Brain

No matter what the sector, many businesses have an intellectual property (IP) portfolio. Whether it is patents, trademarks, registered designs, copyright or, in almost all cases, a combination of some or all of these, IP legal rights are critical to a business and its growth strategy.

IP can also be a confusing area of law for small businesses, but if managed astutely, it can add real value to a business. Small start-ups looking for investment should take particular care as the investment community is becoming increasingly IP savvy and are keen to see evidence of IP strategies that will create barriers to market entry for any potential competitors. Here we take a look at what businesses should consider from the off when it comes to IP protection and management.

IP awareness

Be aware of the different types of IP rights, what they protect and how they arise. What is the difference between a patent, a trademark and copyright? Do you need to apply for them like a patent or trademark, or do they just arise automatically like copyright? The UKIPO website provides a useful summary of the different IP rights. Knowing the basics will help you identify what IP your business has and what you might be able to do to protect it.

Budgets and strategy

It may be an unpleasant truth to face, but securing IP protection costs money. 50 years ago, most of that value would have been in physical assets (like bricks and mortar). Given that most of a company’s value nowadays is in its tangible assets, such as its knowhow and other intellectual property, it is now vital not only to put together an IP strategy and incorporate it into your business plan, dedicating budget to it in the process.

Ownership of IP

As a business, it is very important to consider who owns any IP (the innovation or fruit of creative effort itself, not just the legal rights) that is generated. As part of your IP strategy, you need to set up processes for capturing all of the IP generated by your staff. If IP is generated by an employee in the course of their employment, ownership is usually straightforward to establish as the IP is owned by their employer under UK law.  When IP is generated by consultants or through a joint venture, the situation becomes less clear cut. Without a written agreement, the legal ownership of IP may also vary depending on the type of IP (eg patents, copyright). The best advice is to have a written agreement regarding ownership of IP before entering into any collaboration that could result in IP being generated.

Protection of IP

Once you have generated IP, you need to consider how best to protect it. Do you need to think about filing patent or other applications for protection? Before you get to the stage of consulting an IP professional, you need to make sure you keep the IP secret. This is especially important with patentable inventions, because all public disclosures before filing count against a patent application when it is assessed by the patent office. Any disclosure you make that is not confidential (eg under a non-disclosure agreement) could prove fatal to the patent application, including discussions with potential investors, or trials of a product.

IP strategy

Think about how you can make IP rights work for you and make sure your IP strategy is aligned with your business strategy. This can include geographic considerations of where your markets might be, where your production might be and whether you need to think about protecting your IP overseas. It is important to review your IP portfolio continually and consider whether your IP rights are still useful. If you find you have IP rights in your portfolio that are no longer relevant to your business, you might consider whether it would be of use to someone else. Because IP is an asset, you can sell it or license it to another party to generate revenue. You don’t have to sell or license to a competitor, as many patents relate to technology with applications across a number of different commercial fields.

Other people’s IP

As well as protecting and utilising your own IP, you also need to consider the impact of other people’s IP rights on your business. It is a common misconception that having a patent or a trade mark gives you the right to use the brand or innovation. It does not. What IP rights give you are the right to stop other parties from using your IP. This means that even with a patent, you can still infringe other people’s rights. Before an expensive product launch, for example, it is worth commissioning “freedom-to-use” searches to check for other parties’ patents, trademarks or other IP rights that you might infringe. It can also be worthwhile carrying out regular “watching” searches to see what IP right applications are being filed in your field or by key competitors.

With investors insisting more and more on investee companies applying for patents and other IP rights before investment, if not securing them altogether, businesses need to be on top of their IP management from the off. As your business grows, the way you manage your IP will need to change and become more sophisticated too – in the same way as your people and service management does. However, the more familiar business owners are with IP from the beginning, the better the foundation for business growth.

 

By Thomas Prock, Marks & Clerk