IP in Business Lecture Notes 2023 PDF

SILE Part B Course: Corporate & Commercial Practice Intellectual Property IP in Business Lecture Notes 8 Copyright © IPOS 2023. All rights reserved. OFFICIAL (OPEN) / NON-SENSITIVE  Comp...

SILE Part B Course: Corporate & Commercial Practice Intellectual Property IP in Business Lecture Notes 8 Copyright © IPOS 2023. All rights reserved. OFFICIAL (OPEN) / NON-SENSITIVE  Competencies: IP in Business 1. Identify strengths and weaknesses of a company’s IP position; as well as opportunities and threats o a.k.a. SWOT analysis 2. Explain ways to extract value from IP 3. Identify relevant issues in IP deals and due diligence Copyright © IPOS 2023. All rights reserved.  The world’s most valuable enterprises are driven by IA Source: Global Intangible Finance Tracker 2022 by Brand Finance Copyright © IPOS 2023. All rights reserved.  Top 10 Most Valuable Singapore Brands 2023 Copyright © IPOS 2023. All rights reserved.  SWOT Analysis 1. Identify strengths and weaknesses of a company’s IP position; as well as opportunities and threats 2. Explain ways to extract value from IP 3. Identify relevant issues in IP deals and due diligence Copyright © IPOS 2023. All rights reserved.  SWOT Analysis Copyright © IPOS 2023. All rights reserved.  SWOT Analysis  Framework to evaluate the subject’s competitive position and develop strategic plans  Identifies Strengths and Weaknesses of the subject’s position, as well as Opportunities and Threats  Can be done on an industry, a company, part of a company (e.g. a product line) or a splice of a company (e.g. the IP position of a company), and even individuals (for personal improvement)  Strengths and weaknesses: Internal  Opportunities and threats: External  Each SWOT point can carry a different weight and be prioritised differently, which affects the strategies eventually adopted Copyright © IPOS 2023. All rights reserved.  Strengths  What a company is good at  What distinguishes this company from its competitors Copyright © IPOS 2023. All rights reserved.  Weaknesses  What prevents a company from being better  Where a company needs to improve Copyright © IPOS 2023. All rights reserved. OFFICIAL (CLOSED) / NON-SENSITIVE  Opportunities  Favourable external factors that could give a company a competitive advantage Copyright © IPOS 2023. All rights reserved. OFFICIAL (CLOSED) / NON-SENSITIVE  Threats  External factors that could potentially harm a company Copyright © IPOS 2023. All rights reserved.  SWOT Analysis Template SWOT Positive Negative Analysis Internal STRENGTHS WEAKNESSES External OPPORTUNITIES THREATS Copyright © IPOS 2023. All rights reserved.  SWOT Analysis Follow Up OPPORTUNITIES THREATS STRENGTHS Strength-Opportunity strategies Strength-Threat strategies How can you use the company’s How can you use the company’s strengths to maximise the strengths to mitigate the threats? opportunities? How can you harness the opportunities to augment the company’s strengths? WEAKNESSES Weakness-Opportunity strategies Weakness-Threat strategies How can you minimise the How can you minimise the company’s weaknesses using the company’s weaknesses to avoid the opportunities identified? threats identified? How can you overcome the company’s weaknesses to realise the opportunities? Copyright © IPOS 2023. All rights reserved.  Extracting Value from IP 1. Identify strengths and weaknesses of a company’s IP position; as well as opportunities and threats 2. Explain ways to extract value from IP 3. Identify relevant issues in IP deals and due diligence Copyright © IPOS 2023. All rights reserved.  Extracting Value from IP  Working the IP  Licensing  Collaboration / Joint Venture  Sale  Collateralisation / Securitisation Copyright © IPOS 2023. All rights reserved.  1. Working the IP  Most direct way to exploit IP  E.g. applying your trade mark or registered design to your goods for sale  E.g. applying your patented technology to make or do something  Generate revenue  Build brand and customer loyalty  Maintain barriers to entry based on the exclusive rights in the IP Copyright © IPOS 2023. All rights reserved.  2. Licensing  Another way to extract value from IP  If you don’t work the IP, you can let others do so o National Skin Centre example: https://iposinternational.com/resources/case-studies/suu-balm_172  If you already work the IP, you can let others work it as well  You work your IP  revenue from selling the goods/services to which the IP is applied  You license your IP  revenue from licence fee and royalties  (a) Non-exclusive (b) Sole (c) Exclusive  (a) Fully paid up licence fee (b) Running royalty (c) Combination of upfront licence fee and (b) Copyright © IPOS 2023. All rights reserved.  