By Martin Brassell, CEO of Inngot
Every day I speak with business owners who don't believe they need to worry about Intellectual Property (IP), or haven't even considered it.
Those who believe they don't need to worry about it usually have some inaccurate misconceptions about IP. That's why I have exploded some of the most common myths surrounding IP.
IP doesn’t matter to me, because I’m not an inventor
Think again. IP is everywhere within the knowledge economy. It protects the products we buy, the services we use, the apps we download, the music we listen to, the books we read, the films we watch… in fact, it can cover pretty much anything with a distinctive name, appearance, sound, look or feel.
A typical start-up, for example, has very few physical or monetary assets and pretty much all of its value is in one form of IP or another. If you create a plan, a database of potential targets, some software code, a great new design, a piece of marketing material, a logo or a great name for your business, then you are creating IP.
Also, if you’re not thinking about your own IP, that means you’re not thinking about anyone else’s. How do you know you aren’t infringing someone else’s rights, and risking threatening letters and court proceedings?
But IP is about patents, isn’t it?
Not the case. IP is much broader than patents, which protect inventions. The other main members of the IP family are trade marks, which cover brands; designs, which relate to the physical appearance or styling of things; and copyright, which covers creative works of all kinds, including software.
As well as these formally recognised IP rights, there are many other types of ‘intangibles’ – non-physical things – that businesses often own. These include recipes, trade secrets, internal processes, contracts and know-how. They all need to be kept secure and treated as business assets, just like computers, offices and machinery.
Ah, but IP protection is expensive
Not true at all. Copyright protection, for example, is automatic. You can register a unique design for a product in the UK for as little as £60 for the first five years. You can start to protect your brand name for just £170 for ten years, if you self-file your application online.
If you want to take out patents globally, it’s certainly true that your bills will add up – but for a typical patenting strategy, significant costs don’t usually occur for two and a half years after first filing. And you’ll only spend that money if sales opportunities justify it.
But I don’t want to get involved with IP, because I can’t afford to defend it if challenged or sue someone who infringes it.
This is a poor excuse. Without an IP strategy, you risk having absolutely no case to argue, and nothing to bargain with, to defend your business against accusations of copying. You also make it very difficult to take action against anyone who tries to rip you off.
The majority of cases where infringement is alleged never come to court. Instead, they end up with licensing agreements that often prove beneficial to both parties. Nowadays, there’s also an IP Enterprise Court that makes it affordable for smaller claims to be brought or defended. Either way, if you’re not in the IP game, you don’t get to play.
After all, IP isn’t really worth anything, is it?
This is the biggest mistake of all. IP can be worthless – or worth billions: it depends on what it is and what you do with it. The thing that you can absolutely guarantee is that if your venture is successful, it will spawn copycats and imitators. Without IP, how are you going to show that your offering is the ‘original and best’?
More importantly, if you ever intend to sell your business, your IP is going to be a major determinant of how attractive your company is to a buyer, and what they will be prepared to pay for it. When a big company buys a small one, around 30-40% of the price paid is normally attributed to ‘identifiable intangible assets’ like IP – and the goodwill associated with the business can be worth the same amount again.
Overall, UK companies spend about £130bn each year on IP and intangibles – or one-third more than they spend on ‘hard’ assets. There’s a reason for this: know-how is what really drives our modern economy.
Inngot provides web tools to help companies identify, manage and value their IP, and provides IP Masterclasses for the GrowthAccelerator programme. It has just launched the ‘IP Manifesto’ - view and vote on it here: www.inngot.com/manifesto.html