As resources become more challenging to extract and process, and the economic climate puts more pressure on budgets, innovations that can increase efficiency, reduce costs and create stakeholder value are essential to the mining, oil, gas and resource industries. Resource companies should consider “mining” their considerable intellectual property (IP) assets to sustain the profitability of their operations, as well as to create and maintain long-term value.
In a recent report, the World Intellectual Property Office (WIPO) found that income generated from IP licensing increased from US$27 billion in 1990 to approximately US$180 billion in 2009, outpacing growth in global GDP.1 The WIPO report illustrated that some of the top research and development spenders are in the mining and energy sectors, including PetroChina Co. Ltd, Vale SA, Petroleo Brasileiro SA and Reliance Industries Ltd. Yet resource companies traditionally have not focused on IP protection.
IP protection is one of the most efficient and effective means of capturing that valuable research and development investment.
Extracting value from intellectual property
Companies in the mining, oil and gas, and resources industries tend to overlook the value of technological developments, focusing instead on ground coverage, exploration and keeping operations running. Management easily recognizes the value of big investments in research and development projects, but often seems to miss the corresponding value of owning, protecting and exploiting the IP arising from these same projects.
Traditionally, companies have dealt with the protection of these assets as confidential information or trade secrets. Trade secrets can be quite valuable, but once disclosed or reverse engineered, their value decreases significantly. This is why companies should consider all avenues of IP protection for these developments, including patents, trademarks, copyrights and trade secrets.
Provided below are some strategies that can help extract and maximize the value associated with the technological innovations developed by, or for, your own resource company.
Effective IP management
Conducting an IP audit is a key starting point to determine the types of IP assets your company possesses and their role within your company’s strategy. This is a precursor to developing an IP management plan since it is a good mechanism for understanding how IP has been and is now protected. More importantly, performing an internal IP audit can also help you identify which areas are being handled well and which areas require improvement. Once you identify the strengths and weaknesses of your company’s current position regarding your IP assets, you can decide where and how to improve your IP management.
An effective IP management plan should address the following five key aspects:
- Maintain an up-to-date list of all owned and licensed IP assets and the scope of protection for your company’s products and/or services.
- Record and document all IP developments and confirm ownership of developed IP and when dealing with thirdparty service providers (e.g., drillers or labs who assist in R&D by developing new and improved exploration, extraction or processing technology) to ensure the benefits flow back to your company.
- Assess the value of each IP development in view of your company’s overall business objectives and strategies, including your core business, the company’s long-term and shortterm goals, revenue generation potential (e.g., licensing-out IP to third parties), and your company’s competitors (e.g., does this affect their business?).
- Address how your company’s IP assets are to be used and/or disclosed both within and outside of the company, including necessary security measures (e.g., non-disclosure agreements) and employee training.
- Monitor possible third-party IP infringement risks (e.g., conducting IP searches for relevant third-party IP rights) and possible misuse of the company’s IP assets by third parties.
Obtaining professional advice now in relation to your company’s IP strategy and management is likely to save your business both time and money in the future. Ultimately, it could add significant unrealised value to your company.
Mark Penner is a Toronto partner at Fasken Martineau in the Technology and Intellectual Property Group with expertise in the acquisition, protection and enforcement of intellectual property rights.
Melanie Eggers is an associate in the London office of Fasken Martineau in the Technology and Intellectual Property Group. She is also a geologist with international experience in both hard rock mining and oil and gas.
Richard Cheung [not pictured] is a Toronto lawyer at Fasken Martineau in the Technology and Intellectual Property Group, with a focus on drafting and prosecuting patent applications.