Know what intellectual property rights you hold to extrapolate their value

World Intellectual Property Day falls next Sunday, April 26th. And while celebrations may be somewhat muted this year, it is worthwhile considering the role that intellectual property (IP) rights play in stimulating innovation.

One heartening story resulting from the Covid-19 crisis is that the search for answers to address the pandemic’s problems has led to collaboration across the world, and there is a proven framework for effective negotiations to help translate the resulting innovations for use at scale.

"Businesses are under pressure like never before in the current environment," says Ann Henry, a partner in intellectual property with Pinsent Masons (Ireland). "That pressure can, and is, stimulating the development of innovative business models and new product development. If you have an innovative product or service, then the value will lie in the intellectual property rights intrinsic to it.

“You need to understand what intellectual property rights you hold to extrapolate their value,” she says. “Intellectual property rights are like any other property right – they can be used as security, licensed and assigned with the associated revenue-generating streams.”

And there are different forms of IP protection.

“You will likely have a trademark for the brand name,” she says. “Pharma products largely rely on patent protection and technology products on copyright and database rights. If you are still in the midst of innovating, then consider often overlooked registered design rights which are cost efficient and effective.”

Negotiations

Her colleague, commercial litigation partner Jim Richards, advises IP holders to start negotiating from a position of strength. "Consider cost effective steps to strengthen your arguments before the negotiations start. These could include expert reports on quality assurance or a phone call with an alternate partner."

He says “sticks” might include the ability to place work elsewhere where there is no exclusivity, while “carrots” might involve possible extensions of term, scope, or geography, the grant of exclusivity, or a volume discount.

“Make sure that your negotiating team understands what agreements entitle you to and require from you,” he says. “It is essential that you have an informed overview of the options should it come to enforcing your intellectual property or other legal rights. In this climate it is also important to address force majeure and frustration of a contract.”

The human dimension should not be underestimated.

“This is likely to be of particular importance in the current climate,” says Henry. “Rarely does everything come down solely to the financial or technical aspects. In any negotiation it is not just a case of what you say but how you choose to say it.

“Listening, empathising, and maintaining rapport is key. Seeking to understand rather than telling the other party how it is will likely elicit a far more favourable response. Even with social distancing, insist on negotiation by video call. People impact people, face to face.”

That will help in understanding wants and nots. If the difference between wants and needs is not understood then you are unlikely to have a happy conclusion,” says Henry. “Identifying each side’s wants...is the foundation stone upon which any successful negotiation is built. Unlock the wants of the other party or you will end up offering solutions based on needs.”

Best alternative

It is important to establish your best alternative to a negotiated agreement (BATNA) early on in order to understand how much the alternative would cost or benefit you.

“By disclosing your BATNA you are telling the other party what would cause you to walk away from the negotiating table,” says Richards. “This can send a very strong signal that you are confident of your position, but it is crucial that it is disclosed at the right time. Disclose it too early and you may lose the chance of a better outcome, and if done in anger or frustration it is never likely to be productive.”

The exit strategy must also be taken into consideration.

“Consider the termination of every contract, and make sure you insert a clause for the scenario you want covered. Last, but not least, make sure the contract is clear about how the other side is to stop using your intellectual property rights once the contract terminates.”