Intellectual property (IP) is intangible property. Any business may own patents, trade marks, designs and copyright just as it owns physical property, such as land, buildings or machinery.
IP might be the most valuable assets that a business can own, demonstrating to the world your ownership a technical invention, a brand name or presentational style, a design or computer software.
Some IP needs to be formally granted, such as patents: qualifying trade marks and designs should be registered. The costs of patenting are usually considerable. Registering trade marks and designs are, however, considerably cheaper if you are confining them to certain geographical markets or specific products or services. Other IP comes into existence automatically and without cost: copyright or unregistered trade marks may nevertheless become extremely valuable.
Why is intellectual property important?
For as long as they remain in force, IP rights consolidate investment and inherent value by reflecting attributes of your offerings and their reputation. Registered trade marks are particularly good value since they may be renewed indefinitely. It is easier to enforce them without so much of the complex evidence needed to establish a case for passing off.
Parties attempting to make use of IP without consent of the owner can be prevented from doing so by court order. Damages or surrender of profits may be obtainable.
Enforcement actions may come at a price, but they are an essential aspect of preserving the value of your business. Early action by registration will save money in the long run and avoid problems that may not be fixable in the long run. Funding the acquisition of IP must be supplemented by an enforcement budget for taking action against all infringers.
Last year, the UK Intellectual Property Office concluded that industries that were significantly reliant on IP accounted for £166.5 billion of value-added output, £37.1 billion of exported goods and 5.1% of total UK employment. Owning IP is vital to your company’s balance sheet. You may derive significant revenues from licencing IP locally or internationally or selling it. It is possible to raise capital on the basis of lending secured on IP rights.
If you are planning an exit strategy, it is essential that your entitlement to IP is verified and its scope fully understood. The goodwill that trade marks in particular can embody may be realised to considerable advantage on sale of the company. Asset sales have collapsed when it is discovered that target companies do not own the IP they think they have got!
How do successful companies regard intellectual property?
Any well-managed start-up will have developed an IP strategy at the outset. It will then accumulate the necessary IP rights. Companies which are IP-positive are likely to have a greater chance of success than those who just don’t “get” IP. Full understanding and sound management of IP will generate investor and consumer confidence. The demonstration of understanding of your IP is good marketing strategy.
I am a start-up business. What should I be doing?
If your enterprise is based on a new brand, investigate the use of similar brand names or product styles in your sector by your competitors. Industry sector knowledge, a general internet search, and specific trade mark and domain searches will help in this regard. If relevant, the register of designs may also be consulted. These steps are usually inexpensive. Patent searches are however quite an art and specialist professional advice should be obtained.
Assuming that you uncover no conflicts after all necessary clearance searches have been completed , consider the categories and geographical areas in which you file applications for patents, registered trade marks and designs.
Software source code is protected by copyright. It is often created by independent contractors and not employees. Accordingly, some software owners overlook the fact that they don’t own the copyright unless it has been “assigned” to them in writing by the original creators.
Where your business is the commercialisation of novel technical innovations, you would generally rely on having significant investor funding in place. This is a necessity to meet the significant costs of research and development followed by the patenting a qualifying invention.
One pitfall that is often encountered with potentially patentable inventions is failure to keep the specifics of the invention secret. Insist that any collaborator at an early stage accepts that the specifics are disclosed in absolute confidence. So you put in place a non-disclosure agreement (NDA) before any details of the technology are shared. It is an essential qualification for patentability that protectable inventions must be “novel”, otherwise the possibility of patenting your product simply disappears.
For more information on all IP matters, please contact Laurie at laurie.heizler@twmsolicitors.com.
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