This year is a year of great change in the world. Especially the spread of a novel coronavirus (COVID-19) which truly affects all countries of the world in many elements. The number of COVID-19 patients is increasing continuously. Many people are afraid of the infection until becoming paranoid all the time. Many businesses also encounter serious problems such as infected employees causing the company to close for a period of time, foreign trade partners have decreased significantly, a drop of tourists, airports and malls are empty. Also, Italy even announced the closure of the country to stop the spread of the virus and etc
If not now, when?
From a new perspective, it is the best time for business people like us to take care of our organization more. Because during good economic, the business is growing and many customers have contacted us, so we have to accelerate the market expansion. Therefore, we may not have much time to review the structure of business administration, personnel management, or other internal processes. I personally see the importance of corporate culture that will be adapted to increase the company’s potential. And I knew that I had to be the leader of this change, but due to the mission abroad, I didn’t get to start the process. Until the virus epidemic, work began to decrease or was postponed for several months. The government didn’t allow people to travel abroad. This gives me more time to focus on the organization to inspect, protect, and develop intangible assets (IA).
I believe that when the business encounter problems, it is the best time to take care of our IA to strengthen them in order to promote our business to grow steadily. And intellectual property inspection also known as IP Audit will be an important tool and mechanism to transform your business for 3 reasons as follows:
When the business encounter problems, it is the best time to take care of our IA to strengthen them in order to promote our business to grow steadily.
1. IA are the most powerful ability to operate the organization
We can’t deny that intangible assets (IA) such as brands, data, algorithms, licenses, standards certificates, patents, connections, etc. are the most important ability to operate the business of this era. In which 90% of the net value of an innovation-driven enterprise is acquired from IA and only 10% of the value comes from tangible assets such as lands, factories, machineries, office equipment, and etc. But many businesses still do not know what their IA are.
And how to fully protect and use it. The first step that business owners must do, is to check all the IA they have. Also inquire about IA for collection of data from all teams and all departments. Don’t question from only the executives or the front office such as sales team, marketing team or business development team, but also including back office employees such as accounting team, legal team and HR team. And you will be surprised that IA are everywhere in the organization.
Most of the employees may not know that they have helped create the IA. For example, HR may create internal training programs for technician staff who want to develop specific skills or the award mechanism for promoting the research team. When we know that what is our corporate identity, we are beginning to clearly see what components each IA has and can be protected as intellectual property (IP). In the case of an internal training program, it may contain both images and content for the training which is the copyright of the organization and the program names may be trademarks.
And if using tools or technology for training, and it is a new invention, we can also apply for patent protection. Including special techniques or know-how that are shared in specific classrooms, it may be an internal trade secret that businesses should be recognized and consider protecting them as well.
You will be surprised that IA are everywhere in the organization. Most of the employees may not even know that they have helped to create the IA.
2. During the economic slowdown, IP disputes will increase.
The graph below from Wilmerhale (2018) shows the connection between crude oil prices and the number of patent lawsuits. In 2013-2015, it’s surprising why the price of crude oil dropped in triple figures but the number of patent lawsuits has increased 3 times. Despite the fact that profits from oil traders should be greatly reduced, resulting in a decrease in investment as well. Even this may be between 2011-2015, but it may reflect one interesting behavior which is when players in the industry face challenges or crises.
These companies are beginning to find other ways to contribute their revenue and they will start checking back in their organization to see if there are any assets that can be parted or sorted out for additional benefits. Then that asset might be a “patent” which causing players with a lot of patent ports interested in detecting violators and assign their right to make additional income for themselves. For players who not have sufficient IP protection, they may be prosecuted for damages and become bankrupt.
Marco et al. (2015) research in the Journal of Empirical Legal Studies analyzed that has analyzed the connection between the number of patent lawsuits in America and economic conditions throughout the 20 years. This also emphasized the opposite relation between economic conditions and the number of lawsuits in America. In particular, the decrease in GDP in the country is significantly associated with the increasing number of patent cases. When the economic slowdown and halted, investment in the industrial sector decreased, and product reduction; causing the companies to use their internal assets or other collaterals such as their own IPs.
So what I want to convey is I would like every business to pay more attention to IP protection. Now, we have time to check the IA within our organization, we have to see which types of IA can really make a difference to our business. Do we protect IP well enough? and how? Do we protect it in every country, every market where we do business? Once the IP Audit is completed, we will begin to see the strengths and weaknesses of our IP. We will be able to find ways to fill the gap and strengthen our strength correctly, appropriately, and fulfill the needs of our business with full efficiency. Otherwise, we may be victims of our lack of preparation.
3. IA help strengthen business by creating multiple channels of revenue
As everyone knows, “income” is the most important in the business. if income and profit decreases, then businesses cannot survive. But I still see a few businesses that make full use of IA or IP. Maybe it’s because the IP Audit has not been done yet, or there is no creation of the IP portfolio. So they can’t see the big picture how it’s going to be utilized in any other way aside from protecting their work from violators. Besides, good protection of IP does not guarantee that the business will survive. And business owners often believe that the IP they hold is more valuable than its actual financial worth, everyone must be interested, but they don’t know if it is truly what the market wants. The owner may not clearly study the market demands before filing an IP registration, production and administration, resulting in the value of the IP isn’t as high as it should be.
Therefore, when business owners decide to improve their business with the IA during this crisis time, it’s very important that they must go through all of their existing IA and understand how to protect IP in all forms. Also, the thing that needs to be prioritized, they must recognize business opportunities before protecting their IP. And business opportunities for using IA or IP as the tool aren’t just using it exclusively or internal use such as use it to protect the products they sell, use it to protect the internal production process; but it can also be used in other ways such as:
- assignment/sale: In the event that IA / IP is no longer used but it still valuable to others.
- licensing: In the event that there is an IA / IP that is not primarily utilized but we still wish to be the owner and want to earn extra income from allowing others to exercise our right for a period of time.
- franchising: In the event that there are multiple IA / IPs when combined them, we can allow others to exercise our right to expand the franchise business for a period of time.
- joint venture: In the event that the IA / IP in our business is more useful when combined with the partner IA / IP. Combining IA / IP in a new venture may create synergies and new business opportunities that cannot be easily occurred in original businesses.
- spin-off: In the event that the IA / IP in our business is more useful when separated to develop into a new business. The IA / IP is in the original business, may not suitable for the business or no one in the company pay attention to it. Partition may allow IA / IP to be more fully utilized than being in the original business.
There are many ways to make use of IA / IP and the risk profile is different. Especially if it is in spin-off form, the risk is higher but it may offer more profits than other forms as licensing. Therefore, when planning IP strategies for business, we should select the format that is suitable for the situation by considering the strength of our IP portfolio and assessing the opportunities and risks in all aspects as well.
In conclusion, I want to point out that business transformation with the IA requires planning, systematic review, and teamwork. It requires cooperation from all departments in the organization. Not only rely on the legal department or let it be a one-person job, but it needs to be a collaboration between the various parties. For the benefit of an effective business transformation that can truly protect and utilize IA and IPs and even in crisis, your business will certainly succeed.