Hard And Soft Rights Combine: Function Or Form?

 
 

When Google launched its latest technology, Google Glass, it had soon come up against objections raised over everything from privacy issues to how it looks. In steps to allay the backlash and having already released responses to the top 10 Google Glass myths, Google announced on that they had formed a strategic partnership with Luxottica “to design, develop and distribute a new breed of eye-wear for Glass” to be released in 2015.

For this commentary I want to emphasize the positive combinatorial effect intangible assets can have for a product – particularly when blending somewhat diverse sets of rights. What does this mean for a product and what this can mean for the parties involved?

Many will not have heard of Luxottica. The Italian corporation is responsible for many of the world’s high-end sunglass brands, including Oakley and Ray-Bans, which have been included in the deal with Google. Through more than 50 years in the market, they have become one of the leaders in the sunglass business and with that they bring significant IP in terms of the content design around sunglasses through to their branding and distribution channels.

Google, on the other hand, brings all of the hard technological rights around the Google Glass concept itself. From a stylistic point of view though, as a consumer would you rather wear Google Glass or a pair of Ray-Bans? You don’t have to be Paris Hilton to answer Ray-Bans and it is this point that Google has successfully picked up on.

What Google has done is analogous to the Tesla electric car story. Electric cars have been on the general market for a decade now but only recently have they caught the eye of the true car aficionados. Why, because people didn’t want to drive a Jetsons-esque bubble car and for many, the technology alone wasn’t enough to make them buy – even if it was good for the planet. Conversely, people are willing to consider an electric car if it looks and behaves like something akin to a sports car. Tesla brought together the hard rights of the electric car technology with the soft design rights of much-loved sports cars, bringing a significantly more desirable offering to market than was previously available.

Google hoped to do the same in their venture with Luxottica. Complementing this, in order to distance the Glass technology from the realms of tech-geeks, Google has also linked up with one of the matriarchs of global fashion, Diane von Furstenberg, for the ‘DVS Made for Glass’ collection to be launched at high-end fashion retailers.

Google has essentially piggy-backed the strong high-end fashion brand equity held in Diane von Furstenberg, Oakley and Ray-Bans (the soft rights of the form) to take its Google Glass technology (the hard rights of the function) out of purely the world of tech geeks and make it mainstream.

What this highlights is that how things look is really important, not just the function. Image matters. These are both classic examples of bringing hard technology rights together with soft design rights with the sum of the parts being greater than the whole.

Coming back to the Google Glass – Luxottica deal. Having established that the combination of rights is providing each player with significant potential value, what does this mean for either player in terms of acquisitions?  Is Luxottica now an acquisition target for those outside fashion sunglasses markets? They have instantly expanded their target market from pure fashion to functionality, having dabbled here previously with MP3 and HUD devices. Also, they are likely to be some of the first to market with the Glass offering, providing them the opportunity to establish themselves as market leaders in the new field. Luxottica will now be developing an expansive IP portfolio (whether registered or not) relating to the innovations around getting Google Glass to look good – or at least good enough! These are all likely to raise the company’s desirability and may provide the major shareholder and company founder, Leonardo Del Vecchio, the exit many self-made businessman desire.

In summary, technology rights alone are often insufficient to develop a mainstream consumer market upon – design rights and eventually branding are required to take innovation to the next level. This can either be done by hard slog - building your form from the function up, or by partnering with a player who has an established brand (form) upon which you can leverage your function.  


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