2. Licensing: Franchising  Franchising is a special business set up that involves licensing of IP and IA  Franchisor grant to franchisee rights to sell a product or provide a service using franchisor’s business system  ”A contractual relationship between the franchisor and the franchisee in which the franchisor is obliged to maintain a continuing interest in the business of the franchisee in such areas as know-how and training; wherein the franchisee operates under a common trade name, format or procedure owned by or controlled by the franchisor, and in which the franchisee has made or will make a substantial capital investment in his business from his own resources.” – Definition by International Franchise Association Copyright © IPOS 2023. All rights reserved.  2. Licensing: Franchising  McDonald’s example  Ray Kroc, successful businessman from Illinois, USA started a franchise of a successful Southern California hamburger stand  Kroc brought an assembly line-like concept to the fast food industry  Belief that McDonald’s customers should have an idea of what to expect wherever in the world they are Copyright © IPOS 2023. All rights reserved.  2. Licensing: Franchising COVID-19 has exponentially accelerated the global EduTech market. Singapore EduTech players can leverage their branding and trade marks for regional growth and expansion. At the same time, they need a strategy to address copyright issues as they enter new markets  Consistent brand image – To ensure consistency in programme delivery wherever they are in Asia, I Can Read has put in place a comprehensive set of brand guidelines and registers its trade marks in markets where it currently operates or may operate in future.  Scaling up through licensing and franchising – I Can Read has adopted a hybrid approach where franchised centres Image source: IPOS International and licensed content are strategically  Managing copyright issues – To minimise deployed based on the respective market’s the risk of copyrighted content being needs and context. This enables I Can Read misappropriated, I Can Read registers its full to scale regionally while reducing the high curriculum in markets where registered capital investment required to establish copyright protection exists. wholly-owned centres. Copyright © IPOS 2023. All rights reserved.  2. Licensing: Cross-licensing  A contractual arrangement between two or more parties where each party licenses its IP rights to the other parties  Typically in the context of patents  Can be between collaborators or competitors  Consideration is not mainly in $$ but in mutual licences  Usually between companies who own patents over different aspects of a product Copyright © IPOS 2023. All rights reserved.  2. Licensing: Cross-licensing  Gives licensee freedom to operate, able to avoid infringement and litigation  Enables licensee to make its product more attractive (with the licensed technological feature)  Google–Samsung example (2014) o Both parties preeminent players behind the Android operating system for smartphones o Broad licence to cross-license a range of patents o Existing patents as well as some that would be filed in the next 10 years Copyright © IPOS 2023. All rights reserved.  2. Licensing: Cross-licensing  Google–Samsung example (2014) o “By working together on agreements like this, companies can reduce the potential for litigation and focus instead on innovation” – Allen Lo, Deputy General Counsel for Patents, Google o “Samsung and Google are showing the rest of the industry that there is more to gain from cooperating than engaging in unnecessary patent disputes” – Ahn Seungho, Head, IP Center, Samsung Copyright © IPOS 2023. All rights reserved.  3. Collaboration / Joint Venture  Loose terms  Can involve elements of working the IP, licensing and/or sale  When two or more parties have something to contribute, and the arrangement enables parties to achieve more than each could have individually  E.g. a pharmaceutical company with a new drug that cannot be taken orally may collaborate with a company that has developed a nasal spray delivery system  E.g. R&D collaboration between a non-profit research institution and a commercial entity, which is expected to result in new IP products Copyright © IPOS 2023. All rights reserved.  3. Collaboration / Joint Venture  A collaboration can take the form of a joint venture, or not  Parties can collaborate as they are, or form a joint venture vehicle for risk management, compliance with local regulation etc.  Terms: (a) background IP (b) foreground IP (c) sideground IP (d) postground IP Copyright © IPOS 2023. All rights reserved.  4. Sale  Immediate returns  Usually of IP that is not or no longer of interest to seller (“non-core IP”) – e.g. in the course of R&D, come up with IP that won’t be worked by company  Other scenarios – e.g. bankruptcy  Kodak example: o Filed for bankruptcy protection in 2012 o Fire sale, sold around 1,100 patents for US$525m o Short of US$2.6b target, but needed $$ urgently to get out of bankruptcy o Finally emerged from bankruptcy in late 2013 Copyright © IPOS 2023. All rights reserved.  