By Jackie Maguire
Most businesses know that intellectual property (IP) is important; but many are not really sure how to make the most of it. Yet a comprehensive IP strategy affects just about every aspect of a company’s day-to-day business, says Jackie Maguire, CEO of Coller IP.
When it comes to tackling IP, there are three key issues to consider. Firstly, understanding what you have and the value of it. Secondly, protecting it. And finally, looking at how to enhance and exploit it.
If IP is not protected (or not protected thoroughly enough, for example in each significant country where it may be at risk) there is a real possibility that an organisation could have not just its trading and product names stolen but also its ideas and inventions—its very core.
The first step is to undertake a thorough audit of all the intangible assets in the organisation. When intellectual property is discussed, people usually think of filing patents, and perhaps registering trade marks and designs. But a company’s value is contained in its wider intangible assets. This includes so-called ‘know-how’ as well as branding, skills, policies and processes. Ideas and inventions may be fundamental to the company but the wider intellectual capital often drives growth, profitability and access to markets. Written materials, customer contact lists and bespoke materials can all form part of your intangible assets.
Identification of all the valuable intangible assets in a company can be done internally or by calling in outside specialists. Such specialists will undertake an audit, and then, often using specifically designed software tools, will undertake a landscaping exercise in order to understand the intangible assets that are of value. This includes assessing the company’s unique position relative to existing or potential competitors, while at the same time identifying possible opportunities for exploiting any IP further. Once this has been done, the specialist can then put a value on the assets assessed.
So, once an organisation understands its intangible assets and their value, it next needs to ensure that protection is as watertight as possible. Having the right patents and trademarks in place is, of course, important—for example there are organisations that acquire unprotected brand names and then sell them back for extortionate sums; and you need to be able to defend your right to revenue streams from your ideas and inventions in court if you need to. But other areas also need to be considered. For example, does any company you are thinking of investing in have employment contracts that prevent their employees taking ideas to a competitor?
If you are a start-up company, you are going to start to build value in your brand from day one. So check out your proposed trading name well before you launch. This means concurrently considering registrations at Companies House, and trade mark and domain name registries. Make sure you register all relevant trade marks. Remember that trade marks are more than the company name: they can include words, logos, sounds, colours, gestures, brand names and slogans—in fact, any distinctive feature which can be represented on paper and which can distinguish the goods or services of one business from those of another. They can even consist of the shape of goods or their packaging! Registration of such marks can be indefinite as long as the renewal fees are paid.
Obtaining patents for innovative developments and your inventions gives you rights to stop others from making, selling, licensing, distributing or otherwise profiting from your invention for a limited period of time in exchange for a public disclosure of that invention.
It is also important to know if someone else has also made a disclosure connected with your invention which would prevent it from being claimed as novel. Before starting your patent application, you should undertake a global patent search. It can be quite complex to submit a patent that stands a good chance of being granted, and novelty is only one aspect that needs to be considered. Companies should not forget the important role that registered designs, database rights, copyright and trade secrets can also play in protecting intangible assets.
If an organisation is trading, or planning to trade, internationally, the issue of protecting intellectual assets across the globe can be quite intricate, particularly in this digital age, where access to information is so easily available. Wherever possible a company should register its IP rights in its key geographical markets.
Once a decision has been made to seek IP protection, there are a number of elements to consider. Unfortunately it can seem quite a daunting, time-consuming and convoluted process, because each country has different processes and the pitfalls in obtaining IP in each country do vary. For companies trading across several countries, protection of intellectual property is certainly possible—most people would say essential—but not always very straightforward. There are, however, some simple steps that can be taken alongside professional pragmatic advice.
If an organisation has decided to trade in a particular country, it needs to try to extend protection, particularly for its goods, as soon as possible in that country. Consideration should be given to a number of routes, for example, via patents, trade marks and designs—trade marks and designs being a particularly important part of any marketing strategy.
In Europe, there is the European Patenting system which can be used to provide protection across the EU states. When launching products, however, it is also important to consider distribution strategies. This is because in the EU, different trade restraints apply, and it is especially important to consider competition law, which covers the free movement of goods around the EU and the avoidance of the abuse of a dominant position in the market.
