The shock of COVID-19 to the business community has been sharp and severe. The lockdown in New Zealand is challenging all businesses, and the evolving situation overseas is creating additional problems. We’ve already been contacted by clients seeking advice on how to manage their intellectual property (IP) portfolio to meet these challenges.
I’ve been working in the IP industry long enough to remember the economic shock during the 2008/2009 global financial crisis (GFC). It created significant pressures for established exporters and start-ups. While the COVID-19 situation is not the same as the GFC there are similarities.
Many businesses across the country are currently questioning: How do we respond to, and manage, the challenges that COVID-19 is having on our business?
There is no one-size-fits-all plan. Much depends on the business and its stage of development. Some industries, like healthcare, are ramping up while others have come to a screaming halt. Irrespective of where you find yourself, it is important to consider the following issues when managing your IP portfolio during an economic crisis.
Cash is king
It is in times like this that the old adage holds true. If you have cash then you can meet your obligations, keep the doors open, retain key staff and continue to trade. With that in mind, businesses may be asking whether it is sensible to invest in an asset such as IP rights at this time. The opposite also applies. Deciding to abandon an application results in the loss of your exclusive rights. If those rights defined your competitive advantage, can you really afford to lose them?
So how do you weigh up whether to invest in IP rights now or to wait?
- The process of securing registered IP rights is not just a short-term consideration. Starting the process now may require future actions or obligations that will incur costs in 6, 18 or 24 months. Ensure you understand when the next actions are likely to be due, plan accordingly and be wary about over-committing.
- Ensure the business has good systems and records in place – thorough budgets, clear instructions on what costs can be incurred, and decision-making criteria for potential investment in IP rights.
- Have a contingency fund wherever possible. Costs often arise earlier than expected or external factors, such as changes to foreign exchange rates, can lead to cost increases. Being able to accommodate shocks will reduce stress and improve your chances of getting through this unscathed.
What are you protecting?
Many companies have portfolios of IP rights protecting specific products or aspects of their business. Businesses should ask “how do these aspects relate to our business and are they essential”? If the question can’t be answered, it’s a good indication that the IP right is superfluous and does not require further investment.
However, if an IP right captures your business’ competitive advantage, can you really afford to discard it to save costs in the short term? You can only make an informed decision by understanding your IP rights and their relevance to your business, both now and in the future.
Unfortunately, some forms of IP rights are time sensitive. There is a narrow time frame in which patent applications must be filed related to the disclosure or commercial use of an invention. If the time frame is missed, the opportunity for a patent may be lost. Other rights such as trade marks can be registered in the future even if you’ve been using them in the market for some time. Determine whether immediate action is necessary or if it can wait. Your best option may be to delay filing an application or a product launch for the time being.
In addition, many IP rights have deadlines that must be met to avoid the right lapsing. But, extensions can be sought in many circumstances. Therefore, where possible, use extensions of time to delay costs or decisions.
Pivot or partner
When the world is turning upside down don’t expect your focus to stay the same.
We’ve seen in the United States that Ford has started producing respirators to meet local demand. Australian company Medtronic has openly shared the IP rights to its portable ventilator and is rumoured to be partnering with Tesla to help meet the demand for its products. Closer to home, there are the distilleries who are changing from gin and whisky to hand sanitiser.
The lesson here is to identify where you can add value; understand your core capabilities and skill set and ask how that can be used to solve customers’ problems. They don’t even need to be your current customers.
You will need to think outside of the box and adapt. Look for new partnerships where you can provide value to another company who in return will help you. Or, change your focus and produce different products.
Research suggests that crises inspire more novel and innovative start-ups. This is due to the opportunities presented and the need to approach problems from a different perspective. What may not have previously been viable, may now be. Use this as an opportunity to explore new ideas.
Revisit your IP Strategy
An IP Strategy is a plan of how IP tools will be used to achieve or improve business outcomes. It is dependent on your business strategy. Therefore, if your business strategy changes then so too must your IP strategy. Don’t be afraid to make hard decisions on investment in IP rights, but also be prepared to commit to continuing your existing plan or investing in a new one.
The COVID-19 situation is stressful for everyone. Business owners and leaders are grappling with the challenges posed at a macro level, while team members may be concerned about their health and safety, or even job insecurity. Those pressures will affect productivity and collaboration, and long-term retention.
The significance of people to a business is frequently talked about. However, teams and their importance as a form of competitive advantage, is often overlooked. Look after your team; communicate what is happening with the business, engage them on problem solving, and help with their personal challenges. You will need these team members to help the business survive during the crisis and to recover during the eventual market rebound. Therefore, it is important to nurture the team and to give them the tools and support they need to thrive.
Markets and customers
All market niches will be affected by the COVID-19 situation, albeit in different ways and timelines. You need to understand the different effects and how they will impact your business. Don’t assume that what applies for New Zealand customers will also apply in other markets.
Good businesses will survive and may even thrive during the COVID-19 scenario. How you respond will determine whether you are a good business or are left by the wayside. Getting input from a range of experienced sources will improve your decision making and outcomes.
The team at James & Wells are here to help. We’ve seen many of these challenges before and have experience in developing IP strategies or portfolio management to respond to them. We encourage our clients to get in touch and talk through any issues. We understand the pressure that you and your business is under and want to see you thrive.
Even if you’re not currently working with us, reach out for a friendly ear or reality check on your situation and approach.
We’ll all get through this together.