Futureproof? Protecting innovation in rapidly evolving technologies
This post was written by Mohammed Karim, attorney at Bird & Bird international law firm
Gordon Moore’s law that computer processor speeds would double every two years has historically held true. Ray Kurzweil’s modern theory of human development and the Law of Accelerating Returns proposes that the rate of human progress exponentially increases throughout time. Considering the two in conjunction, it is no surprise the world has witnessed such an aggressive increase in the rate of development of new technologies.
What was once written about in science fiction novels is now the norm and what today is considered fantasy will one day be commonplace. Connected communications devices, artificial intelligence and virtual reality are examples of some of the many technologies currently revolutionizing enterprise and consumer life.
But in the rush to bring technologies to market, developers often neglect to adequately protect intellectual property rights (IPRs) in their products or services. This is often the case with start-ups; investors may pressure companies to realize immediate returns and smaller businesses may just not have the in-house knowledgebase regarding IPRs.
Different flavors of IPR protect different aspects of technologies: patents protect inventions, copyright applies to defined recorded works, brands benefit from trademark protection, different jurisdictions regulate protection of article designs, and trade secrets can be protected by principles of confidentiality.
To protect or not to protect?
An astute IP strategy is paramount to effective business in today’s ever-evolving world of technology and failing to protect IP can have grave consequences. Shares of the UK company Fitbug plummeted after a recent trademark infringement case it brought against Fitbit failed. Had Fitbug actively sought registered trademark protection in the US when it first commenced business there it would not have found such difficulties in bringing an action.
Naivety is not the only reason why inventors are facing IP issues; ever-changing laws also present difficulties. Previously, the US and Canada had operated a ‘first-to-invent’ system of patenting inventions. A developer putting a patentable invention on market could institute “interference proceedings” against others attempting to claim a patent on that invention. Now that both territories have come into line with the rest of the world in using the ‘first-to-file’ system, companies cannot rely on interference proceedings as a contingency.
In some instances it might be preferable to not disclose and protect an invention using patents, but rather keep it confidential as a trade secret. Examples include recipes, customer lists, business plans, and chemical formulae.
Costs also come into play. It is highly unlikely that budget constraints forced Coca-Cola and KFC to choose trade secret rather than patent protection, however, for smaller companies the price of application and renewal fees for registerable IPRs may be prohibitively high in light of the goods or services offered. Indeed, a criticism leveled at the introduction of ‘first-to-file’ in the US is that it further benefits large corporations that have resources to file copious amounts of patents.
In certain cases companies might be best advised to not bear the efforts (and legal costs) of seeking protection or enforcing IPRs due to political or moral reasons. For example, see the revoked Washington Redskins trademark and the international relations issues caused by the MPAA’s attempts to extradite a UK student on copyright infringement charges.
Swords and shields – a good offense is the best defense
The repercussions of being found guilty of IP infringement can be huge with injunctions, damages, and court and legal fees to consider. But in certain industries a pattern has emerged whereby protecting one’s own inventions indirectly affords protection against others’ IP infringement claims. The accused entity can level the playing field if it can show that its own IP might also be infringed by the accuser. The telecoms industry is a great example of this. Most major players have developed large portfolios of patents to cross-license with competitors.
This practice of licensing IPRs has in turn given rise to infamous ‘patent trolls’, more affectionately known as non-practicing entities (NPEs). An NPE does not manufacture goods or supply services, but seeks to out-license its IPR. NPEs might actually be distinguished from trolls in this regard, for example, inventions owned by educational institutions might be licensed because manufacturing facilities are not available.
It has been mooted that Chinese mobile phone manufacturer Xiaomi has delayed entry into the US market to reinforce its own licensable patents portfolio. The cellular phone industry is a notoriously tough nut to crack. In addition to licensing issues, the Samsungs and Apples of this world can exploit marketing budgets of billions dollars and it is thought that Xiaomi is also looking to build its brand before competing against such players.
Success begets success
Different IPRs can also be used to accelerate growth. Apple’s enormous success is often attributed to the strength of its brand. While its brand protection and exploitation strategy has facilitated fantastic financial returns for Apple, in turn this has allowed it to push the boundaries of technology and continually innovate as can be seen with the new Force Touch trackpad (US 8,633,916) found in its latest MacBook. A well-managed IP strategy can lead to a virtuous circle of protection and monetization of IPR.
The recent news that Uber, the app-based transportation network started up in 2009, has hired Google’s Director of Patents shows the central role IPRs are playing in companies at the forefront of developing technologies and should act as an archetype to all similar businesses contemplating their own IP strategies.
Mohammed Karim is an attorney in Bird & Bird’s London Intellectual Property Group.In addition to his legal qualifications, Karim holds a masters degree in Computer Science from University College London. He qualified as a solicitor in 2009, having trained at a technology and intellectual property-focused law firm in the city. Before joining Bird & Bird in 2012, Karim gained a wide variety of intellectual property experience working at a niche media practice and in the in-house legal team of leading microprocessor intellectual property company ARM Limited.
