BY Ridwaan Boda AND Priyanka Naidoo
Platform economy series: IP protections
This article is part of a series of articles, the Platform Economy Series, delving into the legal issues arising from the platform economy. In this article, we dig deeper into the issues discussed in our earlier article, specifically in respect of IP rights and protection and what platform providers and developers should consider in launching the platform.
A platform provider should look to partner with a developer that has a strong innovation strategy and who will continuously search for innovative ways to create new products and improve existing products. Innovation creates value which in turn ensures high demand and consumption by customers. However, IP is an inherent feature of innovation and the developer and platform provider may find that they face a few challenges in balancing their interests in commercially exploiting such IP. For the platform to thrive, a platform provider must therefore consider a number of IP-related issues.
- Protecting the IP in the platform
The platform provider should first ensure that it protects the IP it has developed to be able to offer the platform to developers and customers. This includes the trade marks used in respect of the platform, new inventions or designs which could be protected through patent or design registrations, as well as the copyright in its platform.
The IP assets in the platform are not limited to the underlying technology – it is in many cases the “non-technology” IP assets such as logos, platform name, platform content, branding, look-and-feel, that are the most valuable as they serve to distinguish the platform from its competitors.
From a trade mark perspective, the platform provider should consider “branding guidelines” with which it requires the developer to comply to ensure that the products (including their name and design) do not contravene applicable laws, are not offensive, are not in violation of other third parties’ IP (more on this below), and so on. The developer may also impose certain restrictions in respect of the platform provider’s use of its trade marks and branding including rights to quality control and approval over how their trade marks are used on the platform.
- Licensing and ownership of developed IP
The platform, including the underlying source code, is a key asset of the platform provider. As such, the platform provider must ensure that it at least has the rights to use, exploit and modify the IP in the platform. This includes ensuring that licences for the use of APIs, customers’ access to the platform, jointly developed IP, etc. are contracted for.
Developers need to be cognisant of the rights granted by platform providers in respect of their API, including the limitations and specifications which apply to such APIs. In addition, customers need to be granted appropriate rights to access the platform which would at least include limitations as to a number of users, the territory in which the licence applies, and the royalties (fees) that may be payable.
These rights should also be unencumbered and appropriately assigned to the platform provider if developed by a third party.
As discussed in our previous article, developers will also need to integrate their product offering into the platform. This means that the developer is likely to integrate its apps with one or more of the platform provider’s core product offerings and related IP. Such integration may result in it being difficult to distinguish one party’s IP from the other, and what constitutes developed IP. A good contract, however, will ensure that these rights are appropriately captured and ringfenced, providing certainty regarding ownership and restrictions on the use, licensing and transfer of IP.
It is also essential to ensure that the end user terms also provide these protections.
Related to ownership of IP, particularly developed IP, are exclusivity arrangements. The platform provider may wish to have market exclusivity in relation to a particular product offering of the developer. This will of course increase the value of the platform and demand. Where there is an exclusivity arrangement, the developer risks not being able to fully commercialise its IP and may accordingly attempt to negotiate restrictions on the exclusivity. All exclusivity arrangements should be fair and reasonable and would ordinarily be limited in territory, term and scope.
Both the platform provider and developer should also ensure that their confidential information (which is often a valuable IP asset) is protected and that the parties are bound by suitable non-disclosure and non-use obligations.
- Infringement of IP rights
Another important consideration is liability for IP infringement and dealing with infringement complaints. As mentioned above, the platform provider’s “branding guidelines” or similar documents may put the onus on the developer to ensure that its products do not violate the IP rights of others.
However, in practice, complex situations may arise. For example, is the platform provider liable if the developer causes a product to be offered for sale on the platform which infringes a third party’s patent (usually without the platform provider even knowing that there is an infringement)? And further, how does the platform provider deal with complaints of this nature, eg, an IP right holder sending a take-down request or letter of demand to the platform provider which relates to the developer’s product?
Again, the appropriate starting point is a good contract between the platform provider and developer that deals with both parties’ obligations (and the customer’s warranties) in respect of IP infringements. This should be coupled with a user-friendly and efficient mechanism for dealing with customer and third party complaints relating to IP rights violations.
A good contract should also demarcate liability between the developer and the platform provider when it comes to IP infringement claims.
Our specialist team at ENSafrica have deep expertise in advising platform providers and developers on applicable IP considerations in the development of the platform and integration of product offerings, and have assisted a number of clients not only in protecting their IP rights through the appropriate registrations, but also in drafting the necessary rights and obligations both from a developer and platform provider perspective.
Should you require any assistance with drafting appropriate terms and conditions governing the use of your platform or app, please contact any member of our team.
Technology, Media and Telecommunications | Executive
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Technology, Media and Telecommunications | Senior Associate
+27 72 662 4355