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PatSnap co-founder explains dangers of scaling up without laying the groundwork

If you scale up too fast without nailing your intellectual property, you could be in for a disaster down the line. PatSnap explains.
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If you scale up too fast, you put your whole business at risk. Here’s a guide to laying firm foundations and intellectual property, and making sure your ideas are protected before they go to market.

If you’ve just had your million-dollar idea, you’re probably raring to get going and get your idea to market as quickly as possible. Yet while it’s great to be enthusiastic about your idea, it’s important not to act too hastily and forget the old adage – look before you leap.

In all the excitement of starting a new business or launching a new product, it can be all too easy to make silly mistakes or slip up when it comes to intellectual property– as many entrepreneurs know all too well.

Before you launch a new business or idea, you need to be absolutely sure the time is right and that if you take your product to market it will be fully protected, but how can you ever truly know?

We caught up with Ray Chohan, VP for corporate strategy at PatSnap, a Sequoia backed firm specialising in helping new businesses and new products get to market.

Intellectual property: Scaling up and innovation

“This year, R&D [research and development]expenditure will be over $2tn, and that figure is a mixture, so companies like Amazon, Apple, Tesla, government R&D, organisations like Innovate UK, and universities like Imperial College or Stanford,” said Chohan.

“The global 2017 R&D spend will be over $2tn, but what’s interesting is that R&D productivity has declined 65 per cent over the last thirty years – meaning on average, a firm is seeing 65 per cent less growth for each dollar spent. The R&D system to date is disturbingly inefficient.”

To guide businesses through its route to market, PatSnap offers software and services that allows businesses to identify and vet ideas before taking the plunge and beginning development.

Get intellectual property right from the start

Intellectual property (IP) and patents are not just for the big players, and PatSnap also works with a lot of SMEs who are looking to take new ideas to market.

“If large companies make mistakes on a product bet, they most likely don’t go bankrupt, but if an SME/startup owner makes a mistake on a new product, potentially they’re out of business,” warned Chohan.

Chohan said there are several boxes an idea has to tick. Is the idea novel? Is there market demand for the idea? Are the partners and the technology I need available to deliver the idea?

In considering the IP position of the idea, there risks are two-fold. Firstly, if you create something and leave it’s IP unprotected, you put yourself at risk of copycats stealing the idea for themselves.

Take, for example, Catherine Hettinger, the inventor of the fidget spinner. The Guardian recently reported that Hettinger held the patent for eight years, but surrendered it in 2005 due to the cost of the renewal fee. Now, they’re everywhere, and she isn’t making any money off her invention.

Alternatively, if you create something and don’t check existing patents, you risk litigation. Either way, failing to check patents and other IP can spell disaster for a business trying to scale up.
“If your product is successful, that’s when people come knocking on your door. That can be the most challenging position for an SME owner, because they’ve put all that blood, sweat and tears into building out a product and it’s become successful and lo and behold they’re paying litigation fees and people are demanding royalties.”

Typically, PatSnap works with businesses at the bleeding edge of technology – whether that’s ideas around human genomics, mixed reality, new applications within AI. But Chohan is keen to stress that it’s not just these types of businesses that need to think about IP before scaling up.

“I know with SMEs on shoestring budgets, IP can be a challenge. But honestly, if you Google ‘patent trolling activity and SMEs’ the litigation and penalty fee stats are quite scary,” he said.

“Innovation analytics and patent analytics should be top of mind from the very beginning, or it can come back to bite you when you’re making money and becoming a success.”

This article is part of a wider campaign called the Scale-up Hub, a section of Real Business that provides essential advice and inspiration on taking your business to the next level. It’s produced in association with webexpenses and webonboarding, a fast-growing global organisation that provides cloud-based software services that automate expenses management and streamline the employee onboarding process.

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About Author

Letitia Booty

Letitia Booty is a special projects journalist for Real Business. She has a BA in english literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.

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