Managing IP in a changing world

October 2016

Young people in business meetingJude Umeh MBCS considers how technology entrepreneurs and start-ups should best approach the difficult task of balancing IP protection vs. commercialisation considerations in the shifting European and global landscapes.

When it comes to tech entrepreneurship, a good intellectual property (IP) strategy will often play a critical role in the difference between unbridled success versus failure-inducing infringement lawsuits. For obvious reasons, this is even more pronounced among both established and emerging technology organisations and start-ups.

Firstly, the financial environment has become even more fluid and challenging of late. Maintaining positive cash-flow is the oxygen of any start-up, therefore raising funding is critical to getting established in the race for survival and / or success.

Among the various items that prospective investors seek to understand, the IP position of the start-up is perhaps one of the more crucial elements for consideration, particularly with regard to potential return on investments.

The second challenge is centred on geo-political considerations, which can be particularly relevant to tech entrepreneurs and start-ups who potentially, (thanks to the internet and World Wide Web), have a global environment / audience / perspective with which to play. It is bad enough even when things are relatively stable, but in the face of recent global financial meltdowns, migrant refugee crises, global terrorism and regional upheavals (such as Brexit), things can get somewhat / exponentially complicated.

In terms of IP, the key question for many high-growth start-ups is how to negotiate the daunting landscape of protocol, jurisdiction and regulatory compliance requirements for each new market that they penetrate.

In my opinion, three key factors that need to be taken into consideration when attempting to address these particular challenges, are outlined as follows:

Pay to play

The digital world has ushered in a shift from transactions to a more interactive economy. According to Constellation Research Principal, Andy Mulholland, three distinct types of time-zone-based interactions can be recognised in this new environment.

They comprise of: reflex interactions (e.g. autonomous machine to machine interactions); service based interactions (i.e. multiple, coordinated services interacting to deliver value to customers / subscribers / end-users); and finally, cognitive interactions (delivering enhanced value as part of a ‘smart’ system and ecosystem).

On that premise, one can see how each type of interaction builds on the one previous, and how these interaction time zones could influence how IP-based services may be deployed and consumed. For example, extremely high volume micro interactions in the reflex time-zone may be exponentially difficult to monetise, unlike the moderately high volume/low value transactions that may be found in the service interaction time-zone.

Whereas in the cognitive interaction zone, even the measure of value becomes highly subjective - as a function of the recipient’s perception and judgment of value. This makes for interesting opportunities and novel business models based on the individual’s contextualised perception of value. Simply put, the value of smart cities is far more than the sum of all transactions and interactions on which it operates.

Changing of the guard

IP is a moveable feast, and sooner or later any proponent of ‘free-to-use’ IP soon become vigorous advocates of IP protection once they start producing their own. Nations that were once net consumers of IP, with scant regard for anti-piracy measures, will often become rabid defenders of international IP laws when they start producing more IP than they consume.

For example, the USA’s stance on IP was markedly different in the nineteenth century than what it is today, primarily because the USA became a net producer of IP in comparison to times past. China and India are merely the latest examples of such poacher-turned-gamekeeper behaviour.

The same applies to start-ups who initially think nothing of appropriating other people’s IP in order to create or enhance their own products / services, but then go on to spend oodles of funding money on top IP lawyers to protect or defend their IP as they mature.

In another scenario, the application of innovative technologies can bolster anti-piracy efforts, for example, blogger Pascal Hetzscholdt posted claims by Credit Swiss that: ‘The most practical benefit of block-chain technology would be reduction (not necessarily elimination) of piracy’.

This of course would be dependent on the mass adoption of block chain, but if you think about it, the key components and technologies to make this work are already in place and just waiting for the right catalyst or circumstance to make this a reality.

Caring, sharing, gig economy

The last point is very much about the real cost of freedom and flexibility. The so called ‘gig economy’, which offers short-term roles for hordes of contingent workers (aka ‘micro entrepreneurs’), has been popularised by the likes of Uber, Airbnb and Deliveroo, because they promise a greater degree of freedom and flexibility than traditional employer / employees models.

Such degree of flexibility can be a double-edged sword for both workers and customers, since such platform operators effectively undercut the more traditional employers who typically have to provide such things as: training, security, safety laws, minimum wage and benefits to their employees in exchange for a certain level of control and obligation.

The new gig economy players typically provide a platform for exchanging goods and services, but sometimes the nature of services required of and provided by gig workers can verge on the employee domain (e.g. wearing uniforms with the platform logo) instead of an independent provider.

This blurring of lines, which may be interpreted as an attempt by platform operators to have their cake and eat it, has led to a recent spate of high profile law suites and demonstrations by irate contingent workers.

Although seemingly unrelated to intellectual property, such disruptive business practices in emerging economic models bring to mind the threat posed by file sharing platforms such as: Naptster, Grokster, Pirate Bay and Megaupload, to so many in the IP-centric content industry. It also clearly demonstrates how advances in technology can reveal unforeseen vulnerabilities with established business / economic models.

According to author / innovator, Jerry Schaufeld, IP was invented to protect the fragility of start-ups as a platform for realising value from their inventions for a limited period. It provides an incentive for creators to benefit from their work.

However, when key contributors such as creators (or contingent workers in this case) are undermined by new, disruptive platforms then such dramatic reactions are almost always sure to follow.

The sad thing is that such repercussions, if unchecked, can serve to dampen the innovative vigour of said platform operators.

A middle ground must be found where it will be possible to explore the frontiers of the new gig economy without trampling over the rights of its participants. The promise of freedom and flexibility alone may not be worth the pixels through which it is displayed.

A good strategy for IP

In conclusion, when it comes to start-up entrepreneurship in today’s world, it takes a certain level of awareness to negotiate the myriad challenges facing new innovative / disruptive entrants to most markets.

One of the key criteria for success, (in addition to having the right ideas, resources, team and opportunity/timing), is the presence of a good strategy for intellectual property and how it can be employed to the benefit of the organisation.

It is no accident that in the US, California State, with its high concentration of IP based industries, is the sixth largest economy in the entire world.

Identify and protect

Finally, it is almost impossible to over stress the fact that during this period of transition, a lot of seemingly insurmountable obstacles may turn out to be nothing more than transient illusions once the dust settles, therefore it is important for start-ups to identify and protect any competitive advantage to be gained from their IP assets, right from the start.

Find out more information on Brexit

Further Reading
 
Read more about tech start-ups and entrepreneurism in post-brexit UK, in the related chapter of Digital Leaders, available in the Member Secure Area under 'My knowledge', and then 'State of play reports / Digital Leaders'.
 

Image: iStock.com/StockRocket

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