Nurturing in-house innovation
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Businesses need to think long term about IP and the significant role played by in-house counsel in not just protecting but encouraging innovation within the organisation
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IN A DIGITISED WORLD, intellectual property considerations should form a crucial part of long-term business strategy. An IP strategy that is aligned with a company’s business strategy requires cooperation and assistance from staff to plan and execute it effectively.
“Successful IP strategy is a long game. Today’s sharp competitive advantage can be tomorrow’s distant memory,” says Jason Wach, partner at IP specialist firm James & Wells.
“Think broadly about IP – patents, copyright and trade marks have their place; but we encourage clients to consider, when strategising in this way, all of the things which provide an edge in the marketplace but which aren’t physical assets. These are your intangible assets. For most businesses they represent the greatest store of value, but it can be difficult to establish ownership and control over them.”
Since 1979, James & Wells has been at the forefront of innovation in Australasia. We are here to help you grow, leverage and protect your IP. Our depth of experience ranges from managing large IP portfolios for large international corporations, right through to protecting the ideas of start-ups, and everything in between.
We are dedicated to championing our clients and providing them with the highest levels of service. As a fully independent firm, we have the flexibility to adapt our services to integrate with what you need, both now and into the future.
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Senior in-house legal professionals worldwide who felt their businesses’ trust:
“If business is quieter than usual and you have excess capacity and human resources, consider increasing focus on R&D, ideation, IP strategy and commercialisation … Position your business to be ahead of its competitors in the next growth cycle”
Jason Wach, James & Wells
“In-house counsel can have a huge influence on innovation within a company. Often in-house lawyers have visibility across most, if not all, of the business units within an organisation,” he says. “Use that visibility, and your legal training, to identify innovation and opportunities for growing and controlling IP.”
James & Wells partner Ceri Wells adds that “in-house lawyers are more than just lawyers. They’re business advisers and are involved in all aspects of the running of a company, so they really can be influential in both risk management (by protecting their company’s most important assets) and business growth (by fostering an innovation culture).”
A 2020 study conducted by Gartner Inc. indicated that personally effective general counsels devote 52% more time to strategy and 42% more time to business guidance than their peers. Moreover, executive-level GC advice is more important than it has ever been.
“In-house counsel can lead a culture of innovation within an organisation by putting in place innovation recordal procedures for staff, which enables a company to identify its IP, while at the same time leading staff to think about innovation and IP,” Wells points out.
Employees on the frontline can more easily identify areas for improvement, he says, adding that staff are “wonderful idea creators” who should be encouraged to “share their ideas and explore new product concepts and processes”.
Nonetheless, he cautions companies to be proactive in ensuring that these ideas are documented and owned by the company, especially at a time when remote working makes it harder to keep track of new ideas and identify unauthorised disclosures.
“Businesses need to ensure that access to confidential information is controlled, and that staff understand what is confidential and what their obligations are regarding the protection of the business’s confidential information,” Wells says.
“It’s not enough to rely on cookie-cutter employment contracts to cover your organisation – you need to ensure that trade secrets stay that way, and that your organisation’s competitive advantage remains secure.”
Companies can minimise the risk staff pose to their IP by clearly identifying what the company considers is confidential, for example via notices on a wall, or document stamps, and by having employment agreements which define information and institutional knowledge that is important to the company and set out the consequences of unauthorised disclosures during and after employment.
“Employees often have detailed knowledge of information and IP that would be of value to an organisation’s competitors; if they leave, you want to make sure no IP in recorded form goes with them and they understand there are consequences if the institutional knowledge inside their head is disclosed to their next employer,” Wells says.
“In a time when the poaching of staff is rife, and there is intense competition for employees with expertise, it has never been more important to ensure your IP is safe.”
“In-house counsel can lead a culture of innovation within an organisation by putting in place innovation recordal procedures for staff, which enables a company to identify its IP, while at the same time leading staff to think about innovation”
Ceri Wells, James & Wells
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36%
Source: Lawyers on Demand, Trust: An Antidote to Uncertainty, 2021
Source: Gartner Inc., 2020
PRIORITIES OF PERSONALLY EFFECTIVE GCs
52%
42%
more than their peers
Time devoted to strategy
Time devoted to business guidance
more than their peers
Anticipating the next wave
The economic environment has been adversely affected by the pandemic, and many economists are predicting recession as interest rates and the cost of materials continue to rise. For Wach, however, a cooling economy presents opportunities.
“If business is quieter than usual and you have excess capacity and human resources, consider increasing focus on R&D, ideation, IP strategy and commercialisation,” he says. “The cycle will run its course. Position your business to be ahead of its competitors in the next growth cycle.”
Wach highlights how some of James & Wells’ clients have benefited from being able to capitalise on new trends.
“Some of our clients have done extremely well in recent times by drawing on their existing innovation pipelines to take advantage of new areas of demand. This wouldn’t have been possible for those businesses without having a long-term focus on R&D, and IP growth already in place,” he points out.
“No one could predict the pandemic. But sooner or later, and it’s already happening, business life will normalise, albeit to a new normal. Plan for a range of scenarios in the business environment – but remain agile.”
Wach cautions businesses against dragging their feet on innovation.
“Anticipate where the market is likely to head, and grow and develop your IP to meet future demand,” he says. “Protect your IP where appropriate. As a litigator – and a commercial adviser – I too often deal with innovative businesses who don’t think about trying to own and control their great ideas until after someone else is benefiting from them. At that time, it can be too late to take effective action.”
Typically, the best ideas come from within an organisation, and in-house counsel have become instrumental in driving progression and innovation, especially with the onset of the pandemic. According to a 2020 study conducted by the Association of Corporate Counsel and legal ops platform Dazychain, “lawyers are critical in the workplaces of the future”.
Respondents to the study expressed their need to be constantly accessible and prepared – one indicated that “there's not a meeting in the business now that can happen without legal being involved”.
A 2021 global report published by alternative legal services provider Lawyers on Demand (LOD) revealed that businesses are increasingly placing their trust in their in-house leaders – 36% of the 183 senior in-house legal professionals who participated in the study reported feeling this trust, and they have reciprocated as evidenced by the 35% boost in the use of self-service legal solutions.
Innovating from the inside
Wach emphasises that the expanded role of in-house counsel means that they can play a major role in helping their organisations to innovate.