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Intellectual Property in the Language Services Industry

The language services industry is all about providing, well, language services. Services, as a rule, are something that are incredibly hard to patent or trademark. 

You cannot patent the act of translating any more than you could copyright a verb. This doesn’t mean that translation companies haven’t tried to get a competitive advantage by building and protecting their own intellectual property (IP). Usually this comes in the form of either patenting a technology or a certain workflow process. Most of the time, though, the technologies and the workflow processes are so interconnected that it is difficult to distinguish one from the other.

Technology, of course, can be a major factor for language technology providers (LTPs) whose core competency is developing and selling language software and tools. These tools usually take the form of computer-aided translation (CAT) tools, workflow and enterprise resource management (ERP) tools, or machine translation (MT) engines and the artificial intelligence (AI) that drives them. For the typical LTP, it is abundantly clear that technology can majorly influence the market relative to their niche. LTPs will want to guard their intellectual property fiercely, as this holds the key to their competitive advantage in the industry.

As for LSPs, most license software from one of the leading LTPs in the industry, rather than develop their own. However, many multiple language services providers (MLSPs) and all of the massive multiple language services providers (MMLSPs) in the industry have worked to develop their own tools so that they don’t have to be reliant upon a third party for tools that are absolutely critical to their process. Additionally, LSPs seek to differentiate themselves from their competitors by having more efficient toolsets that can reduce internal costs, manage overwhelmingly complex and agile localization programs, and create value for end clients by easily integrating with the clients’ systems.

Source: WIPO.int

Think of an MMLSP that is doing US $50 million in business with a large technology company in Silicon Valley. They were able to win the contract by convincing the client that their proprietary software adds more value than their competitors’ solution does and that it will seamlessly integrate with the client’s systems. The fact that the MMLSP alone holds the patent to this tool powerfully decreases the threat of a new entrant coming in and stealing the business. New translation companies just do not have the resources to quickly come up with equivalent, IP-protected tools.

A little further down the supply chain, we have contract language professionals (CLPs) working as freelance translators for the MMLSP. If they are translating using the MMLSP’s toolset, then the threat of new entrants to them may be very high. If the MMLSP controls the environment in which the work is being performed, then it can at any time choose to replace any CLP with a cheaper newcomer. 

Basically, if you are working with tools or processes that are not your own, you are easier to be replaced with a new entrant.

The factor of intellectual property can be very powerful or virtually meaningless, depending on the position of the business you are in. For an LTP that develops CAT tools or a language service buyer (LSB) that is investing in their own machine translation engines, IP is everything. However, a small LSP that uses standard processes and publicly available tools may not have any real IP to speak of. This is why it is impossible to provide a standard analysis for the industry as a whole and it is important to make sure to analyze it from the perspective of your business.

For more on intellectual property in the language services industry, see our book The General Theory of the Translation Company.

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