New research project at MIPLM: IP-risks as part of corporate compliance for industry 4.0
Very recently, Ursula von der Leyen, new head of the European Commission, has announced the nomination of Margrethe Vestager, former head of the competition directorate of the EU, as new head of the European Directorate for digitalization. This step is utmost consequent, as for the European industries, in order to remain competitive in the international industrial environment, which is developing towards a knowledge industry with decisive impact on the socioeconomic development, the successful digital transformation is indispensable.
The ongoing digitalization leads to the reinvention of how businesses operate, especially enabled by today’s advanced technologies. In particular, the coincidence of so-called enabling technologies – e.g., cloud computing, internet of things, artificial intelligence, big data analytics – dramatically accelerates the pace at which today’s businesses are evolving. The digital transformation of traditional businesses leads to more volatile, uncertain, and complex business scenarios, but as well may be enabler for unique business opportunities. In this sense, the consequences of digital transformation of businesses may be disruptive to entire industries and businesses.
This refers both to the degree to which they transform, the way they innovate, operate, and serve customers. Different basic technologies are merging into fundamentally new information and communication systems, which enable new data-driven services and new business models, in particular digital business models. An understanding of how aspects of such digital business models can be protected by intellectual property rights is desired. Indubitable digital business models are based on IP and display both, chances and risks of IP, as well as the importance and necessity of structured IP-risk-management in the frame of corporate governance, accompanied by reliable and structured compliance management.
IP-Risks are the mayor threat for Industry 4.0 and, more specific, for companies that are running digital business models both for self-owned IP and for the possibility of infringing 3rd parties IP. The majority of IP-risks within corporate compliance and corporate governance is however infringement of 3rd parties IPR, which is intentionally or accidentally an issue of (non)- compliance. In the digital business model scenario existing risks are leveraged by it’s characteristic, the ubiquitous availability of data in real time and the interconnectedness of whole industries and public networks.
Both claims from 3rd parties, whose IP has been infringed, and insufficient protection of USP’s and customer benefit by own IPR has the potential to erode or delete the economic basis of enterprises, even by resulting reputational damages.
Organizations that aim to be successful in the long term need to maintain a culture of integrity and compliance, and to consider the needs and expectations of stakeholders. Integrity and compliance are therefore not only the basis, but also an opportunity, for a successful and sustainable organization especially in changing socioeconomic environments. Compliance is an outcome of an organization meeting its obligations and is made sustainable by embedding it in the culture of the organization and in the behavior and attitude of people working for it. While maintaining its independence, it is preferable if compliance management is integrated with the organization’s financial, risk, quality, environmental and health and safety management processes and its operational requirements and procedures.
An effective, organization-wide compliance management system enables an organization to demonstrate its commitment to compliance with relevant laws, including legislative requirements, industry codes and organizational standards, as well as standards of good corporate governance, best practices, ethics and community expectations and is robust towards transformation resulting from changes in the economic environment, such as Industry 4.0 and digital transformation and its consequences.
Dealing with risk postulates exact knowledge and valuation of risk and exposure. Regarding IP, the top management is permanently exposed to the consequences of latent infringement of IP of 3rd parties, where latent means, potentially existing, but not presently evident or realized. The risks are manifold both legally and economically and reach out as far as to the law relating to economic offences, the international civil law, the competition law and the patent law.
Management is per se dealing with risk and uncertainties and successfully conducting business is realizing and taking opportunities and chances, while managing uncertainties and risk professionally. The application of DIN 77006 enables the knowledge and visibility of such risk for the top management and thus enables corrective steering measures. The basics thereto are taking chance while exactly knowing the risk and exposure and from a managerial point of view, keep them in an acceptable, steerable, manageable dimension. Therefore mangers, especially the top management, wish to be aware of all kinds of business risks, especially the ones, originating from IP, with the potential, to put the whole endeavor at risk.
While international treaties, like WTO, TRIPS which establish minimum standards for trade and IP for the regulation by national governments of member states, the International Standards Organization (ISO), together with her European counterparts EU(S) and DIN provide the basic structures for management-system norms (high level structure), in order to harmonize business conduct and enable management of risks. Regarding the subject matter, the high-level basic standard of corporate governance and management is DIN EN ISO 9000.
This International Standard can be combined with existing management system standards (e.g. ISO 9001, ISO 14001, ISO 22000) and generic guidelines (e.g. ISO 31000, ISO 26000). The main international standard for quality management is DIN EN ISO 9001:2015-11.
With respect to IP-management, it needs to be supplemented by the detailed and theme-focused DIN77006 regarding IP-risks, enabling an auditable and certifiable IP management system. As IP-risks are main part of Corporate Governance for Industry 4.0, risk management for Digital Business Models according to DIN 77006 is the main challenge for companies and enterprises including public organizations for future decades. Corporate governance is the sum of all strategies, processes and organizational measures with regards to management, risk management and compliance. Therefore, it is consequent to integrate the application of DIN 77006 into this context in order to cope with IP risk in digital business models.
This research project is conducted by MIPLM graduate Martin Salzburger and supervised by Prof. Dr. Alexander Wurzer and Dr. Thibaud Lelong both CEIPI.
Martin Salzburger has a background in the automotive industry, worked for Daimler and Volkswagen. For more than 12 years he is IPR-portfolio manager at AIRBUS. He worked in different leading functions for economic exploitation of IP at AIRBUS. He is Engineer by training.
Here is a description of the research project: IP-Risks as Part of Corporate Compliance for Industry 4.0