in the purchase agreement can help to prevent future disputes.

In addition, there should be a definitive post-closing agreement to protect the buyer from financial risks, including future IP claims.

04. Issues Surrounding Intellectual Property Validity

Another common aspect of IP due diligence often neglected during mergers and acquisitions is IP validity. Not considering IP validity during transactions can have two significant consequences.

Firstly, for the seller, the transaction may fall through if the prospective buyer discovers that some of the IP assets are not valid. This is usually the case if the IP assets are considered a key element in the supposed transaction. For the buyer, acquiring or merging with a business or business unit without checking the validity of the intellectual property also has its consequences.

First, the business may acquire or merge with a company that hasn’t been maintaining its IP portfolio. Thus, the proposed IP assets may be lapsed, abandoned, and in a worst-case scenario, registered by a competitor. Besides, even if the company is prompt with all renewal filings, some IP rights, although issued, may not have met some validity criteria and can be prone to invalidation claims. This issue is mainly associated with patents.

For instance, if certain “prior art” is an essential component of an invention but was not fully considered during a patent examination, the validity of such patent, even when granted, can be contested.

Thus, it is essential to employ the services of an experienced IP consultant to carry out an all-round assessment of the target IP assets before finalizing any merger and acquisition deal.

Have any questions about IP transactions and IP Due Diligence, feel free to contact us on info@palladium-ip.com

In today’s world, businesses are increasingly recognizing the value of intellectual property in strategic decision making.

For small and budding businesses, the registration of IP assets such as a trademark has become a top priority. While the big players are continuously seeking ways to either gain a competitive advantage in the marketplace or generate more revenue for their business. 

However, even though many businesses are aware of the value of intellectual property rights, a lot of them still struggle with developing a holistic IP strategy. By holistic, we mean an IP strategy that doesn’t just protect their IPRs but also position them to extract the most value out of their IP assets.

So today, we will be highlighting the three core elements of a revenue-generating IP strategy. 

01. Strategic Protection

Traditionally, intellectual property law is designed to offer protection to innovative businesses by giving them exclusive rights to their creations and inventions.

However, the business world is moving at a breakneck pace. Technology has made business processes more sophisticated yet more vulnerable; hence, the need for a proactive approach to protecting IP.

The defensive publishing approach is one of the most functional and modern methods to adopt. This approach puts your assets in the prior art domain, thus, cementing your ownership of the disclosed IP assets.

02. Value Maximization

Traditionally, IP laws are designed to protect inventors through exclusivity.

However, the days are gone when IP assets merely sit on a firm’s balance sheet without contributing to the revenue flow of the company. That is for companies that deem them worthy of being listed. In fact,  in many cases, business owners don’t record their IP assets on the balance sheet.

This issue of non-monetization of IP assets is mostly common among small business owners. 

For well-established businesses, we have noticed that their problem has more to do with the lack of proactive monetization measures.

For instance, most businesses have budgets and teams dedicated to bringing in sales.

Contrastingly, the same businesses don’t have proactive strategies to pursue licensing and or commercialization strategies.

A  revenue-generating IP strategy must incorporate measures designed to bring more value to the business through the various IP assets held by the company. 

Furthermore, it should incorporate measures to tackle infringers as well as identify opportunities in new markets and cross-licensing.

03. Cost-efficiency

Our approach to strategic IP portfolio management is simple – increase value accruable from assets, reduce the cost of management.

While it is crucial to pursue protection and monetization opportunities proactively, it is equally essential to seek ways to reduce the cost of managing IP assets. 

One common mistake among corporations and government organizations is the urge to protect everything, hence, neglecting the financial cost of managing a broad IP portfolio. By financial cost, we mean expenses such as management fees, prosecution fees, and of course, renewals. The financial burden becomes even more unnecessary when a portfolio is full of non-income producing IP assets. 

Going back to our approach – “increase value, reduce cost.” It is advisable to keep IP assets that meet either one or both of the following requirements:

• Guarantee tangible financial returns
• Provide a competitive edge against competitors

So these are what we call the three core elements of a  revenue-generating IP strategy.

If you have some questions about strategic IP portfolio management, feel free to Contact Us