Almost overnight, most office-based workers had to adapt to remote working conditions when social distancing regulations were put in place in March this year to slow the spread of the COVID-19 virus. This shift has presented challenges as well as pay-offs, and as restrictions have eased and a new hybrid model of working is looking like the way of the future, organisations have to ask what this means for work culture, such as innovation and productivity, as well as employee policies and agreements.
Innovation is crucial to business sustainability especially in the disruption era in which we live, where challenges and stress often bring about creativity. In remote working conditions, businesses need a clear mandate on how to cultivate and protect innovation so that today’s new idea is not tomorrow’s court case.
Relationship between innovation and intellectual property
Conceptually, innovation and intellectual property are comfortable bedfellows. Intellectual property rights are designed to encourage innovation and protect and promote creativity. They do this by creating areas and periods of exclusivity or a monopoly right as an incentive to innovate and to share the innovation.
For example, the principle of sharing the innovation as publicly available drawings in a design and embodiments or claims in a patent both wards off others from infringement and stimulates further innovation. The automatic protection provided by copyright protects the creators (music, artistic works and the like). The trade mark’s ability to protect sustainable brands can be linked to incentivising innovation by that brand.
Furthermore, the state of innovation of companies and countries is regularly measured by their level of intellectual property registrations relative to others.
Move towards intangible business assets
Tangible value of an organisation is attributed to buildings, factories, stock and the like whereas intangible value encompasses everything that cannot be physically seen, such as goodwill, and includes the value of human capital, expertise, innovation, culture, and brand reputation. Over the past five decades, company valuation experts have consistently reflected that intangible assets on a company balance sheet significantly and increasingly outweigh the tangible value of that company – and this has even more of an impact not only in the digital era, but as the workplace no longer needs to be in a traditional office environment.
The legal basis for protecting and enhancing intangible value is, most directly, through intellectual property rights created by statute and common law. Thus, from a business value perspective an understanding of the ownership and control of intellectual property rights is crucial.
Why governance of intellectual property is important
If stakeholder value in a company is protected by intellectual property then proper intellectual property governance becomes important. For example, the negligent lapsing of a crucial intellectual property right can significantly devalue a company, as would the badly researched selection of a trade mark to act as legal title to reputation and goodwill, or the sharing of trade secrets and abuse of confidential information obligations. Corruption scandals such as Theranos in the United States and Steinhoff locally are also linked to the lack of legitimate intellectual property governance and transparency. As stakeholders and investors are crucial to business growth, proper intellectual property governance should therefore follow as business imperative.
A business seeking to encourage work output and protect innovation will be astute in ensuring that clauses within their employment contacts, policies and even ad hoc agreements with staff create a basis for that to occur. Examples include clauses governing confidential information, incentive clauses or policies for innovation, patent development or performance generally, restraints of trade, intellectual property ownership and cession clauses, as well as penalty clauses.
These legal obligations become even more imperative in a remote working and/or hybrid model space, where collaboration between full-time employees and contractors, along with the removal from the formal ‘place of work’, can lead to questions of who has actual ownership among the layers of intellectual property that produced the final innovation. Addressing these issues in contracts and agreements, and identifying and mapping out intellectual property, upfront will help to avoid disputes and protect innovation.
By: Darren Olivier, Lita Miti-Qamata, Aslam Patel and Thandeka Mhlongo (Adams & Adams)