Economic Crisis Sends IP Owners (And Their Lawyers) Looking For Protection

By Liza Porteus Viana for Intellectual Property Watch
NEW YORK – As the value of intellectual property increases in the innovation economy, an increasing number of IP owners are trying to guard their ideas and innovations through business-method patents, international trade agreements, biological patents and other forms of protection.

But amid the economic crisis roiling the financial markets around the world and trickling down to Main Street, intellectual property owners often need to weigh the costs and benefits of protecting their IP assets through litigation. Many companies say it is hard-knock times like these that make protecting their intellectual property even more vital.

“Intellectual property is our business. If we don’t have IP to licence to people, we don’t have a business,” Alexander Arato, associate general counsel for Computer Associates (CA), said Monday at a Foley & Lardner law firm “The Changing Face of IP” conference in New York. “It’s not a luxury, it’s just a question of how much of an investment you want to make.”

Litigating patent claims and other intellectual property matters is costly, and many companies like CA play defensively – only entering the legal fray if sued, which is quite often in the US for such a large software company.

When it comes to tracking down cybersquatters, it is nearly impossible for companies, particularly smaller firms, to go after every squatter using their name on the internet. Many brand-name companies try to determine just how negative an affect any given squatter may have on the brand, if any, in deciding whether to spend the resources to combat it.

“It would also depend on how the domain name incorporates the trademark,” said Sarah Crispi, director of legal affairs for Discovery Communications. If the domain name is just spelled wrong, or seems otherwise fairly harmless, it is likely Discovery will ignore it. But if the domain name looks like it is intended to drive traffic somewhere else or intended to harm the brand, “we would probably go after it,” she said.

Many entities also find themselves having to defend themselves against so-called “patent trolls” – people or companies that enforce their patent against alleged infringers in a way that can be seen as unduly opportunistic. Patent trolls are also called “non-practicing entities” (NPEs) – patent owners who do not manufacture or use the patented invention.

There are some complaints that IP rights can too easily be used for anti-competitive purposes, such as keeping someone else out of the marketplace, even if the person holding the patent is considered a NPE.

But F. Kinsey Haffner, vice president of intellectual property and licensing for US defence contractor Raytheon Company, explained that many patents held by companies are not necessarily utilised on a regular basis, but that does not mean they don’t have value.

“It doesn’t seem reasonable to me that anyone can just step on those patents” and use Raytheon’s inventions without compensating the company, no matter whether the company is not using those patents at that time, Haffner said.

Companies often spend time and resources trying to determine whether another’s use of their copyrights or trademarks constitutes fair use, particularly in cases where a potential infringer may be using that brand name for less-than-desirable purposes or parodies. And with the proliferation on the internet, any cease-and-desist letters sent to those parodying a brand are sure to be made public, meaning the complaining clients also will be made public.

“Apart from the cost and the executive time and the effort made to engage in enforcement, companies have to take into consideration the publicity aspect, because you can get slimed,” said Andrea Baum, a Foley and Lardner partner in the trademark, copyright and advertising practice.

Fair use is the “most difficult and unpredictable aspect of copyright law,” Baum added.

And with the advent of wildly popular user-generated content, with sites such as Google’s YouTube, Facebook and others being used as platforms for users to post virtually anything online, companies like Viacom are constantly trying to prevent user-generated content sites from using their copyrighted material without permission. Those companies want to be able to more tightly control how their content is used.

“The driver for us is getting eyeballs to our site, getting our content the way we want distributed to our consumers,” said Viacom associate general counsel Stanley Pierre-Louis.

But other companies say they just might look the other way of potentially infringing parties if those parties are positively promoting the brand.

For example, Labatt Brewing Company, owned by InBev and the second-largest beer brewer in Canada, made beer commercials in 1988 that are getting second and third lives via online video site YouTube.

“It’s great because it becomes viral long after we paid for it – long after we got the market benefit,” said Keith Hunt, legal counsel for Labatt. “For us, it’s free marketing.

“We don’t prevent it, we don’t promote it – hint, hint, nudge, nudge – but it’s a way to get it out there,” Hunt added.

Liza Porteus Viana may be reached at info@ip-watch.ch.