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Intellectual property (IP) rights include various types of intangible corporate assets which you will want to protect and use and exploit on a daily basis in your business.  These include trademarks and design rights, copyright, patents, trade secrets or confidential information, and other categories of rights. Even the smallest companies have such proprietary information and proper protection for these IP assets can enable companies to get the most out of their branding.  As you prepare to export your products and services, there are many considerations that go into the development of a fulsome exporting business plan, and you will want to be sure to have an international IP strategy in place that aligns with your commercial objectives. 

A starting business planning recommendation is to conduct an IP audit.  This consists of assembling a list of key IP items that your company already owns, or might wish to protect in the future, as well as some understanding of their relative importance. You can assemble a basic IP inventory on your own, or you can enlist the assistance of an IP lawyer to help you to assemble this information.  Regardless of how you build it, this will be an important asset for you in the understanding of the relative placement of IP in your company.  With an inventory in hand, international strategic planning can be started.

One of the things that exporters must keep in mind is that the laws of each country are different with respect to the protection of various types of IP.  Certain types of IP assets are protectable, or not, by statutory IP rights or registrations in some countries.  Presumptions of ownership can vary by IP type and country, and the like. For example, the patent law in Europe is different than the patent law in Canada and the US on the patentability of computer software.  In another example, assets registered as trademarks in some countries might be protected by copyright in others. Dependent upon the geographic footprint of your marketing plan, and the nature of IP assets to be protected, localized legal awareness is necessary to ensure that the right protection is understood and used.  Building an IP plan that accommodates local legislative requirements or options is a significant competitive advantage to your company.  This can also help in terms of prioritizing your foreign plan (since virtually no company has an unlimited legal budget and depending upon your overall export decision matrix and the relative strength of local laws, you can try to “get the most bang for your buck” in terms of your legal spend through such awareness).

Particularly where your IP assets are not ideally protectable locally under the law of the country in question, contracts with customers, distributors and other parties become paramount in importance as a supplemental layer of protection (even with respect to trade secrets and other confidential information – customer lists, corporate information etc.).  These are again subject to local law and should be considered with local legal counsel at the time of their creation.

Two other key planning factors in your international IP protection strategy are the timing of your overall market entry plan, local business model, as well as relative costs or budgeting.  Your IP strategy should accommodate your overall business timeline – for example if you plan to be in a particular geographic region in three years, and it will take two years to register and protect your IP assets there, these relative timing indicators can dictate the appropriate times for the triggering of foreign protective actions as well as being used to best inform your budgeting in terms of costs.  Knowing when things need to be triggered and finished, and understanding the nature of the relative timelines can help to develop a most accurate budget of costs and other corporate resources required in this area.  Another timing element to consider, particularly in the trade secret or patent space, is that certain home market decisions about disclosure, filing or otherwise can have positive or negative effects on your ability to protect in foreign markets at a later date, and this should be factored into your planning as well.

As the geographic footprint of your business expands, it is important to ensure that your have taken the appropriate measures in foreign markets to protect your IP assets in order to enjoy the maximum economic benefit of your intellectual creations.  Aligning your IP strategy with the remainder of your business plan, rather than simply protecting IP for the sake of doing so in a list of indeterminate foreign markets, will yield a plan this is more easily understood and executed throughout the organization.  You should consider consulting an intellectual property professional to put yourself in the best shape on these points.

Every corporation has and creates IP assets. Occasional strategic review and oversight of IP initiatives by the board of directors is appropriate and important.   The importance of the IP assets of the company fits within the larger context of enterprise strategic planning and the board should ensure that IP strategy is in line with the remainder of the corporate structure and plans.  

Factors defining IP risk profile:

The degree and nature of IP issues faced by a company can vary based on a large number of factors, including:

1. Industry – companies in some industries will rely more heavily on IP than others and companies in IP-intensive industries will most appropriately see IP strategy and issues visit the boardroom more often;
2. Competitive landscape – if the corporation is involved in a business vertical where competition relies upon IP protection and IP-based product or service differentiation;
3. Innovative positioning of the corporation in relation to peers; and
4. Importance of IP assets of the corporation to the profitability of product or service lines.

What are the questions to ask?

What are the key IP assets:

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Clearance and avoidance strategy:

The sufficiency of IP clearance and avoidance measures and protective considerations in the new product development workflow of the corporation is also a strategic area in which the Board should gain reasonable assurance of management’s plans and operations.

Related to product development and other business development plans of the corporation is the general position which the corporation elects to undertake with respect to their IP portfolio and the IP assets of competitors. One analogy to consider is the placement of the corporation, in terms of the type of IP position taken, along a spectrum anchored at one end by a purely defensive strategy, centred around freedom to operate and avoidance of third party IP rights, to the opposite end of the spectrum in which a corporation elects to take a more offensive strategy centered around intensive capture, development and exploitation of IP assets to either provide more aggressive exclusionary or competitive options or to add value to the company through increasing the size and depth of the IP portfolio.  This analogy of “pinning” the corporation to a point along a strategy scale oversimplifies the issues but is demonstrative of one thinking approach which might be taken both by management in development of an IP strategy as well as by the board in providing oversight and critique of same.

Even in terms of product development and similar issues, if certain new product pipeline items have potential IP clearance hurdles associated with them such as proximity or threat of action from third parties based on pre-existing IP, if those threats approach or exceed the predefined risk appetite or parameters desired by the board, there should be opportunity for the board to consider these items and provide guidance.  These types of issues might occur more often in an “innovation intensive” enterprise, and this is not to suggest that the board should insert their decision making in place of management, but both the board and the executive of the corporation should condition themselves to have a constructive look at these types of items should they arise, and as important as the discussions themselves to identify the existence of the issues to trigger appropriate followup.

Brand threats:

Insofar as the directors bear responsibility to assist management in crisis management and have a responsibility as custodians of the brand of the corporation, the board should be advised when brand-threatening IP issues such as large scale IP litigation or the like arise. Using IP litigation as an example, given the costs as well as the materiality of the potential economic outcome either in terms of damages awarded against a defendant or as a potential revenue item for a plaintiff corporation, management should work with the board to ascertain and provide appropriate ad hoc or periodic reporting in this area.

Summary:

There are many ways in which boards can satisfy themselves that they are applying appropriate stewardship and risk management principles to the IP position of the company, including for example through assigning various IP strategy issues into the ongoing enterprise risk management and monitoring matrix.

The best likelihood of success for IP initiatives which require wide cultural adoption begins with tone at the top, and it will be important throughout a corporation to see and feel that the cultural requirements for an IP capture plan, tech transfer strategy or the like is adopted by and driven down from the highest levels of the corporate hierarchy into the operational corners below.  This begins with and includes initiative, direction and buyin at the board table.

Directors should provide their varied insight and perspective to the development of IP plans at a strategic level, and insofar as the board will ultimately bear responsibility for the value which is or is not generated in the corporation from IP strategy decisions it is also important to gain a level of assurance on management’s development and execution of intellectual property strategy and plans.

Furman IP can help you as a director, board or management to develop and implement strategic management of the IP elements of your corporate strategy.  Let’s chat if you have questions!