At a time of rapid digitisation, intellectual property (IP) issues are more complex than ever. General counsel have a vital role to play, avoiding pitfalls and ensuring senior executives make the most of their assets.
There are many potential IP issues that companies must consider. Take ‘trademark squatting’, for example. This is a particular problem in markets like China, where the likes of children’s cartoon Peppa Pig and sportswear brand New Balance have battled with trademark squatters who’d already registered those marks.
Andrew Cooke is general counsel at esports platform Fnatic, which has been combatting trademark squatters in China. When a company can’t sell its products because of trademark squatters, it goes a long way to making everyone “aware of the importance of long-term planning in IP protection,” he says.
Cooke points to two key tasks for general counsel. First, help senior executives understand the value of their IP from a legal standpoint: for example, putting in place the correct registrations and rights to operate in their target markets. Second, ensure the board fully understands the full commercial potential of their IP portfolio and how they can bring that to life.
“The value isn’t always there to be realised because sometimes commercial heads – and this isn’t the case at Fnatic – just don’t have the experience in making the most of their IP inventory,” Cooke says.
A business-savvy general counsel can add additional value by helping executives identify potential commercial opportunities. The job has moved from a passive approach to a much more proactive function, Cooke says. “If you have a commercial mindset you can spot trends and unlock the value of intellectual property in a way that benefits the business.”
Some larger companies have a dedicated IP team that sits outside the legal function, increasingly reporting directly to senior executives. German chemicals company BASF, for instance, has a specialist IP unit that handles all decision-making, strategy and investment related to the business’s IP assets.
Senior executives must provide the top-down support necessary “because in the past too often IP functions have been considered a cost centre”, says Tilman Breitenstein, lead IP counsel for BASF’s nutrition and health business. “IP is expensive, but in order to get away from being a cost centre to a value contributor you have to sell the value of what you’re doing to the board.”
The extent to which executives understand and appreciate the value of their IP assets can also depend on their industry. “The CEOs of media and entertainment companies are generally going to have IP at the forefront of their minds all the time because that’s what they sell. IP is their core DNA, they live and breathe their IP,” says Sophie Goossens, a partner specialising in copyright at Reed Smith.
The same is typically true for technology and software companies.
“We’ve created an original product from scratch, so obviously the IP is very important to us,” says Michael Jansen, CEO and founder of Cityzenith, a digital twin technology platform that helps cities reduce their carbon emissions.
But changes in legislation have made it difficult to patent certain types of software, which means tech firms increasingly rely on trade secrets to protect their IP.
“You do what you can to protect your assets as best as you can,” says Jansen. “My advice is don’t show anybody anything you’re not comfortable showing, just be very discreet and make sure the agreements you have in place with team members and people who have access to your IP are watertight.”
The potential of digital IP
Given the growing complexity of IP issues and the value of those assets, general counsel may also need to do more to help the boardroom understand their IP in the context of increased digitalisation. For example, companies might need to consider IP issues related to the metaverse.
“Say you’re a fashion company and you want your handbag to be available for sale in the metaverse, you’re not licensing the actual handbag, you’re licensing an image of that handbag and therefore that could potentially attract copyright or other IP rights,” says Goossens.
That isn’t just a hypothetical scenario; it’s already happening in the online gaming community. Gucci, for example, sold a digital version of one of its handbags in the game Roblox for $4,115 (about £3100) in June, roughly $700 more than the original sale price of the real-life version of the handbag.
“If you’re a CEO of a non-media company, you should imagine that tomorrow all of your assets are likely to become media assets that are going to be licensed to the people who are running these virtual worlds,” says Goossens.
General counsel must not only ensure their boardrooms understand and appreciate the value of their IP today, but scan the horizon for the commercial trends and legal risks that could impact their assets in the future.