IP assets to foster sustainable business models in the fashion industry

The importance of IP assets to leverage the environmental, social, and economic impacts of sustainable innovations, also in the circular economy, is currently a much-debated topic in the fashion industry.

Indeed, companies are increasingly pursuing sustainable business models to reduce negative social and environmental impact and stimulate sustainable production and consumption by relying on innovative products or green technologies, which typically involve some combination of formal (e.g., patents, trademarks) and informal (e.g., know-how, data, trade secrets) IP tools.

Although different degrees of IP protection can be associated to sustainability-focused fashion business approaches, it is crucial that IP strategies are aligned with business models to ensure better decisions for creating and delivering sustainable value (people, profit, and planet) and broader stakeholder value.

IP for Sustainable Value Propositions

The value proposition of a sustainable business model focuses on superior customer value, coupled with clear benefits for society and/or the environment while delivering a profit.

Against this background, IP generation (in-house R&D, co-development, etc.) and sharing (controlled and selected licensing or sharing free of charge) are suitable to address:

• value propositions targeting social sustainability, which may involve offering products, services, and technologies for social groups that have not been served before. An example is represented by Tommy Hilfiger’s collection for disabled people, Tommy Adaptive, which includes essential fashion pieces with modifications such as adjustable hems, one-handed zippers, side-seam openings, adjustable waists, and magnetic buttons to make the fashionable designs disability-friendly.
• innovative products, services, and technologies seeking to improve the environmental impact, which embed different features that involve several IP assets in the form of patented inventions, design rights, trade secrets, and trademarks. The footwear company ACBC, for instance, patented ZipShoe, a sole with a reduced ecological footprint which allows the creation of many different shoes.
• profitability and sustainable economic benefits, as IP is at the core of protecting companies’ investments, their brand, and their offerings.

IP for Sustainable Value Creation

The value creation in a sustainable business model takes into consideration sustainable practices related to key stakeholders, activities, and resources. IP assets play a crucial role as a signaling tool to attract investors, collaboration partners, and suppliers, in terms of:

• IP access and knowledge sharing through partners’ collaborations, to acquire technologies, know-how, and IP rights related to sustainable innovations. In this regard, sustainable brand collaborations can be a great opportunity for knowledge-sharing between businesses. Many social and environmental innovations in the fashion industry are still nascent or unproven at scale but combining the expertise of smaller pioneering brands with the size and platform of larger businesses can foster better practices. A prominent example features Elvis & Kresse five-year partnership with Burberry, launched in 2017 to save and use at least 120 tonnes of leather offcuts produced each year for a range of luxury products.
• Sharing innovations, e.g. through memberships, licensing, or other agreements, to help companies move towards sustainability pathways.
• IP licensing by working hand-in-hand with suppliers, who can be licensed IP rights to turn supplier relationships into strategic partnerships aimed at addressing sustainability challenges.
• IP generation for improvement through R&D either by in-house or collaborative technology development. Such activity is key not only to generate IP assets (e.g., patents, design rights, know-how) but also to improve operational processes.
• IP pooling, pledging, and sharing through engagement in open innovation projects. Collective efforts, based on trust, can reduce costs, accelerate innovation and share unused knowledge and innovative ideas. This view inspired Yoox Net-a-Porter and Prince Charles’s Foundation in the creation of an artisanal collection by harnessing A.I. tools thanks to Politecnico di Milano’s research laboratory.
• Knowledge and know-how of human capital with reference to employees. The latter are considered the most relevant resources in many companies, not only to perform R&D activities to generate IP assets but also to contribute to the execution of sustainable-related activities.

IP for Sustainable Value Delivery

The value delivery considers sustainable practices in terms of how the value reaches different customer segments, customer relationships, and channels for a positive environmental and social impact.

The role of IP assets comes into play within the following B2B strategies:

• IP generation and protection for own exploitation in the target market segment.
• IP licensing and IP transfer to attract IP-seeking business customers: companies may commercialize their IP instead of products in the market for this customer segment involving companies.

• Trademark licensing and co-branding for value delivery in new markets. For instance, in 2019 Reformation worked with New Balance to create a new, eco-friendly version of the 574 and X-90 sneakers, based on recycled polyester and Bloom algae foam. The project featured on Lyst’s top collaborations of 2019 and was a sell-out success that generated a waiting list of more than 11,000 customers. It benefitted both brands in different ways: giving Reformation visibility in the eyes of footwear consumers and boosting New Balance’s sustainability credentials.

• Reuse of freely accessible online platforms, domain names, and open access contents as channels to deliver sustainable social value to customers.
• IP sharing, end-of-life cycle, and post-sale service in B2B market: companies establish agreements to provide services in order to deliver more value, by allowing IP access to help extend product lifetime through repairing, recycling, and remanufacturing services, which are aligned to the circular economy principles.

Four IP-related activities are especially relevant for customer relationships.

• use of open-source IP sharing involving users (in particular, expert customers) in the innovation process, in terms of addressing collective interests and scaling-up sustainable solutions.
• open-source IP sharing and crowdsourcing to retain customers: obtaining valuable feedback from customers for sustainable solutions through crowdsourcing may help strengthen the relationship with customers.
• sharing of IP, product end-life cycle, and related post-sale service towards sustainable value delivery.
• use of trademarks and certification marks for communicating sustainability messages to relevant customer segments. This strategy involves ownership and own use of IP, particularly trademark as a branding tool to convey brand messages to build customer relationships. More information can be found in our previous article “Sustainable fashion: do “green” trademarks actually communicate CSR commitments or just provide misleading information?”, discussing the role of trademarks for sustainability.

For a more in-depth analysis of the integration between IP and sustainable business models, also beyond the fashion industry, please consult the main source for this article:

Hernández-Chea, R.; Vimalnath, P.; Bocken, N.; Tietze, F.; Eppinger, E. Integrating Intellectual Property and Sustainable Business Models: The SBM-IP Canvas. Sustainability 2020, 12, 8871.