Fixing problems and shaping the digital future through government engagement

Whatever area of law you practise – whether in-house or in private practice – the value of lawyering is in finding practical solutions which mitigate risks and keep a business moving forward. Engaging with governments on intellectual property can seem a long way from this; but there are several areas where this is an important part of the toolkit which should not be overlooked, especially for in-house IP counsel.

Picture: ArtisticPhoto/ Shutterstock.com

Where a solution relies on action by public authorities or changes to the law and its practice, engaging with government becomes an important factor – even when this is done through precedent-setting litigation rather than legislative change. Today, changes brought about by digital technologies in particular are redefining the legal framework and the marketplace. This is happening extremely fast in some areas and less perceptibly in others, but the systemic and practical changes being called for will redefine how IP rights are used by all sectors of the economy.

Not engaging with government also carries its own strategic risk. Competitors, interest groups and industries with very different business models are engaging with government, putting their case for changes that support their interests and reflect their vision of the future.

This article examines how and why brand owners should engage on shaping IP laws, regulations and systemic IP issues, as well as some ideas on what issues to monitor and speak to government about. Finally, it explains why, as laws are transformed in the internet era, trademark lawyers need to get involved in much broader and more diverse issues than just trademark law.

What does ‘engaging with governments on intellectual property’ mean?

‘Engagement’ means crafting and delivering persuasive messages to government and other bodies in response to an issue, in order to achieve a practical outcome. This can help to achieve or avoid an outcome that direct action by the company alone could not deliver. Engaging in intellectual property can be as simple as sitting down and describing a company’s business to officials, the context behind its IP issues and cases, as well as their importance to the business in a way that fits in with what those officials are trying to achieve themselves.

In other circumstances a more involved plan may be needed, which might include an alliance of like-minded companies or citizen groups engaging a variety of influencers through trade associations and other constituents or through the media. There are advantages and disadvantages to each route. Companies need to find the option that best matches their case, business priorities and wider corporate engagement strategy.

Why should companies engage with governments on intellectual property?

Changing outcomes

Successful rights holders put a lot of energy into protecting their intellectual property through registration, searches, contracting and enforcement. Companies also expend significant resources on anti-counterfeiting programmes. The value and enforceability of IP rights are determined not just by the legislation made by governments, but – just as importantly – by the resources and capacity of court systems and public enforcers. Targeted engagement with policy makers is needed to ensure that the views of brand owners are heard and reflected in the crafting of laws and the allocation of resources.

Laws are changing around the world in ways that significantly affect key corporate assets:

• Substantive laws on patents, trade secrets, trademarks, designs and copyright are being reviewed in major jurisdictions around the world. In particular, copyright and trade secret laws are being reformed in both the European Union and the United States, while trademark laws and regulations are being revised in China.
• Countries that may be the markets of the future are implementing new regimes. Myanmar is an example of a country that is enacting new laws on patents, designs, copyright and trademarks, as well as new systems for protecting these.

It is vital to identify those which provide opportunities or undermine business interests and develop a response.

Practical support for IP departments

In the short term, engaging with government can also help the day-to-day operations of IP departments. Governments including those of the United States, the United Kingdom, France and Japan have IP attachés in situ in hotspot countries, whose job is to help with IP issues. Embassies more generally can assist, often working with support from specialists in their home capitals. Examples of situations where such outside help can be useful include the following:

• Cases filed in some jurisdictions sometimes take a long time to be heard, let alone resolved. Having a supportive IP attaché ask questions about the case helps to ensure that local courts continue to work on the matter and prevent the file from going missing.
• Where counterfeiting is increasing in a particular region, a joint cross-sectoral initiative under the auspices of the World Customs Organisation or Interpol will help to grab the attention of local law enforcement officials, highlight the importance of the issue and give visibility to the brands concerned. This will make it much easier to get the attention of local law enforcement after the operation ends.
• Sometimes, where government structures are complex, it can be hard to know whom to turn to when it comes to more important and challenging cases. Locally based IP attachés are extremely helpful in pointing rights holders towards the most relevant departments and making connections with the right people.

