Out-Law Analysis | 23 Apr 2020 | 11:39 am | 3 min. read
Businesses that understand their intellectual property (IP) rights and apply a human touch to negotiations will be best placed to make collaborations with others a success during this time of uncertainty.
World Intellectual Property Day on 26 April offers an opportunity for businesses to reflect on the role that IP rights can play in stimulating innovation and on the opportunities to harness IP rights in collaboration with others. The heartening stories of collaboration across sectors to answer problems arising from the coronavirus crisis are testament to this.
Irrespective of whether an organisation is a technology company, pharmaceuticals business or other type of business, there is a proven framework for effective negotiations to help translate an innovative product or service for use at scale. It applies equally to SMEs and multinationals.
Understand your IP rights
If you have an innovative product or service then the value will lie in the IP rights intrinsic to it. Businesses need to understand what IP rights they hold to extrapolate their value. IP rights are like any other property right – they can be used as security, licenced and assigned with the associated revenue generating streams.
You will likely have a trade mark for the brand name. Pharma products largely rely on patent protection, and tech products on copyright and database rights. If businesses are still in the midst of innovating then they should consider oft-overlooked registered designs rights which are cost efficient and effective.
Whether it is supply chain negotiations or the licensing of rights, businesses should start negotiating from a position of strength. They should consider cost effective steps to strengthen their arguments before the negotiations start. These could include expert reports as to quality assurance or a phone call with an alternate partner. "Sticks" might include the ability to place work elsewhere where there is no exclusivity. "Carrots" might involve possible extensions of term, scope, or geography, the grant of exclusivity, or a volume guarantee or discount.
Know your Ts & Cs
Businesses should make sure that their negotiating team understands what agreements entitle them to and require from the business. It is essential that businesses have an informed overview of the options should it come to enforcing their IP or other legal rights. In this climate it is likewise important to address force majeure and frustration of a contract.
Don't underestimate the human dimension
This is likely to be of particular importance in the current climate. Rarely does everything come down solely to the financial or technical aspects. In any negotiation it is not just a case of what you say but how you choose to say it.
Listening, empathising, and maintaining rapport is vital. Seeking to understand rather than telling the other party how it is, will likely elicit a far more favourable response. Even with social distancing, insist on negotiation by video call. People impact people, face to face.
Distinguish wants and needs
If the difference between wants and needs is not understood then businesses are unlikely to have a happy conclusion. Identifying each side's 'must haves' from the 'nice but not necessary' is the foundation stone upon which any successful negotiation is built. Businesses that fail to unlock the wants of the other party will end up offering solutions based on needs.
Businesses should establish their 'best alternative to a negotiated agreement' (BATNA) up front so that they appreciate how much the alternative would cost or benefit them. This seems obvious, but surprisingly parties to negotiations frequently have no credible BATNA.
Disclosing your BATNA
By disclosing your BATNA you are telling the other party what would cause you to walk away from the negotiating table. This can send a very strong signal that you are confident of your position but it is crucial that it is disclosed at the right time. Businesses that disclose it too early may lose the chance of a better outcome, and if done in anger or frustration it is never likely to be productive.
Understanding the risk profile
It is essential that businesses know their own and their contracting parties' risk profile. Establishing whether prospective partners in collaboration are going to have a risk-tolerant or risk-adverse approach is likely to be highly significant, especially in the later stages of any negotiations when brinkmanship can come into play.
Businesses should also consider the termination of every contract and make sure they insert a clause for the scenario their instinct wants covered. The contract should be clear about how the other side is to stop using their partners' IP rights once the contract terminates.
Businesses are under pressure like never before in the current environment. That pressure can, and is, stimulating the development of innovative business models and new product development. It is important businesses negotiate with a view to protecting their company's innovation into the future.
Ann Henry and Jim Richards are experts in IP and collaborative contracts at Pinsent Masons, the law firm behind Out-Law. A version of this article was first published by the Irish Times. Ann Henry and Jim Richard provide hour long remote training to senior executives on effective negotiating skills. Please contact [email protected] for more information.