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Freshfields Survey Shows Increased Willingness to Litigate IP Rights

Issued: June 01 2009
More than a third of the world’s leading IP owning companies – 38% – have indicated an increased willingness to take competitors to court in a bid to protect their IP rights during the downturn, according to a survey released by Freshfields Bruckhaus Deringer this month.

The survey also shows that, in the downturn, 30% of businesses will be seeking to exploit their IP assets beyond normal levels of activity, through licensing, collaboration and joint ventures as tighter market conditions compel businesses to generate increased cash flow from their IP assets.

Chris Forsyth, a London-based partner in Freshfields’ IP practice, believes that increased exploitation of IP assets during the downturn is expected, but that a greater appetite to litigate to protect IP rights is surprising given the implications of doing so.

“There will be a rise in infringement activity during the downturn as businesses desperate to maintain a presence in the market resort to preying on their competitor’s products, brands and technologies,” said Forsyth. “One would have thought that litigation would be a last resort during a downturn – legal proceedings are expensive and the outcome can be unpredictable. Cost and risk are the traditional enemies of downturn planners, nevertheless the prospect of going to court does not seem to be deterring the major IP owning companies.”

The increasing inclination of businesses to engage in joint ventures, collaborations and licensing agreements is an interesting development. Where once businesses might have jealously guarded their IP assets, 80% of respondents believed that the level of licensing activity will remain steady or increase during recessionary trading with a quarter of that group confident of an increase in licensing activity either as a licensor or licensee.

“Businesses are hungry to see a tangible money return on their IP portfolio,'” Forsyth says. “Licensing can be an alternative to litigation. Instead of seeking to prevent third parties encroaching on a market through the assertion of IP rights, companies try to manage and contain the impact of that encroachment and generate a revenue stream by agreeing a qualified, defined permission to use the IP in return for payment – a licence.”

The survey also found that despite poor economic conditions:

• 75% of companies said IP remained a key priority;

• 88% of respondents said the downturn would have no effect on current resourcing of their IP work; and

• 33% of businesses planned to devote more resources to IP generation and protection because of the downturn.


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