08 April 2022
(C) Naomi Korn Associates & Mathys & Squire 2022. Some Rights Reserved. These case studies are licensed for reuse under the terms of a Creative Commons Attribution Share Alike Licence. The contents should not be considered legal advice. If such legal advice is required, the opinion of a suitably qualified legal professional should be sought.
The following case study has been taken from the “Implications of COVID-19 on SMEs – Reassessing the Role of IP in Multiple Sectors and Industries” report written by Naomi Korn Associates and Mathys & Squire Consulting, November 2021. This case study reviews the impact of the COVID-19 pandemic on SMEs (from early 2020 through to the first quarter of 2021). It focuses on the industries most affected by the crisis and whether intellectual property (IP) and IP management may have helped mitigate its impact through adaptation and change.
COVID-19 has had an enormous and perhaps irreparable impact on the retail sector worldwide, with social distancing requirements, lockdowns and dwindling sales pushing many businesses to bankruptcy and expediting the shift from physical stores to digital shopping. It is estimated that the pandemic has accelerated the move towards digitalisation by at least five years.
It has also been revealed that department stores experienced a 60% sales decline in 2020, while e-commerce businesses saw sales soar by 20%. The marked decrease in sales from physical stores has pushed large department stores such as Century 21 into administration, while SMEs found themselves struggling to survive in the competitive online environment. A 2019 study estimated that digitalisation is integral to increase global GDP growth, which further reinforces the need for businesses to embrace digital technologies to weather the pandemic and ensure rapid recovery.
Another consequence of the pandemic is the disruption of traditional supply chains, highlighting the importance of having a more localised supply chain, to support local businesses and increase their brand awareness. In hindsight, this can be a way to counter some of the gradual decline of the high street stores in the UK and many other countries worldwide.
Despite the challenges faced by the retail industry, there have been several success stories, most notably e-retail platform such as Ocado, and Amazon, as well as food delivery services such as Uber Eats, Deliveroo and Just Eat. These platforms have grown from strength to strength with large portions of the population now doing most of their shopping online. Although items such as clothing saw a decline in sales overall, other items such as groceries, PPE, alcohol, entertainment, home improvement or construction materials grew by 10%-15%, largely due to people isolating and further lockdown restrictions. Many companies have pivoted to this new normal in two main ways: by offering online shopping with the order being shipped to the customer; or via a “buy online and pick-up in store” / “click and collect” option, where the item is simply collected at the store entrance, with minimum interaction. Amazon experienced a 40% sales growth in 2020 due to the pandemic, whilst US based Walmart saw a 97% increase in its e-commerce sales in Q2 of 2020 alone.
In order to meet these increasing requirements, many of these companies have developed new technical innovations, both in terms of e-commerce platforms and user interfaces, but also modes of processing and delivering such high volumes of online orders. Multi-channel distribution approaches have allowed businesses to provide greater flexibility and less reliance on a single point of the supply chain. It is worth noting however, that the increased exposure for businesses through digitalisation and e-commerce also increases the risk of potential counterfeiting and IP theft. The traditional focus on protection of registered rights and employee know-how may be insufficient, with a pivot towards cyber security becoming increasingly important. It is also progressively vital that as businesses ‘go digital’, by turning to e-commerce platforms or developing their own software solutions. With such solutions, it is important that businesses understand their responsibilities and obligations when using open source code, especially when looking to commercialise their own solution containing open source software.
Ocado, a leading provider of grocery delivery and logistics, is a good example of a business that has created additional value for through its innovations and licensing of IP to third parties. At the same time, Ocado has been able to foster innovation in adjacent areas through its venture program, supporting and acquiring disruptive technologies. This is achieved by expanding the Ocado patent portfolio, which now covers innovations relating to its core competencies surrounding AI and machine learning; robotics; IoT and edge intelligence; simulation; and modelling and forecasting. In this way, Ocado uses its IP as a foundation layer for a wider defensive strategy, while at the same time ensuring awareness of competitor strategies, what impact they have on Ocado and how to react.
In the meantime, home delivery giants such as Amazon have amassed large patent portfolios, including some IP rights that are relevant to the e-retail sector, such as drones, drone noise reduction, order management systems, mobile loading platforms, and autonomous vehicles. Ocado has also recently expressed its interest in autonomous vehicle technology for self-driving vans through a $13.8 million investment in autonomous vehicle technology company Oxbotica. The use of drone technology for deliveries is now beginning to extend beyond large behemoths such as Amazon, to startups such as Manna in Ireland, trialling grocery and medicine deliveries with supermarket chain Tesco, which estimates the market to be worth £10 billion in the UK alone over the coming years. UK supermarket chain Asda, owned by US giant Walmart, is also planning to trial drone delivery using drone firm Flytrex.
It is clear that the field of automation and logistics must improve to meet the demand of the e-commerce market, and with that, many large companies are already developing new innovations to meet customers’ expectations. However, these will be supported largely by innovators, especially SMEs, that will need to carefully protect their inventions, to maintain a position for themselves in this growing ecosystem. It has been noted that numerous companies, including Heineken and Philip Morris, have had to adapt their IP strategies to reflect the explosive growth in e-commerce platforms. Increasing sales channels have also dramatically increased the number of cases of infringement. This increase in counterfeiting has been influenced by significant changes in supply chains and rapid digitalisation, and has led to a number of malevolent parties taking the opportunity to monetise on someone’s invention or design, resulting in significant seizures of counterfeit branded products, including masks. To combat these issues, many brand owners are now looking to online tools to help monitor and track potential infringements and, where relevant, initiate enforcement actions. Heineken has indicated that it has moved to single user-friendly online tools that allow monitoring of all their brands across different platforms. Ultimately, a company’s brand and its brand assets will remain an important point for business leverage and revenue production moving forward. For those utilising e-commerce platforms, it is likely that there will be an increased level of cooperation and collaboration between brand owners and platform providers to detect infringement and discourage the sale of counterfeit goods. Moreover, in response to an increase in passing off any counterfeit products, companies that are successfully operating through e-commerce platforms have utilised trade mark and design protection across multiple jurisdictions, to both protect their brand and at the same time deter any potential counterfeiters.
Naomi Korn Associates is one of the UK’s specialists in copyright, data protection and licensing support services.
Mathys & Squire Consulting is an intellectual property consulting team that can support all businesses in capitalising intangible assets.
Naomi Korn Associates and Mathys & Squire Consulting are working in partnership across multiple industries to provide innovative consultancy IP support services.
 (UNCTAD, 2020, pp. Summary of adoption of E-commerce legislation worldwide)
 (The Commonwealth, 2020, pp. Trade, Oceans and Natural Resources Directorate of the Commonwealth Secretariat Leveraging, Digital Connectivity for Post-COVID Competitiveness and Recovery)
 (Fabeil, Pazim, & Langgat, 2020, pp. Journal of Economics and Business, The Impact of Covid-19 pandemic crisis on micro-enterprises: Entrepreneurs perspective on business continuity and recovery strategy)
 (International Chamber of Commerce, 2020, pp. Disruptions caused by Covid-19 increase the risk of your business encountering illicit trade risks)
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