In previous articles, we have discussed how in the fast-paced world of start-ups, intellectual property (IP) is a crucial factor for success. Patents, in particular, are often considered the Holy Grail for protecting innovative inventions and gaining a competitive advantage.

However, the reality for start-ups is often more complex, as registering and maintaining patents can require large sums of money, creating a significant hurdle for start-ups with limited resources. Moreover, not all patents translate into real strategic value and only a small percentage achieve significant market impact. The patenting process is often intricate and requires specific legal skills that are not always readily available within a start-up.

In addition to this, concrete information on the actual return on investment (ROI) of patents is often scarce, making it difficult to assess their real value.

It therefore becomes crucial for start-ups to distinguish between ‘strategic’ and less significant patents. Patents with high strategic value feed into the company’s strategy, enabling it to implement key strategies and position itself distinctively in the market. In addition, they generate tangible returns, translating into significant revenue increases or preventing competitors from entering the market. They also provide a solid competitive advantage, distinguishing the company from competitors and protecting the innovations that make it unique.

To overcome challenges and optimise resources, start-ups can adopt a ‘lean’ approach to patenting, based on principles of efficiency and foresight.

This approach involves the targeted protection of inventions with the highest strategic and commercial potential, avoiding dispersing resources on less promising ideas. In addition, a step-by-step approach allows – where national law permits – to start with provisional patent applications to obtain initial cost-effective protection, postponing final registration to a later date.

Continuous evaluation and review of the patent strategy in light of market feedback, business developments and the latest industry trends is another key component of the lean approach. In fact, the technology landscape is constantly evolving, with new inventions and patents emerging frequently, and, therefore, continuous evaluation allows one to stay abreast of the latest industry trends and identify new patenting opportunities. Consider a start-up operating in the field of biotechnology: as medical research advances and new therapies are developed, it needs to constantly monitor the latest innovations to be aware of what can and cannot be patented in order to protect its competitive advantage.

Finally, external collaboration with qualified IP experts allows the patenting process to be optimised by utilising their specific knowledge and expertise.

Adopting a lean approach to patenting offers start-ups a number of concrete benefits, including cost reduction, increased agility and value maximisation. By focusing on patents with the highest potential return on investment, start-ups can optimise their limited resources. A flexible approach allows them to adapt their patent strategy to changing market needs and new opportunities. By protecting the inventions most critical to business success, start-ups can increase their value and attract interested investors. Innovative start-ups wishing to exploit the full potential of intellectual property should not let challenges deter them. By adopting a lean patent strategy based on an accurate assessment of strategic value, a focused and flexible approach and efficient use of resources, start-ups can successfully navigate the sea of IP, gain a lasting competitive advantage and maximise value for their stakeholders.

In the dynamic and competitive environment of start-ups, intellectual property plays a key role in securing innovation and protecting investments. These young companies often rely on innovative ideas and cutting-edge technologies to differentiate themselves in the market and gain competitive advantage. In this context, industrial property rights assume crucial importance, allowing start-ups to protect their intellectual and exclusive assets, such as patents, trademarks and designs. This protection not only ensures the value of their creations, but can also be instrumental in attracting investment and strategic partnerships. Thus, the proper management of intellectual property becomes a key element in the growth and success strategy of start-ups.

The main forms of intellectual and industrial property protection:

Intellectual property protection is crucial for start-ups, as it ensures the protection of their innovations and the valorisation of their intangible assets. The most common forms of protection include:

• Patents: These give the holder the exclusive right to exploit an invention for a fixed period, usually 20 years. Patents can be assigned to process, product or design inventions.
• Copyright: This protects literary, artistic and creative works such as books, music, films, software and other original works. It grants the creator the exclusive right to reproduce, distribute and commercially exploit the work.
• Trade marks: Trade marks identify and distinguish a company’s products or services from those of its competitors. They can take forms such as distinctive words, logos, slogans or sounds and protect a company’s identity and reputation.
• Industrial designs: These protect the aesthetic or ornamental appearance of a product, such as shape, colours, contours or texture. They are used to protect the visual appearance of products, such as clothing, furniture or jewellery.
• Trade secrets: These include confidential information, such as formulas, processes, marketing strategies or customers, that give a company a competitive advantage. Protecting trade secrets involves keeping them confidential and taking security measures, including through confidentiality agreements, to prevent their unauthorised disclosure.

