It’s their ideas, patents and copyrights that make brands such as Apple, Nike and Amazon so valuable.
Even for smaller companies IP is particularly valuable these days. Developing new IP is the key to developing the value of the company and licensing their IP to larger organisations is a significant earner for many smaller businesses.
Professional associations and regulators such as the Intellectual Property Office are increasingly looking to help SMEs protect their IP. This week, for instance, the European Commission revised its rules on the transfer of technology across the European Union from 1st May this year.
According to Pat Treacy, head of the competition practice at law firm Bristows, the licensing of technology is a vital tool for the spread of technology and the encouragement of innovation as it enables companies to develop and sell improved products, while inventors can profit from their innovations.
She believes that there has been some shift in the European Commission’s position with a change to ensure that SMEs are able to protect themselves when licensing to larger companies.
“This will particularly benefit small biotech firms and technology start-ups that will be able to terminate arrangements more easily if their intellectual property is challenged,” says Treacy.
However, SMEs still face serious challenges when it comes to managing their IP.
“SMEs often think about IP too late, sometimes after the ideas have been shared too widely and when it is then not possible to gain protection,” says Jackie Maguire, CEO of Coller IP, a consultancy specialising in commercial intellectual property management and evaluation.
“Steps need to be taken before disclosure to stake a claim to its protection and particularly if patent protection is to be secured.”
Maguire argues that SMEs tend not to bother investing in registering IP because IP costs are typically not understood nor budgeted for. “In fact, registering IP need not be expensive, and can save a great deal more expense and heartache later,” she says.
“If someone steals your trading name, product name or ideas they are in effect stealing the heart of the value built in the business. SMEs typically don’t take time to understand IP issues in the same way they might approach financial, technical or HR matters. This can be very shortsighted.”
One common mistake when protecting IP is to rely too much on lawyers, says Dr Chris Donegan of IP consultancy Fraserburgh. “The IP strategy may not require a patent filing, and in any event the decision about what to do next requires a good understanding of the competitive environment, business goals for the SME and its shareholders and understanding of the direction of product development,” he argues.
Another error is to ignore infringement. “‘We will out innovate them,’ is not a realistic strategy,” he says. “If you have a patent you must defend it. Otherwise you destroy your business as competitors will see you are a paper tiger.”
Five way for SMEs to protect their Intellectual Property
1. “SMEs should consider IP as a key and valuable business asset from the outset,” says Jackie Maguire. “This will ensure that, in the midst of the many demands on the time of a business owner, IP does not get forgotten about. It is important that ideas, trading and product names are protected from the beginning (this is totally separate from registering a company or domain name) to avoid someone else taking them.
2. “Manage your IP for maximum profit,” says Chris Donegan. “The potential for licensing IP internationally is often overlooked but may represent a profitable strategic alternative to building or buying footholds in new markets,” he says. “A significant benefit of expansion through this route is that you establish a real presence in new geographies of markets, which deters unfettered counterfeiting or infringement in those markets.”
3. SMEs should think of IP protection in the same way that they would think about other insurances – the risks are no more or less manageable. “What is the likelihood that your buildings will catch on fire versus the risk of losing the company brand in which you have built considerable value? Few companies will trade without standard insurance packages – why not register IP in the same way?” says Jackie Maguire.
4. Whatever business they are in SMES should protect their brand through trademark protection and securing domain names in as wide “a universe” as possible. “Almost all businesses have an international dimension today and on-line this is particularly true,” says Chris Donegan.
5. SMEs should review their IP protection from time to time to ensure it is still fully protected as the business changes and perhaps goes into new markets where they may not have protection.
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