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Intellectual Property Risks with Respect to Digital Technology

17

JUN

2022

Introduction

Throughout the life of an IP right, intellectual property risk management is the process of recognizing, assessing, and responding to risk factors associated with IP. Risk management that is done well is proactive rather than reactive, and it involves the control of potential future events. Proper IP risk management will lower not just the possibility of a negative event, but also the magnitude of its impact on the company. Risk management can easily enhance other systems if it is set up as a continuous, disciplined process of problem identification and resolution. This covers planning and budgeting, as well as cost control. Because the emphasis will now be on proactive rather than reactive management, there will be fewer surprises.

Key Words: Intellectual Property Risk, Business management, IPR, Risk management

What are Intellectual Property Risks and how do they originate?

IP risks are, by definition, both benefits and risks linked with intellectual property (IP). Risk refers to the possibility of things going wrong and the potential of damage or loss having negative or adverse consequences for the organization or firm. Risk management is the process of analyzing risk exposure and selecting the best way to deal with it. Of course, not all IP risks are the same, and they can be classified into several categories. One of these categories is 'origin,' which involves determining where the IP-related risk originates.

Companies and organisations are exposed to IP risks from a variety of sources, including:

  • from within the organization itself
  • from entities in the eco-system of the organization
  • from competitors
  • from independent 3rd parties
  • from Governments entities
  • from illegal entities
  • from the organization’s own network of IP Service & Solution Providers

Intellectual Property Risks

In this sort of risk management, there are two key perspectives to consider: first party and third party.

The IP's creator and owner is the first party. This organization or individual will want to figure out how much it will cost to protect their intellectual property. The following are some of the risks that the first party faces:

  • Legal costs if IP must be defended in court
  • Costs if the IP loses value or is no longer considered an asset
  • Decreased revenue for a protected product or service if the IP is found to be invalid in some way

The third party, individual or company considering IP rights infringement, must consider:

  • Cost of a lawsuit and resulting consequences
  • Potential for poor reputation and subsequent effects

IP and data & technology issues multinational corporations face in today's ever-changing digital economy.

    1. Digital transformation

Consumer behaviour has been thrown into disarray as a result of the pandemic. Because online transactions are the primary means of communication with customers, the online experience has become a significant focus for businesses. In fact, a customer's online experience shapes the company's brand image and service. Now, more than ever, marketers must provide a more inventive online experience. For instance, an equivalent online experience may be used to replace the experience of viewing a product in person or putting on a clothing. This entails navigating a slew of IP challenges, from branding and trademark protection to copyright in both images and music, as well as concerns about online counterfeiters and the development or licencing of specialised software or technology.

    1. Online sales platforms

As businesses become more reliant on internet platforms to conduct business, there are chances to learn more about your customers and leverage "data" to create unique and personalised experiences. Customer data collection and use are accompanied with requirements for the data's use, storage, and security. Data protection and cybersecurity are critical issues for businesses since failing to take necessary steps can result in security risks, fines, and unwanted publicity.

    1. Ensuring supply chain integrity

Intercepting counterfeit activities at borders becomes more difficult as the regular distribution model of sales shifts from physical to online retailers. This is especially true when counterfeit items are sent individually in small packages rather than in huge consignments between countries. Brand owners and businesses continue to be concerned about cross-border enforcement difficulties.

    1. New technology and Intellectual Property are driving M&As

Business leaders named "acquiring innovative technology" and "acquiring intellectual property" as two of the top three reasons for considering acquisitions in the coming year. This is according to Charting Growth - The New M&A Landscape in Asia Pacific, research we just issued. This rise in tech- and IP-driven M&A activity emphasizes the value of technology and intellectual property, such as patents, trade secrets, and know-how, as well as branding, to organizations. Consumer behavior and demand for digital solutions established during the epidemic will lead the corporate agenda and drive digital transformations across industries, therefore tech and software assets with demonstrated resistance to the pandemic will be very important. Indeed, businesses from just about every sector are making plays to acquire new tech capabilities as they race to reinvent themselves for the digital era.

    1. Protecting technology and innovation

In the fight to see who can get their product to market first, protecting your innovation is even more critical. Whether the technology is produced in-house, acquired through acquisitions, or licensed from third parties, the security granted to it can be critical to a company's business strategy, capacity to get to market, and ultimately success. From the initial concept stage to development, manufacture, and marketing, as well as engaging with third parties such as investors, developers, and manufacturers, a comprehensive understanding of the IP rights available and the method for acquiring protection is essential.

IP protection gains value via blockchain. Traditional contract protection strategies have the disadvantage of being untraceable and difficult to execute. Smart contracts, which are where blockchain comes in, can automate procedures and save expenses dramatically.

Conclusion

Understanding the value of IP assets and ensuring their protection is essential for businesses hoping to succeed in the digital age. It is also critical for businesses to verify that the IP rights created during the online transition are aligned with business procedures. One such example is CAD Chain, which protects trade secrets such as designs and CAD (Computer-Aided Design) data from unauthorised access while also providing legal protection, allowing businesses to avoid a lengthy, legal contracting process while also allowing collaboration, secure sharing, and asset tracking. This means that the outcome of the partnership will be co-owned, resulting in new economic models based on data tracking. Businesses can ensure their IP is well-protected by implementing these technologies, even in countries where IP laws are weak – China and the US, for example, have online courts that accept blockchain-based proof of ownership/copyright, making it easier for non-China based companies to "sue" Chinese companies for IP infringement.

Author: Anuja Saraswat – a student of B.A.LL.B (Hons.) from NMIMS Kirit P. Mehta School of Law (Mumbai), in case of any queries please contact/write back to us via email chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

About the Firm

Khurana and Khurana, Advocates and IP Attorneys
Address E-13, UPSIDC, Site-IV, Behind-Grand Venice, Kasna Road, Greater Noida - 201310, UP, National Capital Region, India.
Tel 91-120-4296878, 91-120-4909201, 91-120-4516201
Fax 91-120-4516201
Email info@khuranaandkhurana.com
Link www.khuranaandkhurana.com

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