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Intellectual Property

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F rom the latest blockbuster can- cer drug to a new avenging slay- er taking the gaming world by storm, exploiting the commer- cial benefits of intellectual property (IP) has never been more lucrative. But the legal terrain is also infinitely more com- plicated than at any time in modern busi- ness history. Stealing a know-how march on compet- itors is crucial, as is having brand power in the market. Intangible intellectual property assets can form the vast majori- ty of a business's value, but without pro- tection they are increasingly vulnerable. No market on the planet better demon- strates just how vulnerable IP assets can be than does China. Until the late-90s, the only IP issue in that country was debate over whether state manufactures of zhongshan – Moa suits – should churn out versions in grey or blue. Now China is the wild, wild east for owners of IP and those trying to pro - tect their rights. Or at least that is the popular perception. But specialist law- yers working in the jurisdiction warn against stereotypes. They acknowledge that 90 per cent of fake luxury brand products in South- East Asia originate in China. But they maintain the authorities are not turning a blind eye. "The tendency in the West is to blame all the intellectual property problems in China on the government and the Chi - nese legal system," according to Paolo Beconcini, a consultant lawyer with the Beijing office of San Francisco-based law firm Caroll Burdick. But, says Mr Beconcini, the authori - ties are increasingly cracking down on piracy and establishing rules. A tangi- ble example of this effort has been the recent opening of three intellectual property courts in Beijing, Shanghai and Guangzhou. IP issues are by no means limited to China. There is huge global growth in activity, with the latest figures from the World Intellectual Property Organization (WIPO) showing that in 2013 worldwide filings for patents and trademarks grew for the fourth consecutive year. The WIPO statistics show an es - timated 2.6 million patent applica- tions were filed worldwide in 2013, a 9 per cent rise on the previous year. Over the same period, trade mark filings increased by 6 per cent. But dry statistics can only illustrate the story to a point. IP makes a real-life impact on ordinary consumers. For example, a case earlier this year in the English High Court involved a chal - lenge to the Innocent smoothie drink's ownership of its familiar Dude logo. In- nocent prevailed, but the challenge came at the worst possible time just at the point global fizzy drinks giant Coca-Cola was aiming to purchase the business. Indeed, so prevalent is IP in modern commerce that some suggest as much as 80 per cent of any business's value consists of this intangible asset. However, making a value equation is not so straightforward. "There is no doubt that the balance be - tween fixed assets and intangible assets has changed for ever," says Nigel Swy- cher, chief executive of IP consultancy Aistemos and a former specialist lawyer with London law firms Slaughter and May, and Olswang. "Fixed assets for a business now form the minority of the value of a corpora- tion," he says, attributing the shift to the profound evolution of the global industri- al economy. "The most valuable compa- nies in the world today were not around 20 years ago and they have brand new business models." But, say Mr Swycher and other specialists, the percentage formed by intangible assets and IP varies widely from sector to sector. Property, for example, is at the lower end of the IP-intensity spectrum. While at the high end are businesses such as interna - tional mini cab company Uber and online accommodation business Airbnb. Indeed, at that top end, businesses probably exceed the 80 per cent mark as the only fixed assets they are likely to have include a handful of employees and a computer. The rest is brand, connections, technology, patents and trade marks. "Experts would say it is entirely sector and definition relevant," adds Neil Nachshen, a partner at D. Young & Co, a London-based trade mark and patent attorneys. "They will shrug and say, it could be 80 per cent or it could be 30 per cent. In big pharma and the bio-tech industries it will always be 80 per cent; others will be lower." Regardless of exactly how much of a company's value consists of IP, those doing business in Europe need to start weighing up the implications of the long-awaited European Union unitary patent package and unified court. The court, which will have a branch in London, still does not have an open- ing date set in stone, but when the system kicks in, the practical effects will be profound. For the first time, 25 EU states will have a unified patent, which will har- monise procedures for a population of some 418 million. And the Unified Patent Court, which will also be sited in Paris and Munich, will have jurisdiction over all disputes. While experts generally welcome har- monisation, there are potential problems. "Small and medium-sized enterprises are going to find themselves potentially in a situation where bigger companies are able to injunct and obtain damag - es against them in one go in 25 states," warns Morag Macdonald, joint head of the international IP group at London law firm Bird & Bird. "It will be very hard for the court to resist that bullying tactic being applied in some situ ations." Keeping the value of creation in mind Intellectual property is now the most valuable asset that many businesses have and must be protected in law against potentially ruinous incursions OVERVIEW JONATHAN AMES Distributed in JONATHAN AMES Former editor of The Law Society Gazette, he is now a contribu- tor to The Times and a special reports writer for The Lawyer magazine. CATHERINE BAKSI Former barrister and Law Society Gazette reporter, she is a freelance journalist writ- ing for a broad range of law titles. MICHAEL CROSS News editor at The Law Society Gazette, he spe- cialises in IT issues within the legal sector, contrib- uting to national newspapers. NIC FILDES Technology and communica- tions editor at The Times, he was former- ly with The Independent and Dow Jones Newswires. DAN MATTHEWS Journalist and author of The New Rules of Business, he writes for newspapers, magazines and websites on a range of issues. CHARLES ORTON-JONES Award-win- ning journal- ist, he was editor-at-large of Londonloves- Business.com and editor of EuroBusiness. RACONTEUR CONTRIBUTORS Publishing Manager Nada Ali Digital and Social Manager Rebecca McCormick Head of Production Natalia Rosek Design Vjay Lad Grant Chapman Kellie Jerrard Production Editor Benjamin Chiou Managing Editor Peter Archer BUSINESS CULTURE FINANCE HEALTHCARE LIFESTYLE SUSTAINABILITY TECHNOLOGY INFOGRAPHICS Although this publication is funded through advertising and sponsorship, all editorial is without bias and sponsored features are clearly labelled. For an upcoming schedule, partnership inquiries or feedback, please call +44 (0)20 3428 5230 or e-mail info@raconteur.net Raconteur is a leading publisher of special-interest content and research. Its publications and articles cover a wide range of topics, including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in The Times and The Sunday Times as well as online at raconteur.net The information contained in this publication has been obtained from sources the Proprietors believe to be correct. However, no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the Publisher. © Raconteur Media raconteur.net/intellectual-property-2015 So prevalent is IP in modern commerce that some suggest as much as 80 per cent of any business's value consists of this intangible asset INTELLECTUAL PROPERTY | 03 RACONTEUR | 15 / 09 / 2015 raconteur.net

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