Internet of Things and Intellectual Property: Keep Your Options Open

Paul Gillin

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Inherent to the very definition of the internet of things (IoT), is that the supply chain is dependent on many different parties. How confident are you to ensure the technology you leverage and the data you collect will be there when you need it? If your company is exploring the internet of things to optimize operations, make sure you consider the intellectual property issues associated with the IoT.

For example, suppose you’re a company that sells frozen food and you want to use sensors in the trucks you lease to optimize your routes, speed deliveries and to improve energy efficiency.

You know that the data that emerges from this initiative has value to a lot of people. In addition to using the data to improve your own operational efficiency and customer satisfaction, the truck leasing company can use it to reduce maintenance costs and better match pricing to usage. Then, the company that makes the sensors can aggregate customer data to create paid information services or to improve its products. There also may be a handful of other players, including regulators and insurance providers, that also want a piece of the action.

So, who owns the data?

That’s a question many companies will be asking. More devices will be connected to the internet over the next three years than have been plugged in over the last 50. The internet of things (IoT) will introduce billions of mostly tiny computers tuned to specific tasks, such as collecting weather data, monitoring traffic flows and capturing security camera footage. It will also raise a raft of new intellectual property issues, two of which should be front of mind: ownership of data and who gets to monetize it.

Back to our frozen food company example. As the owner of the initiative, you might instinctively think that you should own the data, but don’t be too quick to jump to conclusions. IoT devices generate huge amounts of data, and you may not need all of it. In exchange for handing over ownership to the sensor manufacturer or fleet owner, you may be able to negotiate attractive discounts. Perhaps you could even license back aggregated data from one of the other parties that would be sufficient for your needs, and still enjoy those discounts.

The situation gets a bit more complicated when you sell the data to someone else. For example, suppose you’re a maker of truck tires who sells to fleet owners. You want to use sensors to monitor usage, pressure, running temperature and other factors to optimize fuel efficiency for your customers. You may sell that information separately as a service or bundle it into your pricing as an incentive.

Now who owns the data? The customer may lay claim to the asset because they own the tires. But, if you own the data you can combine it with information gathered from other customers to improve efficiency for everyone and lift your bottom line. You may even be able to license the data to insurance companies or truck makers for use in their own products.

A Question of Ownership

Data ownership is likely to become a major legal issue as organizations capture more and more details about their own operations, their customers and their competitors. So will ownership of the software used to interpret data.

Let’s go back again to our frozen food maker example. You’ve invested a million dollars to develop your own route optimization program. You probably want to protect that investment.

Patents and copyrights are legitimate avenues to do that, but neither tactic is completely airtight. Cyber crooks and unprincipled competitors may find ways to steal the code, or an ex-employee could walk out and take it to a competitor. Proving that the software is your own can turn into a game of “he said, she said,” and there’s no guarantee that a court will take your side without bulletproof evidence.

That’s where trusted third-parties can help. Software escrow agreements enable you to deposit your source code with a trusted third-party agent who verifies its authenticity and documents its continued development through techniques like timestamps, audit trails and secure vaulting. The same services can be applied to data to ensure proof of ownership in case there is ever a dispute over custody. Software escrow can even provide peace of mind for potential buyers of your solution by ensuring that source code is always available in the event of an emergency.

In the age of IoT, data is a strategic asset that can be bought, sold and traded. There are many ways you can use data to your benefit, but the important thing is to give yourself options. Ensure that contracts that involve IoT devices specify data ownership and stake your rights to the data that matters to you. Consider what value data and programs have to you and others. Protect your software investments and consider the new business opportunities your intellectual property presents. Then sharpen your pencil. It’s negotiating time!

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