Intellectual property is one of the most important assets of a company, whether it is a small start-up or a large multinational.
It can provide market advantage, revenue-streams through licensing, and/or a basis for outside investment. Despite this fact the role of IP in business, both how to obtain' and use' it, is generally not well understood.
Innovation sets your company apart from others, and is critical to the success of the business. IP is that innovation and can be found in many forms. It includes both technical (e.g. small improvements to existing products or processes, radical changes to existing products or processes, or the development of new products, processes or uses) and stylistic (e.g. designs of products and brands) aspects.
Without IP protection a company will not maximise the benefits of those innovations. Patents, designs, trade marks and/or trade secrets (IP rights) provide companies with tools for protecting their innovations. However, creating an effective IP portfolio from those tools can be a serious investment in terms of time and money.
The types of protection appropriate for an innovation will depend on the commercial circumstances. For example, one product or service could require protection by several IP rights. Alternatively, it may be more valuable to keep an innovation secret (e.g. a recipe or know-how).
A company's IP spend should be commensurate with the commercial value of the innovation and therefore, companies need to consider how that innovation can support their business and how it is going to be used to add value. Ideally, there will be a defined procedure for formally identifying innovation at an early stage and whether to seek protection.
In making such a decision consideration should be given to whether the innovation will become public on release of the product/service (which could prevent obtaining IP at a later date); the likelihood of competitors making (and possibly protecting) the same innovation; how easy it is to design around the innovation in terms of R&D cost; whether failing to obtain IP protection will result in loss of profit margin; and whether is it possible to obtain revenue through licensing.
Almost inevitably, as time progresses, events will occur which affect an innovation and its IP protection. The commercial climate may change. Further innovation may occur - development of ideas can, and usually does, lead to changes in products and services.
It is imperative that companies monitor for, and protect, new innovations to avoid leaving valuable IP unprotected and thus free for competitors to adopt, and potentially protect themselves. This also includes considering whether IP rights are still pertinent to the business, and if not whether the rights can be licensed or sold to generate revenue.
As mentioned above IP rights are valuable, particularly as they can be used to prevent competitors exploiting your innovation and provide a commercial edge. It must be remembered that IP rights do not provide freedom to exploit an innovation as other companies may have relevant IP. However, the burden of enforcing such rights falls on the IP right holder.
Time should be invested in watching the activities of competitors.
Exclusivity over an innovation can only be maintained by, where necessary, enforcing your IP right. Where exclusively is not essential, the possibility of obtaining revenue by licensing (or selling if no longer of value) the IP right should not be overlooked. Failure to do this can undo years of planning and sometimes waste costly investment.
IP rights are also considered highly valuable by investors, because monopoly rights allow a company to strengthen its position with customers, partners and competitors.
This in turn increases investor confidence and therefore the likelihood of investment and/or government grants. Of course, the biggest benefit to a company is the increase in its value! Companies with IP strategies which protect market-relevant IP and manage it in a cost-effective and constructive manner give themselves the best possible chance to be successful and to maximise the benefits of their investment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
