Australia: Mine Your Own Business IP - an effective IP strategy in the mining sector

Explore - insights from the DLA Piper Mining Sector - Issue 1
Last Updated: 23 December 2013
Article by David Richardson

As the mining sector becomes more competitive and increasingly driven by innovation to create value, an effective IP management strategy is becoming essential. Dave Richardson shares his IP 'hygiene checklist' – and offers some thought-provoking reasons as to why you should be following it.

At a recent Intellectual Property licensing conference, The Minerals Supplier Advocate for the Federal Government, Christian Larsen, observed that the Australian mining sector is at risk of falling behind in innovating new processes. "If mining doesn't capture and commercialise innovation in the next five years capacity and capability will go overseas."

A stern warning to an industry already under pressure from volatile commodity prices and a chronic shortage of capital.

The McKinsey Global Institute has identified 12 technologies that present key opportunities to drive economic transformations in coming years. The repor t explains that the combined application of all 12 technologies, including advanced robotics, energy storage, and mobile internet could have a potential impact of between $14 trillion and $33 trillion a year in 2025. The mining sector must utilise these new technologies and leverage off existing processes to increase efficiency, to automate processes and to increase the safety of workers by replacing dangerous activities through technology to plan and operate mining activity remotely.

While traditionally companies involved in mining may have focussed on their tangible assets as an indication of their value, many are now recognising the real value of IP and the need to properly protect and manage these valuable assets.

Having a robust intellectual property (IP) portfolio and management strategy is an essential part of any company that develops and innovates, not only because of the financial returns that it can help generate (through the sale or licensing of IP), but also because it contributes to other company objectives such as being a more attractive partner or supplier, and reducing the likelihood of IP infringement claims or patent troll attacks.

An effective IP strategy must work along-side the overall plan of the organisation and be integrated with other management activities. When properly implemented, the IP strategy enables decisions to be made regarding protection, use and enforcement of IP the way they should made – in terms of how they assist with achieving the objectives and adding value to the business.

Imagine spending time, money and resources developing and implementing a new process or technology only to find out later that your competitor already holds the IP rights for that innovation. Not only would this usually prevent you from securing your own IP rights, but if the competitor enforces its IP rights against your organisation, you may be required to pay damages and suspend sales, with a huge impact on profits and reputation.

In addition, directors of listed companies who do not adequately manage and protect their organisation's IP may be failing to fulfil their corporate responsibilities as custodians of shareholder value and to build the company's value.

A 3-STEP STRATEGY - ASSESS, PROTECT, OPTIMISE

  1. ASSESSING THE STATE - OF - PLAY

One of the most important issues for organisations to consider is whether it has a 'Freedom to Operate'; the rights to be doing what it is doing in the market. That is, there are no third party rights prohibiting or compromising the commercial value of the project or product/service in development.

Organisations must determine at an early stage:

  • What IP rights it owns and what IP rights its otherwise has a right to use
  • The extent of such IP rights
  • How such rights can be properly used by the organisation (including any limitations or restrictions on use)

A detailed assessment of the IP assets held by the organisation is needed to determine the quality of the IP rights attaching to those assets. This includes reviewing the relevant contracts which affect the business' IP rights including licences, supplier agreements, partnering arrangements and employment contracts and determining what limitations and restrictions apply with respect to those IP rights.

Research should also be conducted into what your competitors are doing – you need to assess the IP rights held by competitors and the overall IP landscape within the relevant market to identify any potential infringement issues – either infringement by your organisation of third party rights or potential infringement by third parties of your organisation's IP rights.

If a Freedom to Operate issue does arise, the organisation will need to consider a costs/ benefit analysis of either:

  • Invalidating the third party IP rights
  • Obtaining a licence (or crosslicence)from the third party
  • Avoiding use of the IP and any infringement issues
  1. PROTECTING YOUR 'GOOD' IDEAS

In order to capture the valuable IP, having adequate knowledge management systems are in place is critical. To facilitate the capture of IP, personnel should be required to:

  • keep accurate and up-to-date records regarding creation and handling of IP
  • comply with their obligations of confidentiality at all times
  • assess new material and innovations at an early stage for its strategic and commercial importance
  • feed this information into a central database (rather than individual personal databases)

Once valuable IP has been identified and steps have been taken to ensure third party infringement is avoided, the organisation needs to determine the best means of protecting the valuable IP with regard to the objectives of the business and the cost/benefits of such protection.

