“controlling risks associated with intellectual assets”...the value of intellectual property...

““Controlling Risks Associated Controlling Risks Associated With Intellectual AssetsWith Intellectual Assets””

3030thth October 2009October 2009Hyatt Regency, Hong KongHyatt Regency, Hong Kong

Audrey YapManaging Partner

Yu Sarn Audrey & Partners

WIPO Regional Symposium On Management of Intellectual Capital, Intellectual Assets And Intellectual

Property

2© 2009 Yu Sarn Audrey & Partners

Issues for ConsiderationBackgroundUnderstanding concept of risk in relation to

Intellectual AssetsCategories of risksRisk related with strategic alliances like licensing and distributorshipContract manufacturing – IP issues and risksDealing with risks – clear steps

WIPO Regional Symposium, Hong Kong Oct 2009WIPO Regional Symposium, Hong Kong Oct 2009


BackgroundA company’s economic strength and global competitiveness depends even more on successfully harnessing intangible assets within the organisation.



The value of Intellectual Property & Intellectual Assets effectively increased over the last few years. Increase in value means increased competition for Intellectual Property & Intellectual Assets and increased litigation.Effect – increased risk for IP owners and users.



Risks can be categorisedInfringement risksEnforcement risksTitle risksInvestment risksStorage or maintenance risk



Infringement risksActivities haltedHuge legal expenses if infringing or

just to defendRisk paying substantial damages,

resulting in losses or increased business cost



Enforcement risksEffect of 3rd parties infringing your IPSuffer reduction in value of own IPRisk of bearing legal fees as a result of infringement by others



Title risksOwnership is key for IPNavigating IP system, multiple countries challengingRisk business cannot maximise value if unable to obtain grant or registration if government officials such as examiners unconvinced of patentability or registrability of IPRisk if licensee or buyers of IP doubt the IP the business claims



Investment RisksIP developed at huge cost and investmentRisk if effort and expenditure invested not yield expected results, or results not useful for business



Storage, maintenance, dissemination risks

Rapid technology development, software and digital media valuable

variety of harm resulting from dissemination of creative work and advertising particularly on internet

Also risk of damage to digitally stored IP



Understanding risks allows for strategic IP management planningClearly need for good IP governance



Issues are broad – focus is neededConsider example of strategic alliances like licensing, distribution or manufacturing agreements



Key to managing risks in strategic alliances such as licensing, manufacturing, supply arrangements are setting in place processes for good prospects for successImportant documentation unambiguous



Variety of alliances; and what the relationship is called is not consistentWhat is consistent is the alliance is based on Intellectual Capital, Intellectual Asset or Intellectual Property.Fundamentally, each party contributes Intellectual Capital, Intellectual Asset or Intellectual Property to gain an advantage that either will find difficult to obtain independently.



Types of Intellectual Capital can be market access, customer relationship, people skillsTypes of Intellectual Property include patents, copyright, trade secrets, trademarks



Types of Intellectual Property Trademark – Protects identity, reputation,

trade connectionCopyright – Protects creative expressionDesign – Protects appearance/ design of

article/ objectPatents – Protects Inventions, solutions to

problems, innovations



Different types of Supplier/license or supplier/distributor arrangementsExample 1Supplier purely to just build product designed by purchaser

Little IP from supplierAlliance result of low cost, labour, tax

structures



Example 2Supplier has own IP; Purchaser wants to leverage on Supplier’s competency; sometimes Supplier also has extensive distribution channelsHere Purchaser has IP such as testing procedures, tools, programs.Risk to Purchaser especially if limited competent suppliers Purchaser has to reveal know how.Also, profits may be constrained.



Risk varies depending on type of arrangement, who has the IP, strengths of the partnersObjective would be to strike a balanceExample Purchaser must understand value of IP, manage development, quality control, process and tests. Not just hand over results/know how but license Supplier including patent license.Supplier can benefit – develop own bank of know how, cross pollinate ideas/ process/ techniques or obtain license for entire product line from Purchaser or Supplier



Contract manufacturer vs Distributor

Risks are different; typically risk infringement action against distributor lower



Contract manufacturerRisks to IP ownersRisks to manufacturer

Can manufacturer be sued by third party?Can manufacturer rely on licensors IP?



Manufacturer/licensee may require certain indemnities from licensor against third party infringement action to mitigate risk, licensor will usually provide some very limited indemnity – rare to provide open ended indemnities

Licensor however can make certain representations to give assurances to licensee such as patents from other companies from which it has licensed rights or agree to seek additional licenses jointly with licensee.



STRUCTURE OF DEAL OR LICENSE IMPORTANTIn managing the risk

Identify strategic objectives of relationship to best deliver advantage



Key considerations and steps Identify your own IP identify licensee’s complimentary IPSelect party that can be trusted with your

IPAgree on reciprocal obligations on IPHave plan for maximizing value of

shared IP Provide for an exit plan



DisclaimerThis presentation and the materials connected herewith do not constitute legal adviceYou should consult your own lawyer about any specific problem you may have


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Thank you Thank you for listeningfor listening

Yu Yu SarnSarn Audrey & PartnersAudrey & [email protected]@yusarn.comTel: + (65) 6358 2865Tel: + (65) 6358 2865Fax: + (65) 6358 2864Fax: + (65) 6358 2864


SPEAKER’S CV

Audrey YapLL.B.(Hon.s) LL.M

Advocate & Solicitor, Malaysia & SingaporeSolicitor, England & Wales

Registered Patent AgentAdjunct Fellow, IP Academy of Singapore

IAM 250 World’s Leading IP StrategistWho’s Who Legal (Singapore) 2008

“controlling risks associated with intellectual assets”...the value of intellectual property...

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