Intellectual property and open innovation in the Cloud
Establishing and maintaining a state-of-the-art IP strategy is becoming ever more critical, as companies are moving to the Cloud and Cloud-powered environments. Capturing the full potential of Cloud ecosystems, while adequately protecting any confidential product designs, copyright, source codes, patents, and trade secrets from inadvertent leaks or and other challenges, is complex. Richard Reeve-Young, Associate Director at Deloitte Legal UK, recently discussed a closely-related topic of the real-world legal challenges in the Metaverse. Cloud Computing is one of the key success factors for various emerging technologies to interconnect and evolve. Three Intellectual Property (IP) topics raised by Cloud computing include:
1. Open-source driving Cloud innovation
Moving to the Cloud, embracing open data, and using Open-Source Software (OSS) or Hardware (OSH) are examples of dilemmas business leaders and legal departments are experiencing. The rapid shift into Hybrid and Multi-Cloud environments has required companies to optimize synergies across the domains of open data, open source and Cloud to achieve maximum value enabled by internal policies that interact and strengthen each other. An excellent moment to discuss and reflect on the Open-Source strategy with business is when deploying artificial intelligence (AI) or when OSS is used in a Cloud transformation project.
As indicated in a recent study by Gartner (Hype Cycle for Open-Source Software, 2021), the number of OSS components in an average application has more than doubled in the last five years, to 528; and the proportion of vulnerabilities and license noncompliance have also increased at an alarming rate. If the use of OSS is not managed with a multidisciplinary approach, the business is exposed to major legal risks. Some industry leaders are ahead of the game by deploying advanced track and trace trajectory open-source/co-created technology tools and embracing the opportunity to make even their own Cloud computing patents Open-Source. The successful companies are able to leverage the benefits of Open-Source development models, making more strategic use of acquired structured datasets and developing advanced solutions based in machine learning and artificial intelligence. Even small adjustments to the internal Cloud strategy and open-source policy may lead to significant benefits when carefully implemented and monitored.
2. Rise of Cloud computing patents
According to World International Patent Office’s 2022 report Intellectual Property, digital-related innovation has grown 172% faster than all other patent filings in the past five years, and Cloud computing patents grew by 122%. The digital-related patents are becoming more complex and multifaceted. Furthermore, as data analysis and operations are increasingly conducted in the Cloud, IP strategy needs to be multijurisdictional and targeted at all parties in the evolving interconnected ecosystem. It should no longer be assumed that the legal challenges such as indemnification risk and compliance with international trade regimes are only concerns for a few large multinationals. Many expect Cloud-related dispute numbers to increase in Europe, especially with the introduction of the Unitary Patent and the Unified Patent Court. A high-level understanding of the IP landscape for Cloud technology, identification of the main owners/license opportunities and IP defense strategies will help organizations to mitigate against such IP risks timely and at limited cost.
3. Recommendations
As Cloud computing technology has come to challenge conventional wisdom on IP, it is time to move from managing patents, proprietary and open-source licenses to strategically securing ownership of, and access to, innovation, using a mixture of IP rights to maximize the value of IP portfolios and successfully capturing any future opportunities. Trade secrets and copyright protection play an important role in the protection of innovation on Cloud technologies and of innovation that is handled through the Cloud infrastructure. Designing your IP policy and Cloud strategy together enables you to integrate confidentiality policies into Cloud architecture and processes, thus leading to efficiency and security.
We recommend general counsel to sit down with their IP team and the contracting team to design an over-arching IP, data and contracting strategy for business activities that are impacted by Cloud technology. A consistent integral approach to IP license structure, data access and ownership and standard Cloud-contracting terms will enable the businesses to make optimal usage of Cloud-related technologies.
Author: Nina van Kampen, Senior Consultant, Deloitte Legal The Netherlands
