The discussions surrounding the dependence of society on technology are well worn. We all know technology and the communication revolution that it has enabled are both powerful forces that are here to stay, creating many new and exciting business opportunities. The rapid rise of technology, however, has also created new business risks.
Industries that were once protected by regulation and monopoly structures (telecom, energy, banking, transportation, to name a few) are being disrupted by what would once have been perceived as peripheral competitors, primarily software and technology companies. So without the protections once afforded by traditional industry structures, companies are increasingly turning to patents to protect their market share. According to the World Intellectual Property Organization global patent applications are rising annually and have more than doubled since 2000!
Patents can indeed protect your technology but they can also shut you out of others technologies. This has created new and concerning business risks in many sectors (infringement, trolls, innovation limits, licensing, etc.) that need to be managed. In a world where nearly every business today is dependent on technology founded on IP, the creation, ownership and strategic use of IP is critical to achieve business success.
A recent study by WillisTowerWatson: Risk alchemy in the TMT sector uncovered some interesting perspectives on the business risks faced by the technology, media and telecom industry. The study synthesized the views of 350 executives operating at the global level and grouped the risks into 5 categories:
Regulation and Legal
Operational Complexity and Vulnerability
Global Talent and Skills
Business Model and Strategy Pressure
Digitization and Technological Advances
The risks you may expect were certainly there: technology disruption, pricing/tariffs, and piracy. But they were way down in the pack at 8, 9 and 10 respectively.
So what is disturbing these executives? Practically tied for 1st, and by a measurable margin over #3, were the risk of fines due to data security compliance and intellectual property and patent infringement; the executives felt that these risks posed a greater threat than failed M&A and cyber-attacks!
In the case of data security, management of risk is a matter of ongoing compliance and political advocacy. Difficult, expensive and time consuming, but tangible. Risks related to intellectual property, conversely, are often seen as less tangible and subject to uncontrollable actions of others (competitors, trolls, etc.). Compound this with the confusion of the legal system, evolving case law, and the idiosyncrasies of multiple jurisdictions, and managing IP risk seems nearly impossible. This, however, is not the case.
Intellectual property risks in TMT and other sectors can be managed. A comprehensive IP strategy can highlight where IP is critical to a business’s success and provide insights that strengthen the portfolio. Creating an IP landscape and performing IP analysis provides perspective on company and industry IP to reveal where innovation is coming from and provide perspective on how to stay ahead of the competition. Even when it comes time to enter into an M&A transaction the vagaries of IP can be clarified; a presentable IP story and value model connect a company’s IP to the marketplace and show the impact of IP on the company’s revenue stream. With IP representing up to 80% of a company’s value (depending on industry/situation) a solid understanding of IP isn’t just about risk mitigation it’s about seizing opportunity and capturing value.
ipCapital Group has worked with global brands and telecom leaders for nearly 20 years to help mitigate risks around IP and bring insight, clarity and structure to IP management. Give us a call and let us show you how we can do the same for you.