With technological innovation continuing to transform how companies do business, more and more entities are looking to forge strategic alliances that leverage the commercial uses of intellectual property and other intangible assets. In this Q and A, Jim Nelson and Bill Russell, co-chairs of Venable’s Technology, Media, and Commercial (TMC) group, discuss their extensive experience facilitating such alliances; how innovation is impacting different industries; and some of the most exciting new developments in the field.
Q: What are strategic alliances and how do they work?
Bill: There can be infinite variations, but in its simplest form a strategic alliance is where one company has a particular service or product, another company has a particular service or product, and they both recognize that if they were to collaborate and put elements of those together, they can differentiate themselves in the marketplace, improve their existing product or service offerings, or create something entirely new. That’s where people like Jim and me come in. We understand how these relationships are built, we have the experience to know what generally works and what doesn’t work, and we have the skill to guide the parties in achieving their objectives, both collectively and individually, and to structure these objectives into a deal.
Q: When a client comes to you wanting to do something new and interesting, what is it that you can bring to the table in terms of identifying opportunistic alliances or seeing them through?
Jim: Throughout our careers, we have cultivated the ability to think creatively about how to monetize and leverage intellectual property in a way that can be collectively beneficial. We are always working with intangible asset classes that have a lot of flexibility. The key is to understand the novel legal and business issues surrounding these types of assets. On top of that, we are business lawyers with a lot of industry-specific knowledge. So even as technology keeps evolving into new areas, like fintech or health tech or in the media and entertainment space, the thing that consistently underlies our approach is understanding and being able to think creatively about the asset class we are dealing with.
Q: You work with clients in a broad range of industries. How do you address the different needs each sector might have?
Bill: Every company in the world needs technology. So while each client has different sets of needs and different issues to contend with in their specific industries, we have a core set of skills that can easily be leveraged into new areas. When Jim and I started out, much of our focus was in the software, telecom, and healthcare sectors. But as our practice has grown and evolved, we’ve continued to add deep knowledge of other industry segments along the way, in areas like fintech, hospitality and lodging, industrial products, pharmaceuticals, and biotech, among others. And, of course, we stay up to speed in the new applications of technology and the particular nuances of how the industries we work with use technology.
Q: With the types of assets you work with constantly evolving, how do you stay ahead of the game?
Jim: In addition to being a lawyer, I also have an MBA from the University of Chicago. In business school we were told, “We don’t teach you the latest thing, we teach you the fundamentals and then you’ll be ready for the latest thing when it happens.” So, applying that principle, yes, there will always be variations on, say, the royalty structure or in the approach to different segments of a deal. But the fundamentals of how a deal is put together are always the same. The key to a successful outcome is tying in those fundamentals with a deep domain knowledge of the intellectual property or other class of assets and services involved. So even in the gaming industry, where there is a whole new vocabulary related to deal structures, you’re still dealing with familiar underlying asset classes and the same business fundamentals.
Q: Can you share examples of some of the deals you’ve worked on that you’ve found particularly interesting?
Jim: We’ve been working in the green energy space on a series of collaborative business deals with an investment fund and operating company, involving an investment in a German-based company that manufactures charging infrastructure technology for electric vehicles. So our client will invest in the other party and lend its local knowledge on exploiting the technology, and then the other company will develop its technology further and work through our client as the distribution partner in the United States. Here we are having to both cover the financial investment and the strategic relationship to figure out the best way to ensure that both the parties and the economics are as aligned as possible in the clients’ efforts to collectively win.
Bill: Another deal we worked on recently was helping a U.S.-based medical technology provider ink a strategic alliance with a company based in Europe to repurpose the latter’s existing artificial intelligence (AI) technology platform for use in the healthcare context. The existing technology was not developed specifically with healthcare in mind, but it became apparent to the parties that the technology could fairly readily be applied to solve a specific healthcare need. So, in that context, it’s a clever adaptation of one party’s existing technology for innovative use in a whole new field by bringing both parties’ intellectual capital, skills and resources to bear. The end result will be a differentiator in the marketplace with better results for patients and an interesting new technological direction for both parties.
Q: So many of the deals you work on are attempting new things that haven’t been tried before. How do you safeguard against failure?
Jim: Using our business knowledge to draft agreement documents that align economics and interests is essential to a successful collaboration. It’s also about having a keen understanding of the asset classes that are being created or adapted to make sure that the rights are properly treated and captured. Then, of course, each of these deals builds on the others to the extent that the particular knowledge we gain in, say, the development of a pharmaceutical solution can be applied to the delivery mechanisms around that solution. And, of course, years of first-hand industry experience count for a lot.
Q: What kind of changes or trends are you seeing, and how might these impact the kind of work you do?
Jim: One area that is rapidly evolving is the commercialization of data as an IP asset. Whether it is gathering data from the use of cutting-edge digital technologies in the industrial applications arena or gathering data on consumer purchasing habits, the pool of available data is growing alongside the computing power to leverage that data. So those drivers will continue to provide more commercial opportunities.
Bill: Alongside that, I think it’s fair to say we’re going to see more ubiquitous as well as unique uses of artificial intelligence (AI) as more innovative systems are developed to handle and extract value from the data. For example, with all the innovation going on in the automotive industry, cars are becoming more and more like super-computers on wheels. So there will be AI on the inside and cloud connectivity on the outside, and, once they become fully driverless, the vehicles will become mobile spaces where people will be able to work as if they are in the office, or using and consuming media and advertising as they relax while en route to their destination. I wouldn’t be surprised if over the coming years we’re doing a lot more work in the automotive space just by virtue of the massive amount of technology and data that is being generated and consumed there.
Jim: Ultimately, the more important trend for people like us who work in this area is that the percentage of the economy that is represented by intangible assets is growing exponentially. And so, anyone who can manipulate those asset classes, and who can understand the financial impacts associated with them, is going to be kept very busy.
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