IP in 2023: 5 Trends to Watch
Welcome to the first installment of Storytelling for IP Assets.
Through our work with investors and operators across media, sports, and entertainment, myself and our team at Prosek Partners enjoy a direct view into the flourishing intellectual property (IP) asset class.
We’ve seen several major IP trends and developments occur in 2022 that will impact 2023 and beyond. These events reinforce why financiers, strategists, creators, regulators, law firms, and consultants working across IP must refine their corporate narratives and promote their value through tactical storytelling, if they are to meaningfully progress and seize opportunity over the next 12 months.
Let’s jump into our top five.
1) IP Litigation Ruling on Jurisdiction Sends Ripples
In August, the U.S. Court of Appeals for the Seventh Circuit upheld a landmark verdict by the Northern District of Illinois in NBA Properties v. Hanwjh that ruled in favor of the licensing arms of the NBA, MLB, NHL and NFL.
The original case, an infringement and counterfeiting litigation brought against a group of China-based online companies, accused them of impermissibly using American sports league trademarks such as team logos. These infringements also extended to copying the layouts, terms of service, legal notices and/or contact information found on league websites. The duplicate websites were then advertised across ecommerce platforms serving US consumers, including eBay, Alibaba, and Amazon.
In the eyes of the Court of Appeals, this group of overseas businesses enabled the selling of their products to individuals residing in the US. Despite having no offices, bank accounts, or other properties on American soil, this established a level of “minimum contact” with US consumers that compelled the companies to defend themselves against charges in an Illinois court under US jurisdiction.
Storytelling Need
Much like its tangible counterparts, the value of intangible IP is materially impacted by the ability to monitor for, and enforce against, illegal distribution.
With the precedent set by NBA Properties v. Hanwjh now upheld, rights holders will be more encouraged to aggressively pursue international entities that actively sell IP-infringing products to US buyers.
Right holders will also have new incentive to proactively communicate the resources they’ve allocated to detecting and challenging IP misuse, as a means of deterring brand-damaging criminal activity.
2) Streaming Platforms Stake Claim as Live Sports Distributors
While streaming platforms have existed for several years, 2022 was a bellwether moment for the IP distribution landscape – particularly for highly-coveted live sports broadcast rights.
Live sports content is renowned for capturing loyal audiences who will follow the IP onto new platforms, through different subscription tiers, and over paywalls. They are famously sticky assets, with viewers who are also more likely to engage with rights holders’ sponsorship partners through various channels, including social media.
The streaming world ended 2022 with a bang, as 谷歌 ’s YouTube secured domestic out-of-market rights to the National Football League (NFL) ’s “Sunday Ticket” package for $14bn over seven years ($2.5bn per annum). The deal reflects a 67% increase in value over the NFL’s current agreement with AT&T’s DirecTV, and gives the video platform a major addition to its YouTube TV and YouTube Primetime channel offerings.
NFL Sunday Ticket is the latest example of live sports IP acquisition by a streaming service. Other recent cases include:?
Storytelling Need
Roger Goodell, NFL commissioner, explained that the league’s deal with YouTube is “part of a strategy for building the next generation of fans” by meeting younger and more diverse communities where they consume content.
With visibility and access now in place, the league (and others like it) must now adapt their narrative and IP to the different audience profiles within these communities (gender, race, ethnicity, region, etc.).
The OTT video market is projected to exceed $218bn in value by 2026 (19% CAGR from 2020). Amid this growth, streaming platforms must supplement the stories in their content portfolios with company narratives that resonate with potential subscribers, if they are to grow market share and ‘future-proof’ their offerings.
3) NFTs and Blockchain Chip Away at Artist Royalty Challenges
2022 was a year of exploration for NFT and blockchain technology, as new projects organized by blue-chip brands tested how transformative their applications could be.
In December, for example, Warner Music Group announced that select artists on its labels will release music NFTs through LGND Music, a debuting Web3 marketplace on the Polygon blockchain. LGND Music will offer songs as NFTs, which fans can purchase and listen to via the platform. This novel means of monetization helps artists form more direct and supportive relationships with their fans.
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As compelling as the project is, perhaps the most attractive use case for NFTs and blockchain in IP management has been facilitating creator royalty payments. Artists in the US have attempted to codify universal baselines for resale royalty rights through legislation to no avail.
