IP - Ten Essential Tips for Getting It Right
CEME Innovation Centre guest speaker Fiona Nicolson, Intellectual Property expert at Bristows, outlines a guide to managing IP for small businesses.
Does your business understand and manage its IP effectively? If the answer is ‘no’, then you could be running the risk of not only losing out on a range of commercial opportunities, but also inadvertently infringing other peoples IP rights.
Intellectual Property, which Mark Getty characterised as “the oil of the 21st Century”, represents one of the biggest challenges and opportunities facing businesses in the manufacturing and engineering sectors today. It is a well known fact that, knowledge assets today represent a much greater proportion of most companies’ valuations than hard assets, and savvy businesses should be making moves to protect and make the most of them.
Despite this, it’s not uncommon for small businesses and startups to have no Intellectual Property strategy for their business whatsoever, believing that the subject is too complex to master alone and too expensive to have handled by external experts. However, the facts are that by following 10 simple steps, any SME can ensure that they can avoid the most common pitfalls and protect themselves through straightforward and easily managed procedures in relation to their IP.
1. First, understand what aspects of your business constitute IP. Intellectual Property is a term covering a broad range of subjects including patents (protects inventions), copyright (protects recorded works like software & books), trademarks (protects distinctive brands or badges of origin), design rights (which safeguard the shape and configuration of products) and know how, which protects ideas and concepts.
2. IP rights are an SMEs friend. They are designed to ensure that the people who create ideas are rewarded for their efforts and support fair business practices, enabling individuals and start-up businesses to compete on a level playing field with larger companies. Small companies shouldn’t be deterred by imagined expense or misinformation they may have read in the press - these rights are highly valuable and can be a crucial component in developing your company.
3. Remember that we’re talking about a key business asset. Handled correctly, your Intellectual Property can offer opportunities for commercialisation, licensing and extended sales, generating income and adding value to your SME.
4. Investigate the potential for licensing your IP. Contrary to popular misconception this is one of the cheapest and least risky ways to exploit Intellectual Property and can provide small businesses with a wide variety of options for conducting new business domestically or abroad.
5. Establish ownership from the start. Under UK law an employer owns the IP created by its employees working “in the course of their employment”, but contractors and consultants generally own everything they create by default - even if you commission it - so ensure that any external consultants assign ownership to your company with a simple contract.
6. Confidentiality is imperative. Failure to keep your IP (and details of your IP development) confidential increases the risk that someone else will discover your processes and infringe them. Certain IP - such as patents and trade secrets - may not be protected if they are not kept confidential, so ensure that third parties made privy to corporate information sign non-disclosure agreements first.
7. Be aware of your own obligations. It is your responsibility to ensure you are not infringing someone else’s IP, and transgressions can result in financial penalties or injunctions that could significantly impact upon your company. You are responsible for safeguarding your own Intellectual property, and should be aware that you can endanger your rights through lax enforcement.
8. If you’re considering doing business internationally, remember that IP risks rise with geographic distribution. Trade marks, like most IPRs, are territorial, so you must develop an understanding of the IP laws governing countries in which you make, buy, or sell your products
9. Be careful what you say when publicising your IP. Publication can seriously damage your IP and commercialisation opportunities as patent protection may be refused if your ideas have been made public. At the end of the day confidential information must be kept confidential to be protected at law, so make sure that your business plan and IP development efforts are aligned to ensure that you capture IP at the appropriate times.
10. If this seems like a lot of hassle, consider that rather than being the sole preserve of large companies, an IP strategy can often be a key differentiator for an SME. Shareholders increasingly expect directors to protect and manage the company’s intellectual property responsibly and thanks to new UK legislation, patent profits are subject to a 10% tax rate rather than the usual corporation tax rate through the new patent box.
A proactive, well designed IP strategy can help support and drive the growth of your company and is fast becoming a business prerequisite for SMES, particularly in the manufacturing and engineering sectors. Creating this scenario doesn’t have to be expensive and can be for the large part managed internally, but it is worth understanding when you need professional advice – it’s much cheaper and easier to seek counsel ahead of time rather than after a real issue has emerged.