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Digital Transformation and Intellectual Property

Author Matt Sammon

Digital transformation is nothing new, but the challenges presented by Covid-19 have resulted in a clamour to embrace the digital world. For some it’s a natural progression of their business model, but for others its driven by a need to survive in challenging circumstances. Digital transformation might simply be necessary for a business to operate when social distancing is in place or may be a new way to reach customers and deliver goods and services. When a business undergoes a digital transformation, it will almost certainly give rise to Intellectual Property (IP) challenges.

What is digital transformation?

The Enterprisers Project define digital transformation as follows:

“Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure”

The 4 Types of Digital Transformation

Digital transformation can be broken down into different areas. Andrew Annacone of TechNexus Venture Collaborative identified 4 types of Digital transformation:

  1. Business Process – Reinventing existing processes, primarily to reduce cost, increase efficiency and quality
  2. Business Model – Changes to the fundamental building blocks of a business to change how value is delivered within an industry
  3. Domain transformation – Redefining products and services and opening up new markets
  4. Cultural/Organisational transformation – redefining organisational mindsets, processes, talent and capabilities

3 digital transformation covid-19 trends

The current economic climate and challenges presented by Covid-19 have heightened attention on domain transformation and the delivery of goods and services. And when such fundamental changes are involved it is inevitable that Intellectual Property will play a role. To help brands like yours understand the full picture in this article we will cover 3 key trends in digital transformation and examine the impact, risks and rewards from an IP perspective.

  1. The rise of virtual events

More and more interactions are taking place digitally. The use of applications such as Zoom and Teams has increased dramatically, but what has been particularly exciting is the range of events that are being delivered online.

Business meetings and networking events have managed to transition online relatively easily but imagine having to deliver a global sporting event online! The World Triathlon Corporation, organisers of the famous IRONMAN events did just that. On 1 April 2020 they launched the IRONMAN VIRTUAL CLUB.

The IRONMAN VIRTUAL CLUB is a community that allows its members to track their training, complete challenges and compete in races. The club embraces existing technology providers, in particular, activity tracking devices such as those of Garmin, Fitbit and Nike+. They have also teamed up with Rouvy to incorporate augmented reality and enhance the IRONMAN experience. In addition to taking part, you can also watch the Pro Series where professional triathletes battle it out on virtual courses.

This is a dramatic change to how events have been delivered previously and has the potential to deliver well beyond the current restrictions on sporting events.

IP considerations for virtual events

Moving events online mean that they are accessible globally and the location of the customer base can expand significantly. Brand owners adopting this form of digital transformation need to consider their existing brand IP protection and whether it sufficiently covers this new customer base. In addition, it would be prudent to consider whether the existing protection covers the delivery of online events and any ancillary services that are now offered under the domain transformation.

Securing protection for trade marks can take a significant amount of time, which may not be available for a time critical transformation. Consequently, a good IP search strategy needs to be adopted to assess risks in a short timeframe and ensure that services can be provided within acceptable risk parameters.

The example we have here with IRONMAN VIRTUAL CLUB involves collaboration with other providers, such as Garmin and Rouvy. When there is collaboration like this you need to consider whether licences for use of third party brands or technology are appropriate and whether there is cost involved or a potential income stream to be exploited.

The advertising of a service involving multiple brands also needs to be considered carefully to ensure that there is no misrepresentation of the relationship between the brands and their respective services to avoid trade mark infringement. Often agreements are reached between the parties as to how to use each other’s brands, but agreement is not necessarily essential where you are using a third party brand to refer to the genuine product.

  1. Diversification of sports broadcasting

Broadcasting in general has long been moving towards a digital delivery platform with the likes of Netflix and Amazon Prime. Digital platforms and Amazon Prime in particular, have begun to move into the world of live sports broadcasting. Use of a digital platform gives the user more freedom to choose and the current cessation of sporting events caused by Covid-19 and the restriction on attendance may give a significant boost to the digital platforms.

For example, the Premier League licenses broadcasting rights to Sky and BT Sport and the deal includes provisions to limit the number of games televised live and the time that they can be shown to protect attendances at matches and the experience it brings. However, for now those restrictions no longer have any benefit for the Premier League or the clubs.

As widely reported in the media the government requested that at least some of the remaining fixtures be broadcast on free to air channels forcing the Premier League to renegotiate with their existing media partners BT Sport and Sky. Subsequently, the BBC has announced that they will be showing a number of live matches.

