Hidden value: The digital IP you didn’t realise you have
In our latest expert insight piece from intellectual property law firm Potter Clarkson, Ben Bell highlights the hidden digital value that many companies may not realise they have, and the different options that are available to help companies protect this.
All businesses are digital
Today every business is a digital business, regardless of what they might think. Whether it is manufacturing, retail, engineering, medical or any other domain that might not be traditionally thought of as ‘digital’, every business now touches the digital space in one way or another. So, it is vital for all businesses to consider the digital IP that they are creating on a daily basis, and how best to protect that IP moving forwards.
What digital IP might you be producing?
Consider the following scenarios:
- A pharmaceutical business uses external consultants, along with their own technical know-how and data, to develop software that predicts potentially effective pharmaceutically active ingredients.
- An apple orchard develops a system of using drone-based surveillance to check for the optimal time to pick apples.
- A retail business develops a novel approach for visualising and browsing their wares on their website.
- A manufacturing business develops an alternative automated approach for controlling their equipment that leads to reduced manufacturing times or costs.
Day-to-day, these businesses would doubtless describe themselves as being a medical/pharma, agricultural, retail and manufacturing business respectively. However, as should be immediately obvious from these scenarios, each have incorporated (perhaps without even realising) a significant digital element into their businesses.
And these digital elements will have hidden value, value that will never realise its financial and commercial worth if it remains hidden, ignored and/or unprotected. Instead, this hidden value needs to be captured and leveraged in the same way as all the other IP at the heart of your business.
OK, but can any of it even be protected?
The simple answer to this is almost always yes! When businesses think of ‘IP protection’, they tend to focus on patent rights exclusively, and often conclude that the developments they have made are unlikely to be patentable and so are not worth protecting. This is particularly true in the digital space, where obtaining patents for software-related and computer-implemented inventions can be particularly challenging. However, there are many more types of IP protection available, and an effective IP strategy will generally incorporate a combination of different types of IP protection (including patents) to provide the strongest and most effective strategy to help protect your businesses IP.
As an example of how we might put together such a strategy, let’s look at the four primary IP rights that we would generally consider in a little more detail: patents, trade secrets, designs, and trade marks.
When it comes to protecting digital inventions, patents are probably the first IP right that comes to mind. However, isn’t it just too difficult to patent software?
Not necessarily! Typically, software and digital patent applications tend to fall down at the ‘technical effect’ requirement of the patent office – your innovation must show that it achieves a technical solution to a technical problem. Unfortunately, for most of us, this phrase doesn’t mean much. Here is one of the ways we try to think about the technical effect criterion, when considering where a patentable innovation may be found:
Is the improvement given by your invention: Measurable, Repeatable and Objective?
Once you have identified the part of your invention that meets each of these three criteria, then you can ask yourself if these features of your invention are obvious or not. If it seems that even a small part of your invention meets these requirements, your software could well be patentable.
Even if it is determined that your invention likely isn’t patentable, you may be able to protect your digital innovations using trade secrets.
Trade secrets are all too often the forgotten IP right. While many businesses still think they don’t have any trade secrets, the truth is, if your business has information that is kept secret, has commercial value (now or in the future) and has access to those secrets limited to need-to-know people within your business, you have trade secrets.
If your digital IP isn’t patentable, trade secrets can often provide the protection you want because they can protect multiple facets of your technology, such as: how the particular piece of tech works, a formula, a practice, a process, processed data, an algorithm, code, or the way you use data.
As discussed in more detail below, trade secret protection is becoming more and more valuable given the attention that businesses are focusing on AI and machine learning (ML) related developments. AI and ML implementations generally use known and open-source algorithms as their starting point, however they then need to be trained in order to meet the requirements of the business.
Trade secrets can provide powerful protection for both the training data used to train the AI/ML model, and also the trained model itself. There are certain requirements that need to be met in order for trade secret protection to be enforceable, however by establishing clear internal guidelines for how these requirements are met, businesses can be confident that their most important digital IP assets are well protected.
Design protection is also hugely important when looking at how to protect digital innovation.
If we again consider the retail example, the website of the business might be extremely intuitive, user-friendly and unique. The website user interface (UI) might give an amazing user experience (UX) and might have taken a lot of effort to develop. This look, feel and functionality can be protected by designs.
Similarly, the app the pharma company has developed to acquire patient feedback on treatment results may well use an easy-to-use colour-gradient slider that is completely different to their competitors’. This could be protected with designs.
Maybe you have developed your own icons and animations. Again, these can be protected by either static or even animated designs, and in a fraction of the time and at a fraction of the cost of pursuing patent protection. This makes designs a very effective proposition in areas that innovate at a fast pace.
Traditionally, businesses have protected their company names, logos and even mottos with trade marks. But if you are a business who has developed an app, what are your consumers or clients interacting with every day? I’ll give you a hint, they click on it every time they want to use your app. That’s right, your app icon. This is more compact than your name and might be simpler than your logo, but it is that little icon that consumers start to really associate with your brand through repeated interaction.
So, you mentioned AI?
It seems like every day there are new headlines and articles everywhere talking about AI and machine learning, and with good reason! It is indisputable that AI currently sits at the centre of pretty much all digital innovation. Developing and making use of new AI/ML systems can be enormously beneficial in a wide range of business situations.
But how can AI/ML developments be protected? Well, as we mentioned above, there are plenty of options to consider, but the most effective strategies involve a combination of patents and trade secrets.
Copyright protection and licensing agreements (to help prevent ‘reverse engineering’) can also be effective for software related innovations. However, as AI/ML models typically run in cloud-based environments, rather than on the end-user hardware, these protections are often less relevant to AI/ML.
One final point to consider in relation to AI/ML models is data ownership, and this issue is likely to become even more central to issues surrounding AI/ML in the coming years. Data ownership relating to AI/ML typically falls within two categories: data used to train the model, and data generated by the model.
It is important to ensure that any data used to train AI and ML algorithms is owned by the business or is correctly licensed from a third-party for this purpose. One of the many headlines that have surfaced lately relating to the wildly popular ChatGPT and StableDiffusion AI models are questions as to the ownership of the data that was used to train these AI models. Several lawsuits have already been filed alleging that these models were trained using copyrighted material taken from the internet, without the permission of the copyright owners.
It is also important to clearly define ownership of any data that may be generated by AI/ML models. In particular, if any collaborative work has been undertaken, agreements as to which parties will own any intellectual property (including data!) that may be developed in the collaboration must be established.
Almost every medically-focused business is now a digital business, so you almost certainly will have digital IP assets. Don’t be put off by the misdirection and misinformation around patenting digital innovation. Act quickly to make sure all your digital IP is properly protected. A good IP strategy will consider all available types of IP protection and will make use of a combination to ensure effective and commercially beneficial protection is put in place.
We recommend consulting IP and legal professionals as early as possible to help ensure that you develop an effective IP strategy and a robust legal structure to protect and commercialise your IP.
Ben Bell is a member of Potter Clarkson’s patents team and is experienced in European and UK patent law.
In particular, Ben has experience with drafting and prosecuting European and UK patent applications across a broad range of technical subject matter. Ben also has experience with managing large patent families, with instructing prosecution across a range of foreign jurisdictions, and with providing infringement and freedom to operate advice.