Recommendations for the exact route to choose will depend on the countries to be covered, the stage of development of the technology and the nature of revenue streams and cash flow.
Because patent protection overseas can be complex, we recommend taking advice at an early stage to ensure pitfalls are avoided, opportunities maximised and costs are kept to a minimum. It can be time-consuming and costly to sort out errors later. In addition, contracts need to be reviewed on a regular basis to ensure that as organisations and legislation change, full protection remains in place. By taking care to ensure that property and rights are as protected as possible, companies can feel free to trade across borders and ensure they remain competitive in an increasingly global world.
So, finally, to commercialisation and exploitation.
Coller IP has developed a Commercialisation and Management Process that allows clients to understand the value of their intangible assets and to assess and track the commercial potential of their products and services at different stages of development. In addition, the process prompts decisions on how and whether to protect the underlying assets.
It is, after all, your ideas that attracted customers to you in the first place and makes them want to keep coming back. Protecting these assets adds value to your company, and if someone steals these, your market share can vanish very quickly. Intangible assets can be valued in monetary terms and knowing their worth can help you understand their true value to your business.
If your company is now up and running successfully, perhaps you have your marketing in place and you are dying to expand. But until you are sure that all your legal protection is in place, be very careful about doing so. Make sure that anyone with whom you discuss an idea for a new invention—whether a product or a service—has signed a confidentiality or non-disclosure agreement. During the growth and development phase, a company needs to be pro-active in monitoring any infringement of their IP.
IP needs to be fully integrated with a company’s business plan; and, of course, during the life of a company, the plan will change. The IP needs to be reviewed on a regular basis to ensure it is constantly aligned to the business plan. A good IP advisor will not just help a business with the legal protection aspect, they will actively help in the commercialisation process of the ideas behind the goods or services that the company is selling by helping the organisation realise the tangible value of different aspects of the IP.
If your business has been trading for some time, you may be thinking about the next steps for the life of the business. Let’s consider two possible scenarios. The first scenario is where the shareholders of a company, for whatever reason, decide that it is time to either merge with another company or sell. If you are the company initiating a merger or sale, you need to know what your IP is worth in order to retain the maximum value for your company. The same applies if you are planning an IPO. If you are a company that has been approached regarding a merger or is planning to buy another company, it can be very costly if you do not know exactly which intellectual assets are included in such a situation, and their value.
For anyone looking to attract funding, getting the IP in order is a must. Many venture capitalists/angel investors will be considering a range of IP factors when making their decision whether or not to invest. Knowing the value of your IP—or which parts of your IP are more valuable than others—is essential in making decisions about what parts of the business to develop, and when considering applying for funding or contemplating a sale. It is also possible to sell or license parts of your intellectual property portfolio to gain additional revenue.
The second scenario is that a company becomes insolvent. An insolvency practitioner needs to understand the value of the IP remaining in the company. Having IP rights that could be sold on can help the company and its creditors in such a situation.
Organisations trying to value their IP portfolio and who want to ensure that they are fully protected and are commercialising their IP effectively often turn to outside IP specialists for help. The best of these specialists will undertake a range of activities, includingchecking that patents are enforceable and that an organisation can maintain and defend them. Clever patenting can provide many benefits, including an incentive to investors and a deterrent to competitors, and ultimately company survival and success. They will also advise on commercialisation including how to avoid potential pitfalls.
We recommend to our clients that they build an IP portfolio not in isolation but factor in market issues; that the CEO/CFO takes a strong lead in understanding how IP protects and how its value can be built and optimised and that such matters are not left solely to company technologists or the legal department. Senior management needs to realise that intangible assets are the lifeblood of the company. The optimum way of ensuring success is to integrate IP with the business plan right at the start. Putting the right IP protection in place is an important part of the commercial strategy for a start-up or growing business and its investors. They can then all rest assured that the IP underpins investment decisions going forward.
[This post originally appeared at Coller ip Management.]