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Most businesses possess some form of intellectual property, whether it’s a design, trade mark, or even a customer database – but many miss the opportunity to maximise the commercial and financial benefits.
Last updated: 17 Nov 2020 6 min read
Many small businesses evaluate their current position and performance based on tangibles such as cash in the bank, stock inventories and orders in the pipeline. But failure to understand and assess intangible assets, such as the intellectual property (IP) of your business, means you could be overlooking some important growth opportunities and ignoring risks.
Guy Robinson, deputy director of innovation at UK government agency the Intellectual Property Office, says: “All businesses will have some form of intellectual property. IP rights include things such as patents, trade marks and designs – and there are quite a lot of softer rights, such as trade secrets, database rights and marketing collateral.”
Robinson recommends that businesses should make efforts to assess what IP their firms own, and to understand the role it plays – and the value it adds – to their success.
He explains: “Having this more formal insight can lead companies to be more innovative. The IP rights’ framework is there in order to give companies the confidence to innovate: because you can protect your IP, there is an incentive to engage in innovation because there are ways of then monetising that creative spirit.”
The IP in a business can range from processes and product designs to trade marks, artistic creations and trade secrets, such as a special recipe for a food or drink product.
The Intellectual Property Office has an IP Health Check tool, which helps businesses understand these assets. “The tool has a number of modules which look at commercialising options, and supports businesses to adopt best practice in dealing with their IP,” Robinson says. “You’ll get a confidential report at the end that outlines some action points and guidance on how you might go about putting any of its recommendations into practice.”
It is also a good idea to look at your competitors’ IP, he adds. “If you are aware of what other people are doing in the market you can make sure you are not treading on their toes – and that they are not treading on yours.”
The assessment process should highlight the potential risks your business faces in relation to IP. For example, what might be the impact on your firm if a competitor obtained information about the processes you use, or one of your customer databases?
There are a number of options for protecting your business’s IP rights: patents for inventions and products, and trade marks for product or company names, are perhaps the most common. But firms can also officially register designs, and are entitled to automatic protection in areas such as copyright, which covers writing, film, music and web content.
“Lots of businesses start up internationally or have aspirations to export, so you need to consider IP in other jurisdictions – and that might be best assisted through professional advice”Guy Robinson, divisional director of innovation, Intellectual Property Office
To ensure risks are fully understood and mitigated, businesses should think about IP as early as they can – perhaps even in the pre-start-up phase, Robinson says. “Starting as early as possible means you might avoid future stumbling blocks. And bear in mind you might need external help in some areas. A lot of our services are aimed at individuals and are geared up to businesses doing this independently. However, specialist IP advice is available through the Chartered Institute of Patent Attorneys and the Chartered Institute of Trade Mark Attorneys. Businesses may be able to arrange a free consultation with a member through their websites.”
He adds: “You need to realise also that IP is territorial. Lots of businesses start up internationally or have aspirations to export, so you need to consider IP in other jurisdictions as well – the IPO has information and a global IP Attaché network but direct assistance might be best sought through professional advice.”
Protecting and taking advantage of your IP can help your business in a number of ways, Robinson points out. By registering a patent or trade mark, for example, you can obtain a competitive advantage by making it more difficult for competitors to take your market share. IP can also form an important part of the overall package when it comes to obtaining finance from banks or venture capitalists. It can give them added confidence in your business security and competitiveness – making your business a more attractive investment opportunity.
“Potentially lucrative business models such as franchising and licensing also depend on IP,” he says. Franchising involves allowing another firm to use your trade mark and business model to set up in a new area or territory, while licensing is where a business or inventor permits another company to use their IP – for example to manufacture a product.
“IP can also allow you to enter into collaboration with other companies, or with institutions such as universities.” The Intellectual Property Office has a business-to-business toolkit, which supports best practice with collaboration opportunities: this also provides insights into how to protect such arrangements, for example with contracts and non-disclosure agreements.
Finally, a full understanding of a firm’s IP can play an important role in mergers and acquisitions, Robinson adds. “The value of a business you are selling is much more likely to be based on intangible assets such as customer lists, your brand and the skills of your team, than the value of the stock you hold or the equipment your business owns.”
If you want to sell your business, you and any potential purchasers will therefore be able to value it more accurately if you can clearly set out what IP will be included in the sale.
Robinson says businesses should take the following approach:
Find out more via the Intellectual Property Office.
Leadership and Management