The Editor's Page -- Old Rules For The New Economy

Dec. 21, 2004
Take the lead in leveraging your intellectual property in cyberspace.

If you think that you, as an executive of a manufacturing company, needn't be interested in the outcome of the ongoing intellectual-property court cases in the movie and music industries, you'd better think again. Within the decisions determining how specific copyright laws should be interpreted in cyberspace lurks the bigger issue of how broader intellectual property laws forged during the old economy will be interpreted in the new. Your future competitors are paying close attention; they're looking for that ruling that changes the laws to favor their new business models and render yours obsolete. In case you haven't been following the action, movie studios are battling Web site operators to stop them from distributing a software program that allows users to unscramble movies encrypted on DVDs. The music industry is trying to stop Napster from providing its software and music directory that enables users to copy each other's music without paying for it. While the latest rulings in both industries favor the old-economy studios, effectively applying existing copyright law to the digital world, future appeals will determine the final decision. Particularly vulnerable in a manufacturing company is the information you sell along with your product, which constitutes an increasing portion of its value. As this value multiplies, more sharks will start circling in attempts to disintermediate you from your own information. First to be co-opted by enterprising entrepreneurs and cranks alike were nothing less than companies' crown jewels: their brands and trademarks. Manufacturers have sizable staffs deployed to combat so-called cybersquatters, who register trademark- and brand-related domain names with hopes of reselling them back to the brand owner for a tidy profit. According to one report, major trademark holders find about 25 such Web domains each day. But that's only the beginning. Web operators are publishing others' intellectual property, such as trade secrets and confidential internal documents, on the 'Net. Ford Motor Co. and others have lawsuits pending in such cases. What's next? Your inventory levels? Service information? Shipment information? If it's valuable information, it's vulnerable to intellectual-property poachers. As the court battles continue, the only certainty is that new business models designed around providing valuable information over the Internet will be developed, and will thrive. What remains to be seen is who will prosper from these new businesses. Ultimately, it isn't enough for you to defend your intellectual-property rights. You must take the lead in creating businesses that leverage that property in cyberspace. Otherwise somebody else will. Patricia Panchak is editor-in-chief of IndustryWeek.

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