Now, NFT marketplaces like OpenSea , Rarible and Exchange.ART have created their own on-chain royalty enforcement tools, using computer code to enforce creator payments on primary and secondary sales of NFT collections as a means of fair compensation for artists.
Further features are being introduced to protect royalty distribution across NFT marketplaces too. OpenSea is creating new variations of smart contracts that can actively block attempts to resell an NFT on any zero-royalty or optional-royalty marketplaces, essentially blacklisting these platforms.
Storytelling Need
By enabling the tokenization and financialization of culture, NFT royalties are a vital piece of the narrative underpinning Web3 and blockchain’s respective value. They allow artists to tackle exploitation and derive more sustainable value from their work.
With many non-royalty marketplaces to vie against, artist-friendly setups that enforce resale royalty rights and distributions must develop strong and distinct narratives to a) capture this new wave of artists and b) convey their ability to fuel passionate niche communities.
4) Archived Content Licensing Adds New Revenue Stream to Creator Economy
The flourishing creator economy has been buoyed by a variety of professional services emerging to help creators turn their passions into legitimate and scalable enterprises. Examples include credit lines for creators, all-in-one ecommerce back-ends, and boutique talent management agencies with digital creator clientele.
Every social media platform has its own approach to supporting influencers and creators, from?TikTok’s Creator Fund?to?YouTube’s advertising revenue. But these platforms have not yet solved for how creators can take full advantage of their archived content.
As investors pursue new ways to generate steady income streams from assets, a new category of business is emerging, creator IP license aggregators. Mirroring the likes of Thrasio in the e-commerce space, or aggregators in other fields such as mineral mining rights and songwriter catalogs, organizations like Spotter and Jellysmack are offering capital to YouTube personalities in exchange for licensing their archived content and splitting advertising sales generated by them over a multi-year span.
These investments help creators finance and accelerate the expansion of their businesses and brands. In return, investors and lenders to these aggregators, such as SoftBank’s Vision Fund, are wagering on content collections increasing in value over time as the creators behind them expand their audience.
Storytelling Need
The storytelling needs here are three-fold:
These factors and opportunities underscore the need for aggregators to proactively shape and promote their own narratives. Doing so will help attract best-in-class creators and prospective investors to their business.?
5) Governments Will Put Renewed Focus on IP Protection
In late December, Saudi Arabia unveiled a formal National Intellectual Property Strategy to support IP innovation, optimize IP administration, enable IP commercialization, and protect IP assets. These initiatives are part of the nation’s Vision 2030 program, designed to attract IP creators to KSA’s future cities including The Line, Oxagon and Sindalah. The Strategy will be managed by a mix of government agencies, with progress measured periodically against a governance framework.
Notable in this strategy is the objective to improve IP value by “establishing a fast and high-quality registration system to ensure effective management of human creativity.” This pursuit mirrors that of the recently formed Council for Innovation Promotion (CIP), a bipartisan organization here in the US that strives to secure the nation’s IP by bringing more clarity to the protections around patents and trademarks.
This clarity is also vital to defining what types of innovations are eligible for patenting in the first place. Software is an especially grey area of intangible IP (with ties to both copyrights and patents) and the likes of artificial intelligence and autonomous vehicles are become increasingly important to our way of being.
A robust IP governance framework is the first step to identifying which factors drive innovation. Authority and accountability can also nurture invention and help it realize full value. It’s why House Representatives here in the US introduced HR?9541, the Strengthening Measures to Advance Rights Technologies (SMART) Copyright Act in December. The proposed bill would amend Title 17 of the United States Code to “modernize?copyright?law”?and "provide for accommodation and designation of technical measures to identify, protect, or manage copyrighted works.”
Storytelling Need
The need for developed nations to convey their firm commitment to IP promotion and preservation is captured well by the following excerpt from Andrei Iancu, Co-Chair of the CIP:
“The rules of the game have to be made crystal clear…inventors and investors [need] some predictability…if you don’t have robust IP protection in a free market economy, investors will not choose to put their hard-earned dollars into these areas.”
Progress in national strategies and potential legislation in 2023 will be watched closely by the innovation community, as economies race to bring sorely needed IP infrastructure to fruition.
I hope you’ll consider subscribing for future editions of SFIPA, To learn more about Prosek’s strategic communications work across media, IP, sports, and entertainment (MISE), reach out via LinkedIn, or send a note to [email protected].