Do you want to zoom towards an IP crash?

Lack of IP protection can shorten Zoom’s success, Nick Wallin said.

In just a few weeks last spring, the video conferencing platform Zoom has gone from almost unprecedented to a new and regular staple. The lack of intellectual property (IP) protection can prove to be short-lived, even though its rapid spread has had a dramatic impact on the value of the company.

When Zoom debuted on the Nasdaq in April 2019, it was worth $ 112 billion with a stock price of $ 62. By October 2020, the surge in popularity of video conferencing during a pandemic increased the number of daily active users of the platform to about 300 million worldwide, and the stock price fell slightly to $ 568. It soared.

While the pandemic’s significant increase in video conferencing demand was unpredictable, the company’s valuation surge highlighted a potential flaw in Zoom’s business strategy. As always as to say about the advantages of starters, most tech companies with significant market capitalization also expect to have a robust IP portfolio. Ideally, this should include a number of patents that protect inventions and give them a monopoly period to commercialize innovations in markets around the world. In the competition for the future, companies with a pioneering advantage can use patents to boost their competitors (often larger and more resource-rich). Patents act as a serious obstacle, preventing competitors from catching up.

However, based on the findings of the widely used global patent database, Zoom appears to be granted far fewer patents than expected by market capitalization companies. According to search results, only five patents have been granted, all filed in the United States between 2013 and 2019, with no patent protection in other large global markets, including Europe, China and Japan. There seems to be no.

Of course, there are caveats to this discovery. Due to the time lag that can take several years from patent application to publication, this patent search may not give you the full picture. It may become clear that Zoom filed a large number of patents in 2020 in a year or so after a pandemic and a surge in stock prices and cash reserves. However, in reality, little or no commercial protection is provided until these applications are published. Also, it takes time to launch a quality patent portfolio, as the right inventions are usually not just born overnight. Zoom may be using a holding company with a different name for its IP, in which case you can’t expect to find it. Any The patent by that name is not.

There are other examples of faster-growing, fast-growing tech companies that IP portfolios couldn’t keep up with. The solution is often to go market and buy a portfolio and backfill it. The latecomer mobile telecommunications company Rockstar Consortium is a classic example of purchasing 4,000 patents from Notel for $ 4.5 billion in 2011 to help defend against more established incumbents. The problem with such a strategy is that it can be expensive. For Rockstar, it exceeds $ 1 million per patent, compared to the usual cost of granting the same amount of US patents of $ 20,000 to $ 30,000. Even if patents hit the market, such games require deep pockets.

If not yet launched, Zoom needs to file a patent application in major global markets as quickly as possible. This can help reassure shareholders that their current market capitalization will be retained. Back-end video conferencing technology can be simple. So while you may not need a lot of patents, geographical spread is important. You can also protect your IP permissions and add a layer of commercial protection when innovative features are introduced, such as new ways to access the platform, new filters or backgrounds, and new user interface (UI) features. Is possible.

Another important area of ​​IP-related risk for fast-growing companies with a strong customer base is trademark protection of brand names and other corporate identities. Trademark registration can be done retroactively. This means that companies can seek brand name protection as long as they can demonstrate commercial use, even if it was never thought of before. In some cases, leaving brand names unprotected can remain vulnerable to generalization. For example, when consumers start calling all video conferencing calls “zoom”.

We still don’t have the big picture of Zoom’s IP portfolio, but here’s an important lesson for aspiring tech unicorns. Unless IP protection is a core element of your business strategy, the benefits of a starter can turn out to be short-lived.

Nick Wallin is a partner of European intellectual property companies. Wizards & Rogers.. He specializes in advising technology-driven companies on how to protect innovation.

Do you want to zoom towards an IP crash?

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