A Kick In The Assets: The Big Deal About Big Data & IP

When it comes to companies and their data, bigger really can be better.  With the expansion of the internet, e-commerce has allowed companies to acquire more information not only from website visitors and their preferences (through the use of “cookies”), but from actual registered users purchasing their products and services.  Now, more than ever, companies are acquiring volumes of information from their operations that could prove highly valuable to their bottom line.  How? Increased computing resources and processing power now give companies the capacity to parse such data in ways that were not cost effective (or even feasible) just 15 years ago.  Mobile devices are expanding the way companies interact with consumers, and the Internet-of-Things (IoT) is expanding the world from which such data can be compiled. With big data and such “analytics,” however, comes a big responsibility to protecting company intellectual property… and it’s not as easy as you may think.

Big Data has become an essential component of business — over 80% of company assets are now intellectual property, and that percentage does not appear to be decreasing anytime soon.  That said, neither is competition in the marketplace.  Companies with the ability to process large volumes of data to analyze consumer preferences and trends faster than their competitors stand to gain a significant competitive advantage in the marketplace. Moreover, such companies can also use such data to gain efficiencies in their operations, further distancing them from their competition. Simply put, those companies that can unlock the secrets embodied in their big data sets may find themselves empowered by it.  Unfortunately, those very advantages presented by Big Data also present significant iP protection risk.

In the world of analytics, Big Data is not stagnant — the information is constantly changing.  Being able to analyze large data sets is no easy task, and requires significant expertise and capital.  It requires the development of algorithms, methodologies, and processes designed to accomplish the specific objective — ideas and concepts well worth protecting to maintain competitive advantage. Such ideas, however, have become far more difficult to protect under patent law.  Since the Supreme Court’s decision in Alice v. CLS Bank, the patent eligibility of such software inventions has become far more difficult to demonstrate.  Under Alice, the generic application of a computer to the “abstract idea” of intermediated settlement was not enough to transform the abstract idea to a patent-eligible invention.  As a result, the Supreme Court held that  something “significantly more” is necessary to do so.  The problem; however, is that the Supreme Court did not outline outline what actually qualifies as “significantly more” to elevate such abstract ideas to the level of patent eligibility.  Companies have been forced to rethink patenting such inventions as a result.

How can companies protect such valuable intellectual property capital?  With the specter of patent ineligibility hovering over big data inventions, the first step is to view such inventions through the lens of trade secrets. In essence, a trade secret is any information that derives independent economic value by virtue of its not being known.  Many states have adopted some version of the Uniform Trade Secrets Act, or otherwise have a body of common law that provides such protections to the trade secret owner.  The passage of the federal Defend Trade Secrets Act in 2016 provided an additional avenue of protection for a federal cause of action for trade secret misappropriation under a uniform definition of “trade secret.”  Of course, the trade secret owner will need to take steps that are reasonable under the circumstances to maintain its secrecy, which cannot be underestimated.  This includes physical as well as technical restrictions on access to such information to qualify for (and maintain) such trade secret status, at a minimum.

Another step is to protect the expression of such ideas under copyright law. Although copyright attaches once the original work of authorship (i.e., the expression the idea) is fixed into a tangible medium of expression (i.e., the computer code on the digital storage medium), registering such works at the appropriate time will provide some additional protections to the company that are well worth pursuing.  For example, registered copyrights do not require the copyright owner to prove actual damages — statutory damages ranging from $750 – $30,000 per occurrence become available (not to mention potential treble damages for willful infringement).  This type of protection may not protect the idea itself, but protects the expression of it in a manner that disincentives unauthorized copying.  Combined with the fact that such code is usually “behind the curtain” of the company for internal use, keeping such code restricted to specify company employees proves an even greater level of protection to such IP.  Where such code is accessible to contractors outside the company, then at a minimum, additional restrictions under the appropriate non-disclosure agreement will be necessary.

Big Data is creating some significant advantages to those companies capable of exploiting it, but it does not come without its challenges.  Being able to parse and exploit the large volumes of data companies are collecting is no easy task, but to remain competitive, companies need to not only implement technologies to exploit it, but protect the valuable intellectual capital created the process.  So if your company (or client) is not taking full advantage of the volume information at its fingertips and the resulting analytics, or otherwise failing to take the necessary steps to protect it, then their IP (and bottom line) can expect a proverbial kick in the assets by the competition — and that’s something you don’t need analytics to appreciate.