Using the corona crisis as an opportunity for realignment
The corona pandemic has a strong impact on economic processes and is leading to a recognisable recession. Governments are currently offering assistance in the form of loans and short-time working to ensure the liquidity of the affected companies.
Due to the decline in sales, many companies are forced to budget heavily for their expenditures in the coming months. The focus is usually on “essential” expenditures.
This often leads to costs relating to the property rights portfolio playing a subordinate role in the considerations. In some cases, entire patent families are abandoned or decisions on the planned territorial scope of IP rights are revised as part of cost-cutting measures in order to reduce costs or meet the budget plan.
These decisions can be useful for securing short-term liquidity, but can have a negative impact on the market position in the long term. Therefore, decisions regarding the property rights portfolio should be made with due consideration in this situation as well.
Responsible persons in companies can support this process with simple but effective measures:
Critically review portfolio
In a first step, the existing body of intellectual property rights should be subjected to a critical review. The main focus here is on a classification of the property rights according to their relevance for current products. In particular, property rights relating to developments that have never been applied should be subjected to a critical review. The question must be asked whether these property rights are potentially important for the effective exclusion of competitors. Non-relevant property rights or families of property rights could then be earmarked for release, thereby saving the expenditure already planned.
In this context, it is advisable to discuss property rights that are relevant but not essential property rights. If a decision is necessary in the short term, any costs incurred for renewal or maintenance fees could be deferred and, if necessary, paid at a later date with a surcharge. However, this measure can only be taken in the short term and only serves to secure the liquidity of the company or to postpone corresponding decisions to a later point in time when the further development of the company can be better estimated. The additional and surcharge costs represent a higher cost burden here, but should be reconsidered with a view to extending the decision period.
Another key point is the review of the strategic orientation. This should be based in particular on the current and planned future business areas. Accordingly, new developments in these areas should be promoted and, in order to improve the company’s competitive position, protected even under the current circumstances. At the same time, everyone should be aware that such investments in the future may only be made in the short term, but should not be postponed to the long term. Due to the current situation, many companies are challenged to find innovative solutions that will enable them to survive in the market. In this context, the funds freed up by giving up less relevant intellectual property rights can be invested in future developments. In this way, a future-oriented setup of the property rights portfolio can be achieved in a cost-neutral manner.
In view of a possible new business segment orientation, those responsible for property rights should be involved at an early stage. A Freedom-To-Operate (FTO) search is particularly essential here in order to allow an assessment of the existing competitions in this environment. Such an assessment can provide valuable information on possible gaps or niches in the intellectual property portfolios of competitors, which can be used in a targeted manner.
An effective short-term cost reduction can be achieved, as explained above, by shifting the payment of renewal and maintenance fees, but with the disadvantage of costs for surcharges due to the delay. Another possibility is to delay pending proceedings by extending time limits where possible. Costs thus incurred, such as granting fees, translation costs, etc., can be postponed to a later date. The savings achieved in this way can be used to create leeway within the budget framework in the short term, which can support a reorganisation.
As a result, companies can use the corona crisis as an opportunity for the realignment of their intellectual property portfolio in order to gain advantages in future competition by gaining an innovative edge over third parties.
We will support you in this process of repositioning. Please contact us if you have any further questions.