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15 June 2020
Economic success following the COVID-19 crisis will arguably depend on four considerations:
In light of the above, effective IP rights management will be more important than ever after the current crisis.
A forward-looking perspective and the ability to establish appropriate growth strategies that consider the new needs brought about by the COVID-19 crisis will be paramount. Further, technology transfer agreements (also for states) and licensing agreements (exclusive and non-exclusive) on IP rights will be even more important to make the best use of these rights as a competitive factor on the global market, all the more given the difficulties in trade that will lead to the decentralisation of production to be marketed in more distant markets. Moreover, some of these rights are subject to forfeiture or revocation in case of non-use (eg, trademarks and, in certain circumstances, patents), so that use is a necessary condition for their preservation. Hence, it will be impossible to ignore licensee's activity, which must instead be constantly monitored. This also includes the circulation and use of confidential information. Special attention must be paid to the security of computer communications and confidentiality commitments, which should last until the information covered therein has not become generally known or easily accessible for reasons not attributable to the obligated party. Correct contractualisation thereof will be more crucial than ever.
In most jurisdictions, deceptive trademarks (ie, owing to the way or context in which they are used) forfeit their rights or are revoked. Further, the assignments or licences associated with a deceptive trademark may be declared null and void.
The deception relevant for the application of these penalties may also apply to components of the message communicated by a trademark (ie, immaterial components). In fact, such 'intangible' characteristics (eg, authorship, stylistic consistency and geographical origin) can be decisive for consumers. Moreover, brands often correspond with other aspects of corporate communication, such as advertising and producer responsibility for defective products. In addition to penalties, licensee's and local distributor's risk misusing a brand and negatively affecting its image and value, including internationally. Therefore, the correct contractualisation of international business relations involving IP rights will be essential in this scenario as well.
No less important, especially during the COVID-19 crisis when national resentment might be stirred, is to ensure that a brand's message is compatible with the culture of the country where the associated products are sold, thus avoiding negative reactions. In other words, today more than ever, brand owners must have the courage to be 'glocal' – that is, to build a global business, but accommodate local particularities.
Ownership, circulation and use
A third issue in the post-COVID-19 IP ecosystem will concern IP rights ownership, circulation and use inside holdings, especially multinational ones. The management of such rights should not be based solely on the principle of freedom to use them within the same holding if this setting does not consider the financial and accounting autonomy of the companies which comprise a holding and mutual give-and-take relationships, which will be regulated and valorised by means of effective framework agreements. Under this perspective, the management of technological inventions, whose creation (or acquisition by third parties) is usually expensive, may also lead to employee-inventor obligations. In fact, such obligations always fall on employers, irrespective of whether they hold the patent rights. Therefore, the free entitlement or assignment of any associated rights of other holdings and their companies would be unjustified, if not exchanged for cash flows which could constitute the reason of such asset attributions.
Jurisdictional matters must be carefully considered when drafting or periodically revising contracts (eg, licences and assignments) in future, especially long-term contracts. Clauses will need to be sufficiently flexible to always grant the possibility of effective enforcement, even in the face of crisis situations (eg, the COVID-19 pandemic) and radical changes in the legal framework (eg, those deriving from Brexit).
As the road out of the COVID-19 crisis will be long and difficult, companies should prepare a strategy that integrates a future-oriented IP rights management plan to deal with the potential challenges and demands outlined in this article.
For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email (email@example.com). The IP Law Galli website can be accessed at www.iplawgalli.it.
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