These forms of protection allow start-ups to protect and enhance their creations, ensuring competitive advantage and sustainability in the market.

The importance of the Innovation Plan and how to realise it:

The Innovation Plan is a crucial element in the journey of start-ups as it not only maximises the value of intellectual property, but also effectively manages the risks associated with its infringement. This strategic plan involves a series of methodical and articulated steps:

1. Identification of innovative assets: The first step is to list all innovations developed by the company, including know-how and brands. Very often, especially in early stage start-ups, founders make use of the services of third parties which, however, are not regularised with contracts containing clauses on the transfer of the intellectual property developed, leaving the ownership of the same in the hands of third parties and not the start-up. The process of identifying assets can also be facilitated, not only through the assistance of consultants experienced in the protection of IP assets, but also through the implementation of IP courses for employees and the establishment of an effective communication path between the people who realise innovation and the decision makers. In addition, it could be useful to set up a reward system of incentives to encourage innovation to go alongside the more classic deterrent system, characterised by the provision of confidentiality agreements (Non Disclosure Agreements or NDAs) to be signed by employees, collaborators and strategic partners.
2. Establish protection priorities: As IP protection can be costly, it is essential to carefully select the assets to be protected. For each technology or innovation, a decision must be made whether it is better to file a patent application, keep the invention secret and protect it through NDAs or publish it. This decision should be based on a detailed assessment of the following factors:

• Uniqueness: Assess the likelihood of a patent application being granted through an analysis of prior art and patentability requirements, such as novelty, inventive step and industrial application.
• Distinctiveness: Check whether infringement can be easily detected, especially in the case of software, to determine whether patenting is the best solution.
• Possible alternatives on the market: Examine whether the patent protects the best method of making a successful product, making imitation by competitors impossible.
• Product value: Assess how much the invention contributes to the overall development of the product and how strategic it is for the company’s business.

Overall assessment: The final decision on which assets to protect should be the result of an overall assessment, which is not based on a predefined score, but on a weighted analysis of the factors listed above. The objective is to create an effective plan that allows the start-up to convert intangible assets into IP, maximising value for the company and minimising the risks of infringement and litigation. 

Such an activity, if carried out efficiently and without wasting resources, brings with it the positive advantage of attracting investors and strategic partnerships that can provide funds and business opportunities to the start-up. We will discuss this issue in one of our next articles.

The Role of Text and Data Mining in the Data Economy

As of 12 December 2021, the Copyright Act (L. 22 April 1941 No. 633) has incorporated two specific provisions, set out in Articles 3 and 4 of the Copyright Directive 2019/790/EU, relating to Text and Data Mining (TDM) – an automated method of analysing digital content. This practice has become central in multiple sectors of the data economy, from pharmaceutical research to the application of Artificial Intelligence (AI) and Big Data. Let us therefore examine below, the introduction of the new Articles 70-ter and 70-quater, l. 633/1941 (hereinafter also ‘Copyright Law’) into the Copyright Law, 

Definition and importance of the TDM for the European Union

TDM, defined by Art. 70ter of the Act as “any automated technique aimed at analysing large amounts of text, sound, images, data or metadata in digital format with the purpose of generating information, including patterns, trends and correlations”, is crucial for the advancement of the data economy and, consequently, for the growth of the European Union’s digital single market.

