Empowering Innovation: The Key to Achieving Long-Term Corporate Growth

Intellectual Property management is evolving faster than ever and will only accelerate as we head into the second quarter of the 21st Century. Sophisticated data analytics and AI offer decision-makers new criteria to inform IP budgets and accurately assess ROI. Today's supply chain integration, in which market globalization competes with re-shoring and friend-shoring, is defining new ways of thinking about the use of IP to achieve success. Government regulations and policy shifts are driving corporate decision making in new ways. Indeed, the very definition of success has evolved in the past few decades.

Empowering innovation in an increasingly complex economy requires the integration of IP into all elements of a company's strategy, not only for monetization, but also for growth, profitability and long-term sustainability of the entire enterprise. This article is the first in a series of commentaries on what true IP integration actually means.

Aligning IP with Business Goals

The starting point is a recognition that although intellectual property has a very specific and complex jurisprudence as a legal subject matter, it does not exist in a business vacuum. Expert IP attorneys are the cornerstone of the framework, and high-level experts, especially in the patent realm, are necessary for navigating the intricacies of patent drafting, prosecution, and global portfolio development.

Given the increasing commoditization of prosecution, however, the best IP attorneys understand their role in the broader context of successful strategy implementation. A company's IP strategy must align with, and support, all other activities. There are many aspects to the interplay between IP and other areas of law and corporate strategy. Some of these are outlined below and will be explored in more detail in future commentaries.

The Integration of Intellectual Property Law and Corporate Strategy

International Trade

A prime example of such interplay involves the impact of international trade considerations, including geopolitical realities, which impact market access objectives (distribution and supply side). These realities necessarily implicate where a company's IP needs to be and can be enforced/licensed. The E.U., (especially Germany), is facing increasing competition and decreasing demand in international markets. Rising energy costs and the destabilization of supply, due in part to the geopolitical actions of Russia and Middle East aggression, has led to a renewed focus on fossil fuel technology, which is now competing once again with the more recent push to renewables.

The defense industry is also undergoing change as a result of shifts in trade behavior and national security priorities. Newly emerging strategic cooperations and even M&A activity in bilateral and multilateral corporate deals in the defense industry require changes in IP development, protection, licensing and enforcement strategies. Valuing and driving deals in this important area is strongly reliant on effective and intentional use of a company's IP. Identifying strategic moves to set up profitable deals must be supported by IP considerations in supply chains, agency regulations and government contracting.

Labor and Employment

Another prime example of how IP plays a role in a company's business involves consideration of how labor and employment laws impact access to talent and skilled labor. Human capital management focuses on maximizing employee contributions to an organization in a manner most beneficial for everyone involved. This often requires large investments in time and money for training related to employee obligations on data security and trade secret development, protection and maintenance for the benefit of employee and employer. These IP interests, and others, must be woven into employee agreements, NDA's, and even appropriate separation agreements. Protecting the interests of both employees and employers at the same time is not an inconsistent proposition when the larger IP interests are taken into consideration at all points of the relationship.

An additional consideration involving IP/employment intersection relates to immigration law and policy. Many multinational companies rely on cross-border talent mobility for effective R&D and this often implicates immigration law. Cross-border employee mobility also brings up import/export control issues which much be carefully managed.

Tax

Intangible assets are subject to a wide array of complex tax issues globally, with a company's IP being one of the most significant. Tax rates vary between jurisdictions and selecting the location of the entity which owns the IP can have major impacts on tax liability. Ownership in a U.S. jurisdiction, a non-U.S. jurisdiction, or shared ownership among two or more jurisdictions all impact tax strategy. Many jurisdictions of commercial significance have differing R&D tax credit schemes and IP incentives. Some tax regulations also differentiate between purchased or acquired IP versus internally developed IP. Going even further, some countries differentiate purchased IP on how it was acquired. These and many other factors of tax policy and its impact on IP decisions necessarily require collaboration between expert lawyers in both highly specialized practice areas.

Cybersecurity

Cybersecurity threats are increasingly prevalent and sophisticated. Empowering innovation in today's threatening world necessarily requires comprehensive and robust cybersecurity policies and procedures. Knowing what data and IP is exposed, and where those vulnerabilities exist, is critical to protecting assets. Auditing a company's IP from top to bottom, including pipeline R&D, will inform strategies on where to locate the most sensitive data, how to control access to that data, and technical solutions to safeguard the information.

As government regulatory schemes around cybersecurity rapidly evolve, compliance and cross-border data control are becoming more and more complex. Both the E.U. and the U.S. have significant rules on data breaches. As one example, the E.U. Cyber Resilience Act, enacted on October 10, 2024, provides a comprehensive ruleset to ensure that digitally connected devices meet detailed and documented cybersecurity requirements before being sold. Because IP is often the target of cyberattacks, particularly in sensitive sectors like healthcare, infrastructure and national security, incorporating strong protections and response planning into an IP protection scheme is now central to not only regulatory compliance but sound corporate governance. Finally, weave into these complexities the fact that AI is simultaneously a risk and a solution, and it is clear that sensitive IP and related data must be integrally and critically embedded within sound cybersecurity policy and planning.

Government Relations

A company's government relations and public policy positions should also incorporate IP considerations. Having a complete understanding of legislative, judicial and regulatory trends and activity gives a company the highest return on lobbying and IP investment. The political challenges facing governments throughout the world are creating uncertainty and higher expenses and barriers to innovation. Countries differ on lobbying rules and accessibility to decision making processes. Given the current complexities and challenges, having a strong grasp on government relations and the ability to influence policy is key to effectively managing an IP strategy.

This focus on policy, including unilateral, bilateral and multilateral activities, must recognize issues far beyond just IP legislation and rulemaking. It must include industry wide considerations on trade, labor, tax, regulatory requirements and indeed every area of government/commercial sector interaction. A comprehensive view of all of this activity and the sources of the potential shifts can help mitigate unintended consequences of legislative and policy changes in other areas that can so often impact IP assets.

In the coming months, we will delve deeper into each of the areas mentioned above in separate commentaries, highlighting the multifaceted role of intellectual property in corporate decision-making and beyond.

The Need for Experienced Counsel

At Buchanan, our teams are closely connected to the industries they serve. Our IP professionals work hand-in-hand with attorneys across diverse practice areas like regulatory, healthcare, corporate finance, labor and employment, international trade, litigation, cybersecurity, and more. This collaboration allows us to deliver the specialized expertise of an IP boutique while leveraging the resources of a large, multi-practice firm. Our government relations professionals also help us anticipate changes and influence policy, ensuring your IP strategy remains comprehensive and adaptable to the evolving landscape.