Enhancing reputation

Having a consistent and coherent set of principles behind the positions that a company takes – whether in litigation, registration or the legislative changes that it supports – will enable the company to communicate clearly and enhance and protect its corporate reputation.

A first step is to map the IP protection strategy against the company’s mission statement and corporate social responsibility (CSR) commitments to create a narrative that positions the company’s use of intellectual property as consistent and supportive of these. If it is not, then perhaps it is time to consider what might need to change to achieve this.

IP protection is increasingly subject to greater scrutiny, not only by interest groups, but also by the media and the public on social media. A number of high-profile examples of patent applications and trademark registrations have come in for sustained criticism, potentially harming the reputations of the companies concerned. This is even more clearly the case for some enforcement actions. If an issue is important enough to be litigated, companies should communicate the business rationale behind the case before others spin their own message, regardless of whether the case ultimately succeeds.

When issues hit the headlines and the postbag, policy makers seek to become informed and will turn to those who are engaged with them to help understand the significance of those issues. Briefing policy makers in advance of a controversial judgment or reaching out to them when events become heated to give a reasoned position is important, in order both to maintain reputation and to avoid the adoption of a negative position, with the ultimate possibility of an ill-considered, reactive legislative response.

Changes to the recently appointed European Commission mean that while new Commissioner Elżbieta Bieńkowska (top) remains responsible for trademarks and their enforcement, two further commissioners are now involved in the IP and digital market areas - Vice President Ansip (above) and Commissioner Oettinger

Company involvement versus trade associations

Some companies question whether it is up to them to get involved directly or whether this is something that should be left to trade associations. However, a company knows its own business best. By setting IP policy goals and mapping the stakeholders which can help to deliver them, companies can identify the role that each trade association could play in engagement. The strategy may be delivered in part or in whole by associations, but simple membership is not usually enough. The work of trade associations becomes more valuable when it is being directly driven and led by one or more members.

Practical first steps

A first step is to begin educating management and the board about how systemic changes will alter business models and the attributed value of IP portfolios.

While there is a lot to track in this area, it is vital that businesses identify and analyse the issues that affect them and understand how they influence the business model, the bottom line and sales. They then need to integrate this information into corporate risk assessment models, monitor developments on each and come up with a plan to engage.

Merely monitoring updates and newsletters from law firms on judgments and legislation is not enough. While it is vital to keep track of key court decisions and understand the immediate impact that these may have on business practices, it is equally important to:

• analyse trends across countries and sectors, and assess how these affect business operations and business models in the longer term;
• formulate a plan for how the business should react to these trends, including whether a strategy is needed to engage on particular issues;
• map influencers against issues and prioritise those to engage with on specific issues; and
• align IP strategy with the corporate mission and CSR objectives to create a narrative that can be used with media and policy audiences in order to provide a principled basis for company positions and actions.

When it comes to new laws, by the time that in-house counsel read about these in a newsletter, it may be too late. It is important to ensure not only that IP counsel know about proposed changes in advance, but also that the corporate position on these is articulated and heard.

Finally, with major litigation, companies need to plan how they will engage with media and policy makers on the case and the issues raised by it. Companies should prepare a solid set of frequently asked questions to help them to respond to enquiries from media, associations and even shareholders, regardless of whether they decide to proactively talk to the press about the case. Parties to litigation are always bound by court procedures, but they should consider an engagement plan involving policy makers around issues raised by the case and plan how these should be dealt with in the event of both success and defeat.

Justifying the investment

All company boards make decisions about the business models that drive the company. As well as advising on how this is built on current protections, it is important to educate the directors about systemic risks and opportunities relating to the IP system. This includes change to the system, where the board should be able to take a position on what that change should be.

The new unitary patent and Unitary Patent Court system in Europe is an example of an issue whose business implications boards should understand. This involves translating complex issues into broad strategic concepts and language.

As IP issues become more contentious, policy makers increasingly want to hear directly from companies. A board member explaining the impact of IP issues on the business will resonate and can be a powerful part of any company’s engagement plans.

