By: Victoria Lee
As the world slowly considers what it means to reopen, many companies are looking for ways to adapt their business models to reach consumers. Still others are looking at how to go back to business as usual in a decidedly less than usual way. While discussions over force majeure may continue for the near future, there are a few key intellectual property-related considerations for companies, whether they are seeking to expand into new markets or looking to preserve their place in an existing market. These considerations are important regardless of where a company may be operating geographically. In the case of Israeli companies that have offices internationally, understanding the need to tackle these challenges will have a direct impact on the success of market expansion or preservation.
Intellectual property protection
While companies consider how to bring their work forces back into offices, having some employees continuing to work from home on a regular basis may continue for some time. As a result, there may continue to be a heightened risk for inadvertent disclosure of a company’s intellectual property, especially a company’s trade secrets and key data assets (as well as personal information).Companies in sectors where intellectual property is a key asset are encouraged to consider formalizing their mobile device, intellectual property and information security policies.
As government workers and agencies around the world start to get back to work, changes in filing deadlines for prosecution and registration of intellectual property rights are likely to continue.For those companies seeking to register or continue the prosecution of their intellectual property, regular monitoring of filing deadlines will be critical to ensure that a required filing is not missed.
Access to intellectual property
Access to intellectual property and developments will continue to be important in technology collaboration or joint development projects. If one party to a collaboration or joint development project has not survived the turbulent economy due to fallout from the coronavirus disease 2019 (COVID-19) pandemic, the ability of the other party to either continue the project on its own or transition to another collaborator may be challenging without access to the work product and intellectual property developed to date. Reviewing agreements for transition obligations, robust knowledge transfer obligations, as well as disaster recovery and business continuity plans, are important steps to mitigating the risk that access to its investment in the project.
Source code escrows
Software is a key asset of many technology companies. Technology companies providing software or services are often asked to deposit their software into a third-party escrow account, which provides that the source code of the software will be released on the occurrence of certain specified trigger events.Though software vendors typically seek to negotiate release triggers that are limited to bankruptcy and insolvency, sometimes software vendors must concede to broader release triggers that may also include a failure to perform contractual obligations or other financial insecurity short of bankruptcy and insolvency.Technology companies facing uncertain times might proactively review their escrow arrangements and take steps to minimize the risk of a source code release, which can often be a red flag in a financing or a prospective sale of the company.Licensees of software, on the other hand, should consider taking the opportunity to review their ability to access the software source code if ongoing performance by the software vendor may be at risk. For licensees of mission critical technologies, it may be worthwhile to consider the establishment of a bankruptcy remote entity to mitigate against the risks of losing access to the technology in the event of a bankrupt licensor.
Cybercriminals haven’t taken a break while the global pandemic continues to rage; and cyber risk will not likely decrease once we all go back to work. Cybercriminals will continue to be opportunistic. With the benefit of hindsight, companies are encouraged to have renewed focus on locking down systems to ensure confidentiality, availability and integrity of their company’s critical systems and data. Technology companies with data-centric business models and that need to maintain the confidential nature of key pieces of information (such as pricing, customer lists, bills of materials and other sensitive information) are encouraged to review their cybersecurity practices. For more about cybersecurity considerations with a remote workforce, please see our article here.
New digital platforms
While we have sheltered in place, restaurants shuttered for dine-in meals have reopened for takeout-only orders; gyms and fitness studios faced with membership cancellations and refunds have made virtual workouts available to members; musicians are streaming music and concerts; religious institutions are streaming messages; retail stores that did not prioritize their online presence or channel now have no other way to reach potential customers; and distance learning/teaching may be turning into a more permanent fixture in education than anyone ever anticipated.Even when economies slowly reopen, it is unlikely that anything will be as it was before COVID-19, and, with these new markets and platforms available, businesses are encouraged to consider intellectual property, privacy and commercial issues that they likely never had to consider previously:
- The content and material that is available on a website may be considered proprietary, so companies are encouraged to ensure there are online terms protecting the intellectual property on their websites.
- Producing and making video content available will require appropriate consents and releases from participants appearing in the video. If music is also available, then the appropriate music rights should be secured, and, in some cases, appropriate royalty payments made.
- Data privacy and breach notification laws are ubiquitous across the globe, and compliance is sometimes seen as a necessary annoyance. But adopting best practices in privacy compliance and implementing and maintaining robust data security also builds consumer trust and reinforces brand reputation at a time when consumers are increasingly concerned about their privacy.
- Launching web-based promotions to reach a new and expanded base requires compliance with a distinct set of rules regarding the disclosure of the details of offers, timing of offers, expiration of offers and treatment of information.
We all hope that business and life will slowly resume, though it is becoming clear that it is unlikely business and life will resume as we knew it. At least for the near term, teleworking, distance learning, virtual workouts and virtual social gatherings may be with us for a while. With these changes, some fundamental issues related to intellectual property will be relevant for old and new business models alike and across multiple sectors. Focusing on adequately addressing those issues can help businesses remain open and play a role in restarting the global economy.