To survive in today’s competitive environment, companies must find ways to grow while protecting their distinctiveness in the market. Across many sectors, including medical, F&B, retail, wellness, beauty and education, many are collaborating to share resources and capture new markets. Licensing and franchising are amongst such collaborations, which often require companies to provide access to key intellectual property (IP) or intangible assets (IA), such as proprietary technology or processes. How can companies collaborate without losing control over their most valuable assets?
The payoffs of a successful partnership can be worth every effort. Companies with limited resources or scope can tap on the expertise of bigger players, while incumbents benefit from the innovation of new companies. For companies in growth mode, partnerships with market leaders can shorten their path to commercialisation and revenue, which will attract and keep investors.
Almost every collaboration or partnership involves the transaction of IP and IA. Companies are usually aware of the importance of IP when they develop something new with the potential for commercialisation. They would typically seek protection before sharing information with potential collaborators. However, applying for an IP right is not the same as obtaining protection under the law. Until the IP right has been registered, which could take years, the actual scope of protection is uncertain. It is not uncommon for companies to approach larger companies for investment or collaboration, only to find the latter independently launching similar products or solutions not long after.
To reap the benefits and avoid the pitfalls of such transactions, a company needs to recognise and protect its assets, while clarifying the value exchange with the potential partner. Here are four ways to manage your disclosure risks in collaborations to close a deal that works for you:
Knowing what assets you have strengthens your position in a negotiation. These assets can range from registered IP such as patents, trade marks or design, to IA such as access to markets, key data or important know-how needed to successfully implement a transacted technology. Get down to the details on the type of rights, scope of coverage, and even geographical jurisdiction. Being able to articulate these clearly in a negotiation makes you a more attractive partner.
Prior to sharing important information with potential collaborators, identify exactly which assets are critical to the collaboration. Make concerted efforts not to reveal these aspects, which may undermine the deal. These efforts could include ‘black boxing’ critical processes and stating explicitly during the sharing that certain key aspects are proprietary trade secrets that cannot be revealed. Most companies that are genuinely interested in collaborating will understand and respect this position.
When it comes down to negotiating the details of the deal, knowing what assets you want to get out of the deal can help you better plan your negotiation. For example, access to future data generated through the collaboration may be a critical asset for future development or growth, particularly with the increasing relevance of artificial intelligence (AI) and machine learning.
A good understanding of the law and filing processes can strengthen your company’s position in negotiations.
When protecting your technology, engage a patent agent who understands the technology well enough to draft a strong patent and can advise on the filing strategies for the various jurisdictions of interest, including where to file first. The same applies to trade marks and registered designs.
A well-crafted NDA is a critical step prior to sharing confidential information. This gives you the option to seek legal recourse in case of any breach by the party receiving the information. At later stages of the discussions, other clauses to cover non-use, non-circumvention or even non-competition may be appropriate for inclusion into the collaboration agreement. Seek the advice of legal practitioners when drafting agreements to ensure enforceability, especially in foreign collaborations where the laws may differ.
In particular, carefully consider how to manage any exchange of trade secrets before any contracts are signed, even if they include non-disclosure clauses. If disclosure of sensitive information cannot be avoided, protect your company’s interest by meticulously documenting what is shared, to avoid potential disputes in future.
KAHA, an IoT solutions company headquartered in Singapore, employed these four strategies last year. KAHA recognised that the COVID-19 pandemic was an opportunity for its smart IoT wearables platform, Cove®. At the height of the pandemic in April 2020, KAHA announced its partnership with local medical solutions provider, EasyCare. EasyCare provides affordable and accessible healthcare through its remote monitoring solution, iDOC Clinics. The collaboration was a win-win — KAHA was able to extend Cove® to the healthcare space through EasyCare’s extensive network, while EasyCare was able to enhance iDOC’s AI and data analytics capabilities with additional input from KAHA’s wearables.
Recognising what you own and knowing what you are exchanging them for is thus critical.
Collaborations can enable companies to grow quickly and with limited resources. Secure your competitive advantage by being clear about the IA and IP you own, which will in turn empower you to leverage that for growth.
About the author
Low Jin Wei, IP Strategist
Jin Wei has over a decade of experience in advising companies on intellectual property matters at the Intellectual Property Office of Singapore (IPOS). She is currently an IP Strategist with IPOS International, supporting enterprises’ IP management journey through the signature Discover Intangible Assets programme.
A believer in intangible assets as a driver of business growth, she has delivered strategic IP management solutions to diverse industries including telecommunications, medical technology, information technology and retail.
To find out more about the Discover Intangible Assets programme or IPOS International, please contact her at [email protected]
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