To create a stronger market position regarding IP protection, organisations will usually incorporate a range of protective mechanisms to create different layers of protection in the market. This includes use of patents to protect different aspects of innovation, trademarks to protect the brand, design rights to protect product appearance, copyright to protect valuable works and confidentiality to protect trade secrets and know-how.

Overseas protection

It is important for companies to secure IP rights (following a balanced assessment of costs and benefits) as early as possible in all jurisdictions which it plans to operate and exploit the new IP. Without proper protection, foreign companies may be able to exploit, or register IP created by another organisation and possibly prevent that organisation from exploiting the IP in that country.

Defensive publications

Organisations should also consider use of defensive publications – this is where you strategically publish an invention to create prior art which will then destroy the novelty of any future patent filed. This can be a very useful technique to ensure competitors are not able to obtain patent protection for inventions that you've found (and may need to use in future) but don't need to protect.

  1. OPTIMISING YOUR PORTFOLIO

Once the initial development phase is over, and the IP has been properly captured and protected, it's important for the organisation to have clear policies and procedures to maintain and manage its valuable IP.

The principal elements of an effective corporate IP strategy should include:

  • a statement on how IP management supports the overall mission of the organisation and actively communicating the strategy to staff
  • the responsibilities of the IP management function
  • the strategy to be adopted towards IP negotiations with suppliers/ third parties
  • how to develop new IP opportunities in line with the business strategy and IP landscape
  • various corporate policies and procedures that document how IP is to be captured, protected, commercialised and communicated within the organisation and externally

In the mining sector, development of new technologies is often undertaken with partners, suppliers or other third parties who bring existing (or background) IP and expect to obtain use of the results or benefit from the commercial exploitation of the IP. In these cases, it is critical that IP issues are considered at the initial contract negotiation stage for all new projects. The agreement needs to expressly and clearly confirm ownership of background IP and provide details regarding ownership of the new (or resulting) IP, including the specific rights (and any limitations) regarding use and exploitation of that IP for each party.

Companies these days may also find themselves unexpectedly on the defensive as non-practicing entities (NPEs or patent trolls) continue to grow in number and enforce patents on a large-scale. The NPEs generally are not trading or operational companies and exist solely to enforce patents by way of licensing or threatening litigation. Generally, the patents that are held by NPEs contain seemingly broad claims and are being enforced in a manner clearly not contemplated by the original patent. Licenses are offered to unsuspecting companies for a sum that is significantly less than the cost of disputing the matter in court and, based on a cost-benefit analysis, many companies choose to settle the dispute. Companies need to be aware of patent trolls and have a policy and procedure in place for dealing with these companies.

PRACTICAL EXAMPLES - MINING COMPANIES AHEAD OF THE GAME

  • Mining equipment manufacturer Keech has invested in its 3D capabilities and its chief executive has publicly encouraged miners to set up strategic alliances with companies who can supply this technology. 3D printing (or additive manufacturing) allows mining companies to develop bespoke and tailored applications cheaply and on-site by developing a product on screen and then the 3D printing machine prints it. The dynamic and environmental factors at each mine site can greatly vary the technical components within products, and this allows bespoke one-of-a kind technologies to be created for that site. This reduces freight and shipping times and allows a single production copy without having to develop a pattern for each product.
  • BHP Billiton has opened its Integrated Remote Operations Centre (IROC) in Perth. This facility uses innovative technology that provides an overview of the entire Western Australian Iron Ore network at a glance. The IROC also includes mine fleet management system, train control and fixed plant control systems for mine and port operations, and CCTV and radio systems to interact and communicate remotely with sites.
  • Rio Tinto has made significant investments in the development of new extraction in an effort to minimise environmental impact, save energy and increase efficiency and production, it is developing block cave mining and rapid tunnel development technologies to extract ore from ore bodies without digging an open pit.
  • The development of membrane-filtration technology to remove harmful substances from waste water as it passes through the filtration, reduces the volume and cost of waste treatment and also creates a useable by-products. Salt plant Exportada de Sal S.A. in Mexico is using innovative technologies to return residual brine to the sea from salt mining, generating electricity and also converting the remainder to drinking water.
  • The development of technologies to assist in waterless fracking is a significant innovation to minimise environmental impacts. Canadian company GasFrac has developed a gel from LPG and propane to act as a substitute to water in fracking, which dissolves into the oil or gas and returns to the surface.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.


DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com

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