Cor­po­rate Coun­sel: the Guardians of Innovation

Cor­po­rate coun­sel may not gen­er­al­ly see them­selves as the guardians of inno­va­tion in their busi­ness­es. Nonethe­less, cor­po­rate coun­sel are the cus­to­di­ans of intel­lec­tu­al prop­er­ty, which can be defined as the legal asset in innovation.

We all see inno­va­tion as a crit­i­cal ingre­di­ent in a suc­cess­ful busi­ness. How­ev­er, inno­va­tion has no intrin­sic val­ue in itself. Inno­va­tion only has com­mer­cial val­ue if it serves a pur­pose. There are numer­ous exam­ples of inno­va­tions which prove to have no val­ue. A legion of inven­tors reg­u­lar­ly invent some new device or process, patent it in a num­ber of coun­tries and then wait for the world to beat a path to their door. They usu­al­ly wait in vain. There are myr­i­ad start-ups and tech­nol­o­gy com­pa­nies which cre­ate advanced and com­plex tech­nolo­gies, only to go broke in the process.

The main rea­son that so many tal­ent­ed inno­va­tors fail com­mer­cial­ly is that they do not do their home­work. The ini­ti­a­tion of a suc­cess­ful inno­va­tion does not begin with the devel­op­ment of the inno­va­tion itself but with the thor­ough research of mar­ket needs. A suc­cess­ful inno­va­tion should be cre­at­ed to sat­is­fy those mar­ket needs in an unique way. When Ray Kroc found­ed McDon­ald’s, he did not invent an inno­v­a­tive new ham­burg­er to sell to the pub­lic. He first researched the mar­ket and found that ham­burg­ers were seen by con­sumers to be a stan­dard­ised fast food item. He there­fore focused on the key need of con­sumers which was speed. Kroc then embarked on numer­ous inno­va­tions in ingre­di­ent pro­cure­ment, ware­hous­ing, cook­ing equip­ment and staff train­ing pro­grams, all aimed at increas­ing the speed of sup­ply of ham­burg­ers to his cus­tomers. As a con­se­quence, McDon­ald’s became at one time the biggest food dis­trib­u­tor in the world.

A suc­cess­ful inno­va­tion deliv­ers two crit­i­cal ben­e­fits to a com­mer­cial busi­ness. The first ben­e­fit is increased rev­enue. If you have a bet­ter prod­uct, more peo­ple will buy it. The sec­ond ben­e­fit is increased mar­gin. If you have a bet­ter prod­uct, peo­ple will pay more for it. These two ben­e­fits are crit­i­cal to the prof­itabil­i­ty and growth of a busi­ness. With­out inno­va­tion, a busi­ness has noth­ing to sell but price. There is no prof­itable future in a busi­ness phi­los­o­phy which excludes innovation.

Inno­va­tion lies at the very heart of the busi­ness and should be the foun­da­tion of future plan­ning and growth. Intel­lec­tu­al prop­er­ty, as the legal asset in inno­va­tion, is there­fore the jew­el in the crown of any busi­ness. The pri­ma­ry respon­si­bil­i­ty for iden­ti­fy­ing and pro­tect­ing that IP asset lies with the cor­po­rate coun­sel of the busi­ness. This task involves iden­ti­fy­ing in a sys­tem­at­ic pro­gram all reg­is­tered and unreg­is­tered IP and deter­min­ing the true own­er­ship of that IP. Reg­is­tered trade marks, patents, designs etc should be exhaus­tive­ly list­ed and mon­i­tored. The own­er­ship of all copy­right in all cre­ative works used by the busi­ness should be ascer­tained. Trade secrets should be sub­ject to strict con­fi­den­tial­i­ty procedures.

The role of cor­po­rate coun­sel in the iden­ti­fi­ca­tion and pro­tec­tion of IP inevitably involves liai­son with all man­age­r­i­al func­tions of the busi­ness. Finan­cial man­agers need to be made aware of the legal aspects of IP trans­ac­tions. Research man­agers need to intro­duce secre­cy pro­ce­dures for bud­ding inven­tions and designs. Mar­ket­ing man­agers need to adopt strict rules in the pro­mo­tion of the brands they have cre­at­ed. Cor­po­rate man­agers need to be kept informed of all the IP assets of the busi­ness so that they can be ful­ly exploited.

In a cyber world, the rapid intro­duc­tion of new tech­nolo­gies places even more impor­tance on the iden­ti­fi­ca­tion and pro­tec­tion of IP. These new tech­nolo­gies may even­tu­al­ly neces­si­tate fun­da­men­tal changes in IP law itself in order to address the cyber envi­ron­ment. The use of arti­fi­cial intel­li­gence brings into ques­tion the whole con­cept of the ​‘human intel­lect’ inher­ent in copy­right law. The inven­tions cre­at­ed by machines rather than indi­vid­u­als chal­lenges the legal con­cepts of ​‘nov­el­ty’ and ​‘inven­tive step’ which are fun­da­men­tal to patent exam­i­na­tion. The idea of the ​‘Inter­net of Things’ involves a re-assess­ment of how new tech­nolo­gies can be linked via the Inter­net to car­ry out com­plex tasks.

What­ev­er direc­tion inno­va­tion might take in the future, the com­mer­cial ben­e­fits of inno­va­tion will remain cen­tral to the finan­cial future of any busi­ness. Cor­po­rate coun­sel will con­tin­ue to have a key role in iden­ti­fy­ing and pro­tect­ing the IP in that inno­v­a­tive future. 

Eric Ziehlke is a Part­ner at Swaab and offers it’s clients a free IP Health Check as a start­ing point in devel­op­ing an effec­tive IP iden­ti­fi­ca­tion and pro­tec­tion program.