We are still in the early days of trying to understand the scope of change that will be brought about by COVID-19 and the indeterminately long slowdown we created to mute its impact.
The magnitude of possible change makes business-planning difficult, as companies prioritize protecting employees and supply chains. Much of the value of intellectual property comes from its use as a long-term asset that requires planning over months and years.
This makes it difficult to keep our IP both useful and relevant to the more quickly changing needs of our companies. Rather than wait out the uncertainty, experience working through a number of recessions while in-house and at IP firms suggests that now is the right time to engage in a strategic reevaluation of your IP with the goals of improving the breadth and adaptability of your portfolio.
In the ideal world, it is always a good time to reassess IP strategies. Rather than take a wait-and-see approach during these less than ideal times, consider leaning into available tools and data. Use this time to improve your data collection and analysis toward creating a broader strategy with contingencies for your more significant uncertainties. This may help you reduce costs and risks during this period of uncertainty, identify ways to leverage your IP to supplement existing profits, and possibly position your IP more centrally in your company's planning for its future.
What this means is that if you have time and some budget, or at least time, use it to improve your data sets, to analyze your data expertly, and then to broaden your IP capabilities. To get you started, consider the following seven tips:
1. Utilize data analytics.
Driven by rising costs and risks, companies have been transitioning away from amassing valuable IP portfolios based largely on raw data like the number of patents. In seeking more nuanced approaches, we have had to be careful not to place too much emphasis on measurements that normalize the intangible value of IP assets, whose value may be unique to specific owners or investors, in specific markets, in dealings with particular competitors, and through different stages of the company's business and even litigation cycles.
The goal is to spend money in more strategic ways on IP more likely to be valuable while improving the quality of IP prosecution. To do this, experienced IP owners are working to increase connectivity between their data sets, to deepen their understanding of the capabilities of specific IP in particular contexts and to better integrate IP and IP strategy with corporate decision-making processes.
Use any spare time you have to take a course on data analytics or join an organization like Corporate Legal Operations Consortium. Moving your IP rights, IP licenses, nondisclosure agreements, annuities payments and invoices into online systems can reduce your costs, free up your time, and give you quicker access to data and preliminary data analytics. This will help you make timely and informed decisions if and when your company needs to make changes.
To take this a step further, integrate IP data on your markets and competitors into your strategy. You can also consider what reporting may be useful to decision-makers in your company and different ways to communicate the data. Data analytics is the new black for IP strategy.
2. Grow corporate confidence in IP spend and integrate your IP with business management processes and personnel.
Often corporate management prefers to spend less time overseeing IP issues during times of economic uncertainty. Rather than rejoice, look for opportunities to cross the divide and integrate IP deeper into your company's business planning. Solicit input from management into how IP may support existing business and tweak your IP strategy to increase its capacity to carry more weight in marching toward the company's goals.
Consider offering management, inventors, and key stakeholders relevant IP training. Coordinate discussions on IP reporting, accounting, and finance for your chief financial officer and finance staff. Put together a program for your board on IP issues for board members. If your company may be involved in a merger or acquisition as a result of the slowdown, offer a program for executives and key personnel on IP issues in mergers and acquisitions. And as maybe even more timely, offer a program on IP issues relevant to rebuilding your supply chains.
3. Reduce costs and/or better align costs with corporate goals.
The process of acquiring and asserting IP has considerable variability built into it. Request a 1:1 with your finance team to get better insight, and work with your outside counsel to adjust your spending toward times that may be more tolerable to your company. Talk with your service providers to see whether consolidation can lead to savings you might otherwise be missing, and check to see whether your software tools have better pricing or new capabilities you might have missed.
While updating and improving your IP strategy, you may find that you have IP that you no longer need, that is too far removed from your business goals, or that you are unlikely to monetize otherwise. You can reduce costs by selling, donating, or even letting the IP lapse. Or, you may be able to find someone willing to commercialize it into new markets that creates new revenue streams without jeopardizing existing ones.