IP considerations for sports broadcasting rights

The deal is no doubt complex, but at the centre of it are the rights to broadcast, an intellectual property right which has been licensed for a significant amount of money. The Premier League, Sky and BT Sport have had to re-evaluate the benefits of their existing licensing deals and look at how best to move forward given the current restrictions. It is of course in their interest that the Premier League remains a valuable commodity with supporter engagement. Undergoing a digital transformation to utilise digital platforms has clear advantages in terms of ease of access and reaching a wider audience.

Its not all about broadcasting rights, brand no doubt plays a part. Refusing to let fans access games would have been very harmful to the brand image and equity of the right holders.

Just because a license relating to Intellectual Property rights has been agreed it does not mean you have to live with it. It is always worth reviewing and discussing your existing agreements to see if they are still effective and to see if they can be altered for the benefit of both parties. This should be part of a regular IP audit that is conducted by your IP advisor.

  1. Innovative/Exciting brand collaborations

Digital transformation can of course be a costly exercise and take time. One way to reduce both initial cost and speed of execution is to collaborate with existing technology. Some brand collaborations are obvious and easy to execute, for example, many restaurants are currently unable to accept customers on their premises and lack the infrastructure for deliver so they opt to work with Deliveroo, Uber Eats or other delivery providers. The model is tried and tested, and they can sign up to standardised agreements over use of each other’s respective brands.

Other brand collaborations have been a little more surprising but no less successful. The live music industry is facing a difficult time due to Covid-19. Whilst artists are able to broadcast live on channels such as YouTube or Facebook, one collaboration that caught our eye was that of Travis Scott and Fortnite.

Bringing together a hugely popular avatar-based game and a famous artist has clear benefits for both parties. Fortnite are able to deliver an immersive platform that goes far beyond video performance along with a very large fan base of their own, whereas Travis Scott brings his own fanbase and brand value to the collaboration. The result is a new audience for each collaborator and an enhanced reputation for thinking outside the box to deliver for fans. It also opens up new revenue streams, the Travis Scott ‘skin’ is currently available for 1,500 V-Bucks within Fortnite, once you have completed the requisite challenges.

Whilst the Travis Scott Fortnite concert was not the first in game concert the increase in viewing figures, estimated in excess of 12 million, no doubt owes something to the lack of live music available, but collaborations of this nature are by no means limited to a world without live music. Being able to reach a global audience as a way to capitalise on your brand value it a well-trodden path, but currently the digital world offers the quickest and most cost effective route for doing so.

IP considerations for brand collaborations

The Travis Scott and Fortnite collaboration brings together two well known brands, each with the aim of enhancing their own brand and benefitting from new revenue streams. Consequently, a detailed collaboration agreement clearly defining how each brand is controlled and represented will be required. Whilst there are many benefits to collaboration, there are also risks so you need to ensure that adequate controls are in place to minimize the risk of damage to your brand.

In addition, you do need to ensure that you are free to licence your brand in the relevant territory. It’s also a good opportunity to review the scope of your IP protection, both geographically and in relation to the goods and services covered to ensure you get the most from any such agreement. You should also try and anticipate how the collaboration, or other such collaborations might develop to give you an adequate opportunity to secure the necessary rights.

4 key digital transformation and IP challenges

The reason for many brands in embarking on digital transformation is the ability to reach a wider audience in the shortest most efficient way possible. As a brand owner please consider the following IP challenges you are likely to face:

  1. Speed of implementation – The product or service will often move much more quickly than the IP protection mechanisms. Make sure you carefully assess and understand the risks to your brands IP rights before proceeding.
  2. The global audience – Reaching a global audience is a wonderful thing, but this does mean that you are now dealing with a multitude of different laws and regulations. Make sure you carefully assess what your key markets are and focus the most resource on these to ensure an appropriate level of IP protection.
  3. Moving into the unknown – Not all digital transformation goes exactly as planned. Often new opportunities will arise in the process and the direction of travel can change. Make sure you review your IP protection strategies as the project develops to ensure they are fit for purpose.
  4. Collaboration – is both exciting and can bring about huge benefits quickly and easily. Make sure you take time to think about whether collaboration is right for your business and work hard to develop and understanding an agreement that protects your brand value and safeguards your business long term.

Above all, select an IP advisor that will work collaboratively with you so that you can maximise the potential of the digital transformation strategy that is right to grow your brand.

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