Adapting to Economic Uncertainty
As companies attempt to navigate challenging market conditions, the temptation may be to cut costs related to intellectual property, but such a strategy would be a mistake, as Peter Scott finds out.
With global inflation high, bank failures in the United States, stock markets turbulent, and the continued effects of Russia’s invasion of Ukraine on global sentiment, 2023 has brought with it an economic nervousness that is rippling through global markets.
One indicator of this can be found in a report by Ernst & Young Global Limited (UK). Its EY Global IPO Trends Q1 2023 report found that initial public offering (IPO) volumes declined by 8 percent year on year (YOY) in the first quarter of 2023, with the value of those 299 that occurred declining 61 percent compared to the same period last year.
““[Know] how to stretch your IP capital.”
- Shuwen Koh | National University of Singapore (Singapore)
In Asia, the value trend was more pronounced, with a 70 percent decline in proceeds from IPOs (initial public offerings) against a 6 percent decline in volume.
Shuwen Koh, Director of IP Management & Tech Commercialisation at Technology Transfer and Innovation (TTI), National University of Singapore (Singapore), engages with early-stage companies and university spinouts, and, as such, is in the eye of the storm when it comes to investment hesitancy.
Ms. Koh will be participating in a fireside chat, Impact of Financial Markets on Innovation and IP (10:10 am – 10:40 am, Thursday, May 18), including discussion of how current market challenges affect start-ups. She noted that Singapore is “something of a bubble” when it comes to investment. “There's a lot of money, though not all of it is smart money,” she said. Additionally, when it comes to those working within the university, the policy is to be “patient capital” and to waive payments or grant extensions where necessary. In the rest of the world, patience can be in short supply.
Despite that somewhat insulated environment, there is some uncertainty, she said, noting that she is advising her start-ups “to conserve cash, focus on certain key initiatives to hit your milestones,” and “focus on ‘beachhead’ markets.”
In this context, intellectual property (IP) remains important, with some industries needing to prioritize it higher. It’s both important and useful to understand “how to stretch your IP capital,” Ms. Koh said, noting that trademarks can be especially powerful for young companies “in places where it's harder to enforce patent rights.”
Moderating the fireside chat with Ms. Koh is Jonathan Agmon, Partner and Head of Singapore Office, Soroker Agmon Nordman Pte Ltd. (Singapore). He underlined the power of trademarks for young companies, especially in the context of online sales and marketing. “If you want to start selling your product and if you only have protection in a single country, and someone in another country takes your trademark, it's going to be very difficult for you to get the trademark back,” he said.
In fact, Mr. Agmon argues, an economic slowdown “doesn't mean that you should spend less money protecting your trademarks —if anything, it means you need to be more careful about what are the right markets.”
““IP is key for investment, especially in this type of market, when investors are more hesitant.”
- Jonathan Agmon | Soroker Agmon Nordman Pte Ltd. (Singapore)
In this context, intellectual property (IP) remains important, with some industries needing to prioritize it higher. It’s both important and useful to understand “how to stretch your IP capital,” Ms. Koh said, noting that trademarks can be especially powerful for young companies “in places where it's harder to enforce patent rights.”
Moderating the fireside chat with Ms. Koh is Jonathan Agmon, Partner and Head of Singapore Office, Soroker Agmon Nordman Pte Ltd. (Singapore). He underlined the power of trademarks for young companies, especially in the context of online sales and marketing. “If you want to start selling your product and if you only have protection in a single country, and someone in another country takes your trademark, it's going to be very difficult for you to get the trademark back,” he said.
In fact, Mr. Agmon argues, an economic slowdown “doesn't mean that you should spend less money protecting your trademarks —if anything, it means you need to be more careful about what are the right markets.”
“IP is key for investment,” he said, “especially in this type of market, when investors are more hesitant, they want to spend less, they want to spend on better projects. They will have diligence processes where they actually look longer and harder into the IP protection.”
More broadly, the importance of IP in economically challenging times is hard to overstate. As John Plumpe, Managing Director at Epsilon Economics (USA) noted how past experience shows that in economic downturns “companies will likely refocus their efforts on their intangible assets and leverage their brands as best they can, they’ll continue to enforce them, continue to develop them perhaps more efficiently than they previously had, and keep investing in technology and filing patent applications.” What may change is that they do this with fewer resources, whether financial or human, he said.
It can also be useful for companies to consider other ways of leveraging their IP assets during uncertain times, and, said Mr. Plumpe, you might expect to see companies “looking to others to partner with, such as through collaborations or licensing. If you don't have a core competency in a particular product or service, or if you don't want to invest in a new geographic market, whether it's a new country or in the U.S., maybe an economical way to do that is to license or franchise.”
Mr. Plumpe observed: “When companies have truly unique brands that have a consumer value, and a proposition that resonates with consumers, they have the awareness and the equity to drive value through the ability to charge higher prices or to increase market share,” even when consumers may be dialing back their spending. The takeaway is clear: IP can drive value in a business even in difficult times,