A combination of long-term strategic objectives and short-term deliverables is key to showing the progress that justifies this investment in engagement. Short-term gains could take the form of improved enforcement in a particular territory, cooperation with IP attachés or an improved ability to seize unfinished goods at the border based on changes to design registration practice. Highlighting the costly mistakes of competitors and other rights holders, as well as their strategic gains made through engagement, is also an important way to convey the value of this investment.

Going beyond trademark law

For brand owners, the rules and processes of the Internet, along with those of major communication and distribution platforms such as Facebook, Google Advertising and Alibaba, will shape the consumer relationship for years to come.

To give good counsel as a trademark lawyer in the coming years will require a wide contextual knowledge of technology and innovation and involve thinking beyond pure trademark law to help companies to navigate this changing environment. While digital issues can sit with any of a number of different disciplines within a legal team, trademark lawyers are well placed to show leadership by translating the essential qualities of the brand and its marketing into coherent positions to share with policy makers.

Engaging in digital policy

The restructuring of economies to adapt to networked digital technologies will redefine aspects of what a trademark is and how it is used. Exactly how may not yet be entirely clear. However, changes to internet governance, such as the Trademark Clearinghouse for new generic top-level domains (gTLDs), provide a recent example. The lack of an equivalent to the Digital Millennium Copyright Act for trademarks in the United States and the safe harbours from liability granted under the EU E-commerce Directive are examples from a previous generation of change. Brand owners need to communicate with policy makers to ensure that decisions about future revisions take account of all interests.

In Europe, changes to the recently appointed European Commission around the digital agenda provide a clear example of where brands will need to engage beyond the boundaries of direct trademark law reform. Until now, the commissioner for the internal market was responsible for all intellectual property, as well as the E-commerce Directive. Engagement on trademarks and brand-based businesses informed the commissioner’s attitude to the entire portfolio. While the new commissioner, Elżbieta Bieńkowska, remains responsible for trademarks and their enforcement, two further commissioners are now involved in this area. Vice President Ansip is responsible for coordinating the delivery of the digital agenda across the Internal Market Directorate General and the Connect Directorate General, while Commissioner Oettinger is in charge of copyright and the unit responsible for the E-commerce Directive.

Consider, for example, any future change to European notice and takedown regimes. Any renewed proposal to introduce an EU directive on notice and action will now be viewed through the lens of a department with a technological mission, charged with ensuring that copyright does not present a barrier to growth in the digital economy. This is a rather different starting point from the previous commission, and brand owners will need to work with Ansip and Oettinger and their staff to help them understand the impact that such proposals will have and how to shape them to support brands.

This is not to say that all brand owners will want the same thing. One of the responsibilities of the trademark team is to look ahead and predict how a business may transform, either in part through becoming an intermediary managing an open gTLD or through entirely transforming into a data-driven service built on the physical platform of its existing products. Rolls-Royce now sells hours of flight time rather than just aero engines. Cars are becoming platforms on which apps can be installed. The ‘Internet of things’ is a much-hyped phrase; but through Sonos, Nest, Uber and sensor and connectivity integration into sporting goods, we can now more clearly see how other businesses can become technology companies.

Whatever path they decide upon, it is clear that if brands do not develop positions on technology policy and explain how they fit with the core values of the business and the needs of society, then the governing framework for the economy will be informed by existing technology platforms along with internet-focused interest groups and media companies, which are likely to engage on a copyright or privacy-focused agenda. This is unlikely to produce the ideal outcome for brands. A brief look at site blocking proposals in Australia, for example, shows that they are considering this only in a copyright context, rather than taking account of trademarks as well, and that brands are not raising their voices for or against this measure.

Conclusion

The world is changing and the business of brands is on the move. Marketing and advertising have already seen major changes in the shift to digital – from real-time sale of inventory to two-way audience engagement and experiments in product co-creation with customers. Products and services themselves are next, although the timeframe for impact in some sectors may still seem distant. Nevertheless, the overall rules of the market are being defined through internet governance structures and government initiatives such as the digital agenda, and technological change is driving reform of substantive IP laws.

Engaging with governments on intellectual property is critical for brands if they want this new market to reflect their knowledge, experience and business. Trademark lawyers can play a key role in helping companies to achieve this.