So you have a brilliant business idea and are considering applying to Dragons’ Den? While a great idea will turn the Dragons’ heads, without the foundation of sound business finances and intellectual property (IP) protection, the Dragons will not invest.
Entrepreneurs applying to the Den often appreciate the importance of “knowing the numbers” of the business. More commonly overlooked is the equally important IP protection.
Protecting your IP could be the difference between success and failure. Here we take a look at what you should consider in relation to IP protection before entering the Den.
1. IP awareness
Different types of IP rights exist (e.g. patents, designs, trademarks and copyright). Be aware of the differences between the rights, what they protect and how they arise. An idea that is easily replicated and is not protectable is not an attractive investment.
The UK Intellectual Property Office website provides a useful summary of the different IP rights. Knowing the basics will help you identify what IP your business has and how you might protect it.
2. Keep your idea confidential
This may appear counter-intuitive considering you intend to disclose your idea on Dragons’ Den. But great ideas are often copied. Keeping your idea confidential until you obtain IP protection protects against this risk. Moreover, patent protection is generally not available once an invention has been publically disclosed. If you need to discuss with third parties (e.g. designers, manufacturers, investors etc.), use a non-disclosure agreement.
Even after you have applied for IP protection, if you intend to disclose your idea, be very careful that you don’t disclose any additional developments that are not covered by your existing IP.
3. Pursue IP protection as early as possible
IP protection allows you to challenge counterfeiters and infringers. Having IP protection in place sends a clear signal to investors that you are committed and have belief in your business model. This can help to drive a better deal. As mentioned previously, waiting until the idea has proven successful in the market may be too late for obtaining certain IP rights.
Make sure you consider who the owner of any IP is. If IP is generated by an employee in the course of their employment, the IP is generally owned by the employer under UK law. Other arrangements, such as the generation of IP by consultants or through a joint venture may be less clear-cut.
To avoid ownership disputes, we advise having a written agreement regarding ownership in place before entering into any collaboration that could result in IP being generated. Similarly, we would recommend having an agreement in place if there is any doubt regarding ownership of pre-existing IP rights.
5. Keep records
Records of conversations, correspondence and minutes of meetings are useful not only for your own reference, but also as evidence in the event of any subsequent ownership disputes. The same applies to design drawings, mock-ups and prototypes.
There is no denying that securing IP protection costs money. This cost is offset by the fact that IP rights are valuable, tangible assets. Good IP protection can greatly enhance the potential value of a business. It’s therefore crucial to assign a realistic part of your budget to IP after considering the appropriate level of protection required.
7. Territory and Strategy
Think ahead. Where will your biggest markets be? Where are your competitors based? If you will be manufacturing, where? IP rights are territorial, so make sure you have protected your IP in the relevant overseas countries. Having overseas rights shows the Dragons that you are serious and have an understanding of the worldwide market.
8. Other people’s IP
IP protection is primarily concerned with restricting third party activity. Contrary to popular belief, it’s still possible to infringe another’s rights even if you are within the scope of your own IP rights (it’s complicated!). Before applying to the Dragons’ Den, consider other parties’ rights.
9. Know the status of your IP
Some IP arises automatically (e.g. copyright). Other IP (e.g. registered trademarks, patents) must be applied for and examined. To proceed to grant, this IP has to meet certain criteria.
We recommend keeping updated on your application’s status as this can indicate how close (or if) your application is to being granted. For patents you can obtain an initial opinion as to whether your application meets the criteria by requesting a search opinion from the national IP office. A favourable search opinion or an application at a late stage and close to grant could boost the value of your IP. This could improve any deal offered by the Dragons.
10. Seek professional advice
On a final note, IP can be a confusing area of law. We would always advise seeking professional advice as early in the project as possible.
By Laura Carney, trainee patent attorney, Marks & Clerk