4. Sale  Yahoo / Verizon example: o Verizon had acquired Yahoo’s internet and media business, including some of Yahoo’s IP, in 2017 o In 2021 deal, SoftBank subsidiary makes one-off US$1.614b payment to Verizon to acquire TM rights relating to “Yahoo” and “Yahoo Japan” in Japan, and a “paid up, perpetual right to use existing licensed technology in Japan”  Difference between licence and sale?  Buy the IP vs Buy the company that owns the IP Copyright © IPOS 2023. All rights reserved.  5. Collateralisation / Securitisation  Asset-based lending  IP Collateralisation: o A method of financing where an IP asset is used as a collateral to secure a loan. If the borrower defaults on the loan, the lender may sell the IP asset to offset the loss  IP Securitisation: o A method of financing where rights in receivables (e.g. royalties) are transferred from IP owners to an entity, which in turn issues securities to capital market investors and passes the proceeds back to the IP owners o Most famous example: Bowie bonds Copyright © IPOS 2023. All rights reserved.  Issues in IP Deals and Due Diligence 1. Identify strengths and weaknesses of a company’s IP position; as well as opportunities and threats 2. Explain ways to extract value from IP 3. Identify relevant issues in IP deals and due diligence Copyright © IPOS 2023. All rights reserved.  Issues in IP Deals and Due Diligence  Volkswagen bought the assets of Rolls Royce and Bentley automobiles for around US$900 million.  It was not until after the deal closed, that Volkswagen realized the IP assets it paid for did not include the right to use the Rolls Royce trade mark.  The Rolls Royce trade mark was owned by BMW.  Volkswagen therefore acquired all the rights needed to make a Rolls Royce car, but not the right to brand it as one!  Moral of the story? Copyright © IPOS 2023. All rights reserved.  Context: IP Deals and Due Diligence Examples:  Licence negotiations  Sale negotiations  Merger or acquisition  Joint venture Copyright © IPOS 2023. All rights reserved.  IP Due Diligence Identification Investigation Evaluation Copyright © IPOS 2023. All rights reserved.  IP Due Diligence Patent Sale agreement Copyright © IPOS 2023. All rights reserved.  IP Due Diligence Patent Sale agreement Seller did not give warranties and Singapore indemnities Name of seller in agreement does not Expires in 2023 match name of previous owner on patents register Sale agreement is subject to law of Patents register records a licence Country X (not Singapore) Copyright © IPOS 2023. All rights reserved.  IP Due Diligence But you plan to Patent Sale agreement is subject (not Singapore) selltothe lawproduct of Country X in China, besides Singapore Singapore But you’ll need 6 months to set up Expires in 2023 the plant in China Patents register records a licence You’re not prepared to compete with a licensee Copyright © IPOS 2023. All rights reserved.  IP Due Diligence Is the patent valid to the best Singapore of the seller’s Sale agreement belief? Did the seller even have Seller did not give warranties and indemnities authority to sell your target collaborator the Name of seller in agreement does not patent? match name of previous owner on patents register Sale agreement is subject to law of Country X (not Singapore) Will there be problems enforcing the agreement under foreign law? Copyright © IPOS 2023. All rights reserved.  Issues in IP Deals and Due Diligence Who What When Where Why How Copyright © IPOS 2023. All rights reserved.  IP in Business 1. Identify strengths and weaknesses of a company’s IP position; as well as opportunities and threats 2. Explain ways to extract value from IP 3. Identify relevant issues in IP deals and due diligence Copyright © IPOS 2023. All rights reserved.  Key IP considerations throughout companies’ innovation cycle Which R&D areas should Who owns the IP in I invest in or prioritise? Research and R&D collaborations? IP Development Intelligence IDEAS IP Protection How can I protect my Which tech areas ideas and R&D are my competitors outcomes? moving into? REVENUE INTELLECTUAL Which IP rights Can I license / sell PROPERTY should I register? my IP? How can I protect my What are the key IP PRODUCTS & IP Audit and invention beyond IP issues to look Commercialisation registrable IP? E.g., SERVICES Due Diligence out for when trade secrets, data, internationalizing? know-how? IP Enforcement Contracts and Agreements What are the IA/IP How can I use my that are relevant to IA/IP as collateral? my business? Is there any third party What should I look out for Am I infringing on infringing on my IP rights? when negotiating contracts any existing IP and agreements with rights? potential collaborators? Copyright © IPOS 2023. All rights reserved.  Read More Key IP Considerations for SMEs https://www.wipo.int/wipo_magazine/en/2021/02/ar ticle_0008.html Improving Access to COVID-19 Treatments: How IP Makes It Possible www.wipo.int/wipo_magazine/en/2021/04/article_0 003.html Copyright © IPOS 2023. All rights reserved.  ENJOY THE JOURNEY Copyright © IPOS 2023. All rights reserved.  BUT ALSO START WITH THE END IN VIEW Copyright © IPOS 2023. All rights reserved.