TDM’s interference with copyright

However, automated data mining – a typical TDM activity – may interfere with copyright and related rights. Indeed, the TDM process usually involves the temporary reproduction of the sources used, which could include protected works or significant parts of the databases used. This could be a violation of the exclusive right of reproduction under Section 13 of the Copyright Act and could also contradict a database creator’s right to prohibit the extraction or reuse of the entire database or a substantial part of it.

Copyright reform in the European Union

Despite these challenges, the European Union has decided to reform the sector by introducing exceptions and limitations to copyright that are mandatory for every Member State. These were implemented in Art. 70ter and 70quater of the Copyright Act. These provisions, slavishly transposing the content of Art. 3 and 4 of the new Copyright Directive, allow the extraction of data from sources and databases to which one has legal access, without any need for authorisation by the holders of copyright or sui generis rights to the databases.

Differences between Art. 70ter and 70quater

 However, the two regulations just mentioned have different scopes of application. Whereas Art. 70ter applies exclusively to extraction for scientific purposes by research organisations and cultural heritage institutions, Art. 70quater allows the extraction of text and data in general, by anyone, even for profit.

Protection of digital database rights

This scenario complicates the protection of exclusive rights to digital databases, with a greater impact on the sui generis right of the database creator than on copyright. However, there are measures that can be taken to protect databases, including limiting access and using the opt-out option provided by Section 70quater of the Copyright Act. This option allows right holders to reserve the use of reproduced works and materials in the context of text and data mining, unless expressly stated.

Use of the opt-out option

Despite the uncertainty of how to properly exercise the opt-out, there are several tools that can be used. For example, software can technically recognise an opt-out expressed in the terms of use of a site, which could be considered an appropriate way to express the reservation mentioned in Article 70quater. Moreover, the use of IT tools such as a robots.txt file could provide more effective protection for right holders.

The balance between innovation and copyright protection

In conclusion, while text and data mining represents a huge opportunity for the advancement of research and the development of the data economy, it is important that copyright and related rights are adequately protected. This requires a careful balance between the need to protect intellectual property and the importance of maintaining the competitiveness of the European market. The recently introduced provisions in the Copyright Act are an important step in this direction, but it is crucial that the remaining issues are resolved to ensure the effective protection of copyright in the age of text and data mining.

The new ‘Unitary Patent’ regime

Our civilisation is characterised by continuous evolution generated by human’s constant work of ingenuity, which allows reality to be shaped by tending to improve on the advantageous conditions hitherto achieved. From a legal point of view, invention has the task of explaining how a new, useful result is technically obtained, which enriches collective knowledge. 

The valuable contribution made by the inventor encourages the community to ‘reward’ the inventor by granting the right to exclude others from exploiting the invention for a fixed period of time. The duration takes into account the time needed to remunerate the effort expended, without disincentivising general technological development.  

This is the ratio behind the institution of the patent, which the Italian Patent and Trademark Office (UIBM) specifically attributes only to technological innovations with industrial application, which are presented as new, original and concrete solutions to a technical problem.

According to the principle of territoriality, this exclusive right is only effective within the issuing state. Therefore, if an inventor (individual, company or institution) is interested in exploiting the patent only in his national territory, may file the application at the UIBM following the prescribed procedures. If, on the other hand, it is interested in protecting the invention in more than one Member State, it may file a patent application with the European Patent Office (EPO), through the competent national offices. In that case, the owner of the invention with a single application may obtain recognition of the right to the invention in the states designated by him, which are parties to the European Patent Convention (EPC) . Once the procedure has been validated, a bundle of patents with effect in the chosen countries will be granted, each of which will be subject to its own national rules on infringement. 

The implementation of this system, the complexity and high costs involved in filing and maintaining a patent, result in a significant competitive disadvantage for companies, which prefer to obtain a patent right in a limited number of countries, exposing the invention to the risks of exploitation by others. 