Larger IP expenses like existing or planned litigation tend to have timelines that are longer than typical economic downturns. While adjusting these are less likely to reduce your short-term risk or costs, talk with your litigation counsel about your tolerances during these times. While there may be less flexibility than with prosecution, there may be ways to alter your litigation strategy or timing that reduces or spreads short-term risk.
Some companies find that periods of economic uncertainty are good times to plan for new contentious activities. If your updated IP strategy suggests this might be your company, approach your outside counsel for their assistance in qualifying these risks and creating a presentation with budgets and timelines that might help ease the heightened concerns of your management.
4. Improve predictability and reduce risks.
IP rights, strategies, and policies often grow piecemeal as a company grows in size, in markets and capabilities. When it comes time to assert IP rights through license, sale, or contentious activities, their hodgepodge nature creates impediments like mazes or minefields that limit the range of positive options and outcomes for your company. These impediments increase your risks, reduce predictability around your IP strategy, and come to light at the worst possible time, usually when your competitor is trying to invalidate your IP.
Consider upgrading your docketing processes, move more matters into the system, and coordinate it with the systems of your outside counsel. Attending to IP prosecution matters at the last minute is time-consuming and one of the greatest generators of risk within an IP practice. Having more confidence in due dates can also reduce your costs in working with outside counsel.
IP portfolios are often riddled with outstanding to-do items. Spend some time clearing up title or license rights, confirming proper assignments, and even just making sure you are on good terms with your inventors. Each of these may give you more flexibility to commercialize your IP, without the possible last-minute rush and costs, and perhaps without waiting until you have the least leverage.
If you believe that as a result of changing circumstances your company may pivot into a new market, consider updating your freedom to operate opinions. While companies sometimes avoid or delay these because of their cost, there is considerable flexibility in crafting the research and how the opinion is delivered. Your goal isn't just to reduce costs and surprises from the opinion, but also to deliver timely advice that reduces costly missteps when your company is already vulnerable.
Remember that your company is likely not the only one facing uncertainty. Deals might be had now and at lower costs than they were in the past. If you have spent the time to reevaluate your overall strategy and how your market is reacting to changing circumstances, you may find yourself in a position to source not just legal advice but also business opportunities for your company.
5. Improve internal IP processes, controls, and skills.
If your IP department has some responsibility for updating the gallimaufry of internal corporate documentation, policies, and practices, consider using this time to recalibrate them. Examine terms of service, online click-through agreements, and privacy policies. If you feel motivated or you are avoiding cleaning your garage again, consider cataloging and even improving your standard license terms.
Conduct a review of your company's likely valuable trade secrets and make sure your trade secret policy and employment and termination documents address your IP concerns. Likewise, make sure you have collected your NDAs, invention disclosures, and other proof of invention including your electronic equivalents to inventor lab notebooks.
If your IP team is large enough to require social distancing, use any downtime to improve cross-training. This may help both you and your team better service company needs, whether or not there are any employment or health changes coming. Reducing silo mentalities can help you build a stronger team that better identifies legal issues.
Regardless of the size of your team, now is a great time to fulfill local bar education requirements. Many law firms are doing the same internally. Check whether you can participate in their online efforts as a low cost and team-building activity.
6. Use and improve your IP portfolio.
If you are a company with sufficient cash reserves or creative financing, the same might not be true for owners of IP relevant to your markets. Now may be a great time to do a deal that last year would not have been on the table.
On the flip side, if your company is in need of liquidity, selling some of your IP or licensing it into unlicensed markets might also be a good consideration. This is best done if you have good data, analysis, and an updated IP strategy.
7. Improve the IP protecting your corporate branding.
If after implementing some of the activities above you still have time, consider putting together IP advice designed to improve your company's brand, including its trademarks. These are often considered a company's most valuable assets. Spend some time talking with your trademark lawyers about ways you can use IP to improve the adaptability of your trademarks, broaden the appeal of your brands, and better connect your company to its current and future customers, partners, and investors.
Even a little time spent on this may open up the possibility for your company to be part of a valuable cultural conversation during and after the slowdown that it might otherwise miss.
Global tragedies are just that. Working on improving strategy and the adaptability of your portfolio is not the cure. But it may build a bridge to a better IP future for you and your company.
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