A recent UK High Court decision to revoke three key patents covering the use of controlled-source electromagnetic (CSEM) surveying for detection of hydrocarbons is a timely reminder of the importance of intellectual property rights to business value.
Patents and other IPR such as copyright, trade marks and design rights can be highly valuable, profit generating assets in the right hands (i.e. your hands). In someone else's hands they can make it difficult or even impossible for you to do business. In the current economic climate the need for a business to first secure and then exploit its IPR portfolio has never been more important.
Offshore Hydrocarbon Mapping plc (OHM), an oil and gas survey company based in Aberdeen, welcomed the decision in a case brought by oilfield services giant Schlumberger against Norwegian firm Electromagnetic Geoservices ASA (EMGS). OHM's share price rallied after news of the ruling that will free up the use of CSEM for UK oil and gas exploration.
Originally a spin out company from the University of Southampton, OHM has seen the ups and downs that disputes over IPR can cause over the years. OHM's share price dropped years ago when the UK Intellectual Property Office found that Statoil rather than the University of Southampton was entitled to a patent being used by OHM that had arisen from a research and testing arrangement between Statoil and the University. OHM's share price fell again after Statoil transferred the patent to EMGS and EMGS claimed against OHM for patent infringement. The claim was finally dropped in 2007, which saw OHM's share price rise, and this most recent decision in OHM's favour has also had a positive effect on its share price.
There are three main scenarios in which disputes over IPR entitlement all too frequently arise: joint research and development agreements, outsourcing of research and development, and dealings with employee inventors.
The best way to help avoid IPR disputes is to have a written agreement from the outset of a project that clearly sets out who will own the rights to any IPR created.
When disputes do arise they direct too much time, effort, money and focus towards fighting a battle that could have been more quickly and cost-effectively avoided. These resources should instead be engaged in growing the business, creating value and generating profit.