To overcome these drawbacks, the EU passed a series of legislative measures with the aim of creating unitary patent protection. The result was the creation of the European patent with unitary effect (so-called unitary patent), the aim of which is to guarantee, against payment of a single fee, a single, uniform right that can be simultaneously extended to up to 25 Member States . In addition to simplifying the granting procedure and reducing costs, the protection of the unitary patent is uniform for each country and subject to the jurisdiction of the Unified Patent Court, avoiding the possible initiation of parallel litigation in the different national jurisdictions.

The regulation of the unitary patent is not envisaged as a substitute for the European patent, but rather as a complement to it, leaving the owner of the invention the choice of which level of protection to apply for. It is therefore a strategic assessment based on several factors, including, for example, the markets of interest. 

Such a system can only be operational after the entry into force of the Agreement establishing the Unified Patent Court (UPC), scheduled for June 2023.

In order to adapt the current rules to the new discipline, the so-called sunrise period will begin on 1 April 2023, during which the owners of a European application or patent will have to decide whether to exercise the so-called Opt-Out option, through which it is possible to prevent the automatic attribution of jurisdiction in disputes to the CTI, leaving jurisdiction to the courts of the individual countries . 

The advent of blockchain technology and with it the opportunity to create ‘unique’ digital objects, such as NFTs, has raised many legal questions, most notably those concerning intellectual property rights, in particular copyright.

What is an NFT?

First of all, and before continuing with the article, it is worth dwelling on the notion of NFT. Not everyone knows that NFT stands for ‘Non-Fungible Tokens‘, where non-fungible stands for non-interchangeable, i.e. an asset that is considered in its identity and therefore not interchangeable with another asset. For example: one euro, which is a fungible good, is equivalent to another euro; a Banksy, on the other hand, although it is a work of contemporary art, is not equivalent to a Basquiat.

Thus, NFTs turn digital artworks and other collectibles into unique, identifiable and verifiable assets. In this way, NFTs can also represent real-world objects such as paintings, songs, clothes, bags, etc. They can be created (rectius ‘mined’) based on any work and are bought and sold online, often through the use of cryptocurrencies.

Consequently, NFTs are used to create verifiable digital scarcity, digital ownership and/or opportunities for interoperability of resources across platforms, acting as a ‘certificate of ownership’. This certificate therefore gives an economic value and attractiveness to the digital medium of a work due to its unique and non-replicable character.

Intellectual property and NFT: risks and opportunities

The advantages that NFTs bring are manifold: as mentioned above, they offer the opportunity to confer uniqueness to digital works of art and thus increase their value. Secondly, the combined use of smart contracts and NFTs makes it possible to automate the royalty management process, guaranteeing and protecting the owners of intellectual property rights.

Another advantage of using blockchain technology, which applies not only to the art sector, but to any field involving intellectual property, is that the ownership of rights, as well as licences, are transparent and accessible to all users of the blockchain. This facilitates access to the history of ownership transfers and can make the work of collecting societies more efficient.

Having stated the advantages, however, it is worth making a few remarks about the risks and grey areas resulting from infringements that NFTs may entail against copyright and intellectual property owners.

With the ever increasing number of NFT minting, there is the risk of as many rights violations, which may affect both the moral rights of the artist and the economic exploitation rights of the owner. In this respect, it should be noted that ‘fakes’ have become a growing problem on NFT marketplaces.

Although new tools are trying to change the situation, for instance by using artificial intelligence to detect IP infringements, ‘counterfeit’ or ‘unauthorised’ NFT, which in most cases constitute copyright infringement, are certainly a serious problem.

Furthermore, as far as law enforcement is concerned, the decentralised nature of TLD raises issues of applicable law, jurisdiction and competent authorities. To this should be added that, from a practical point of view, enforcement is difficult in cases where the identity of the infringer is unknown.

For this reason, it is always good practice to constantly monitor NFT marketplaces (among the most important: OpenSea and Nifty) in order to counter activities that may damage IP rights.