Unlocking circularity: the power of IP in a sustainable future

The business world is increasingly shifting from linear to circular models, driven by environmental concerns, consumer demand, and regulation. This transition presents both challenges and opportunities for firms, particularly within the context of intellectual property (IP) strategy.

So, how can businesses leverage their IP strategies to ensure they unlock value in this new world of the circular economy? By focusing on navigating ecosystem transformations, shifting from prevention to enablement, and fostering collaborative innovation and branding.

Navigating circular ecosystems

The move to circularity isn’t without its challenges. As companies jockey for position within emerging circular value chains, friction points are likely to arise.

In the chemical recycling sector, for example, chemical companies, sorting system providers, waste management firms, and plastics producers are all vying for a piece of the circular pie, leading to overlapping technology positions and competing business interests – both being prime catalysts for conflict.

While some friction is inevitable and even a healthy sign of a vibrant business landscape, the success of circularity hinges on coordinated action and open ecosystems. This necessitates a delicate balance between protecting one’s own interests and fostering collaboration with key partners. A critical asset in crafting this balance is IP.

IP strategies in linear business models generally prioritize preventing competitors from accessing or utilizing a company’s innovations and brands. However, directly translating this strategy to circular businesses means using IP to prevent others from pursuing circular efforts.

For example, in the case of a company focusing on independent repairs as part of the circular economy, a business could look to claim infringement if its parts are reused or refurbished. These tactics, while effective in a linear context, can stifle innovation and limit market growth in a circular economy. They also risk damaging a company’s brand reputation if seen as entirely self-motivated and not supportive of the wider ecosystem.

From blocking to building block

Circularity demands a shift in IP strategies, moving from prevention to enablement. They should be leveraged to foster collaboration, accelerate innovation within circular value chains, and catalyze market adoption of circular solutions.

This requires a new IP playbook, one that embraces collaborative development in ecosystems, strategic partnerships, and a more nuanced approach to licensing and technology sharing.

Take, for instance, a company holding a significant share in a stagnant product market. When confronted with a new entrant providing a refurbishment offering, its knee-jerk reaction, if a linear IP strategy is pursued, would be to put a swift end to this new business proposition to protect product sales. This approach, however, may no longer be viable in an increasingly circular economy.

Instead, the company may find greater long-term profitability from partnering up and co-branding with the refurbishment player, even if it means losing some market share in new product sales short term.

IP for collaborative ecosystems

IP can be a powerful tool for building and strengthening circular value chains. Instead of using IP to block competitors, companies can leverage their portfolios to attract partners and foster collaborative development and innovation. Offering access to proprietary technology can incentivize others to build complementary solutions, accelerating the development of entire circular ecosystems.

Participation in industry standards development related to circularity-enabling technologies is another avenue for collaboration. By contributing to shared standards, e.g., the Circular Plastics Alliance, companies can promote interoperability and facilitate the wider adoption of circular solutions across the market. Similarly, contributing to sustainability patent pools or establishing IP pledges, such as the ESG Smart Pool, can create broader alliances and accelerate the diffusion of crucial technologies.

These strategies represent a fundamental shift from the traditional, defensive use of IP, emphasizing openness and shared progress over exclusivity. This collaborative approach not only benefits individual companies but also contributes to the overall growth and success of the circular economy and possibly entire societies.

For businesses embracing circularity, IP is paramount. It must actively enable circularity, balancing control over core technologies with open innovation. Strategic IP sharing, licensing, and partnerships are crucial for accelerating market adoption and unlocking the full potential of the circular economy.

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