IP know how

Did you know that at least 75% of a company’s value rests in its intellectual property (IP)?

Faced with this little-known fact, many fledgling business owners would probably spend more time focusing on protecting their IP in the early stages. Thankfully, our latest Catalyst Centre tenants were given the opportunity to do just that, courtesy of an interesting seminar given by IP expert Laura Trapnell from the leading legal team at Paris Smith. Here, we share some of her valuable advice.

Laura stressed, that while many don’t seem to realise the importance of IP, this really is something that needs to be considered right at the very beginning – indeed before most other things. Avid watchers of Dragons Den know that there are some inevitable questions that will be asked, including: what makes your company different and what are you doing to stop others copying you? This is because the savvy Dragons know the financial value of having a powerful brand that will withstand the efforts of copycats to steal innovative ideas. The bottom line is: either recognise and register your intellectual property rights, or keep everything confidential and don’t tell anyone anything (hardly a formula for business success!).

So, where do you begin? It’s a good idea to think about all of the intellectual property assets that your company has, or will have in the future. Hard IP will be things like branding, trademarks and patents, but don’t forget soft IP too which would cover ideas that are yet to be formalised and developed.

First consider ownership. Intellectual property is owned by the creator of the work, unless it was created by an employee working in the company’s name or if the work was formally signed over. So, if you are having a website created for example, make sure that the contract specifies what elements of the site are owned by your company, as opposed to the web company. In the case of employees, make sure that your employee contracts state that all work is owned by the company and reinforce this with an exit interview should they leave. Avoid shared IP ownership wherever possible as this will adversely affect the value of the company for potential investors.

Next, think about IP protection. Branding is a good place to start and Laura recommended using any spare cash to get your brand registered as a trademark straight away. Consider both your company name and its visual representation via logos/typefaces etc. Think longer term here: if your business plan is to trade internationally, then checks must be made to ensure that similarly named companies don’t exist in the markets you plan to work in. If other companies exist which appear to be too similar to yours, or if a large company has the same name as yours, then change it. Create differentiation at the outset and you’ll not only have a better chance of standing out, but also you’ll reduce the risk of an established business coming after you. Remember that there are two kinds of trademarks: a ‘TM’ symbol is something that should be considered a trademark but it is not officially registered as such. Registered trademarks are denoted by an ® symbol and can be legally defended.

It’s also advisable to think about Copyright. Copyright can be asserted using the © symbol for anything tangible and unique that your company produces, such as written work that is going into the public domain. You can do this without charge and it lasts for the lifetime of the creator plus 70 years.

Depending on the type of business that you are building, you should consider Patents.  Patents are a way of protecting technical innovations and advances and they last for 20 years. Once you have a patent, this information is publicly available so be careful not to disclose how anything works in terms of software/algorithms/coding for example. This way, if someone does replicate your work, you will know straight away and will be able to enforce the protection a patent offers. However, Laura recommended not applying for a patent unless you know your geographical market and can afford to enforce it there – otherwise, it’s best to keep everything extremely confidential until you can because, once information is in the public domain, it is no longer patentable. Ultimately, this is a tricky subject so it’s essential to speak to a patent lawyer to find out what would be best for your company.

Finally, Laura gave two words of caution. Firstly, while intellectual property is a critical start-up consideration, it’s not something that can be forgotten about later. As your company grows, task one person to be responsible for keeping on top of the IP, whether new registrations or renewals. Secondly, she advised keeping your corporate head on at all times, even when with family and friends, to keep your intellectual property – and your company’s potential value – safe.