Business Law & Compliance

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SMEs need to be robust on intellectual property

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A comprehensive IP strategy considers just about every aspect of a company’s strategy and can underpin the business in many different ways.   

“Certainly any investor will want to know that any small business owner has the necessary intellectual property rides over his or her ideas,” said James Reynolds, an advisor on patent law. “The Intellectual Property Act 2014, which came into force in October, tidies up many existing provision affecting SMEs, especially around design. In particular it allows the UK to join the Unified Patent System, an EU-wide initiative and it’s changed to the definition of a design and the ownership of design rights.”

Previously claiming IP on designs was very often the preserve of large business, something that John Mitchell, of the SME Innovation Alliance, argued had pushed the UK patent system in “crisis”. 

But, even with this extra help from the law, small and medium-sized enterprises are often lax when it comes to protecting their intellectual property, say experts.

“It’s important for an SME to think about IP from when they first have their business idea,” explained Jackie Maguire, CEO at Coller IP – a consultancy that specialises in helping organisations protect, understand, value and commercialise all aspects of intellectual property/intellectual capital. “Once the ideas behind a company have been shared widely it can be very difficult to gain protection. If a trading name is stolen, for example, the value of the business gained through branding, reputation and associated good will can be undermined overnight.

SMEs are often not aware of the many ways the IP in their business can help them, she says. “We hear much from governments about how innovation, especially in the SME sector, is the key to driving European competitiveness and growth. Yet many companies struggle, even though they have a clear vision of the business future they want to create, and talented staff and management teams.  

“They are hampered by not being able to access the financing they need to see them through to the next growth stage. They often do not have the track record or collateral in terms of assets that banks are looking for in order to lend to them.”

“Intangible assets can help small and medium-sized enterprises to raise capital, to borrow and to attract investment because it can be viewed as collateral,” added James Reynolds.

“Companies that don’t pinpoint where the IP value lies in their business don’t fully present the commercial value in their organisation, and it is not usually accounted for on the balance sheet,” commented Maguire. “Many entrepreneurs therefore miss an opportunity by not convincingly presenting IP as an asset to investors making investment decisions. A little work to pinpoint the value of the intangible assets can be extremely valuable. 

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When it comes to IP, there are three key issues to consider. One, business owners need to understand what they have and the value of it. Two, they need to protect it. Three, they need to look at how to enhance and commercialise it.

The first step is usually to undertake a thorough audit of all the intangible assets in the organisation. When intellectual property is discussed, people usually think of filing patents, and perhaps registering trade marks and designs. This is indeed all part of it. But a company’s value is contained in its wider intangible assets. This includes so-called “know-how” as well as branding, skills, policies and processes. Ideas and inventions may be fundamental to the company but the wider intellectual capital often drives growth, profitability and access to markets. Written materials, customer contact lists and bespoke materials can all form part of your intangible assets.

So, once an organisation understands its intangible assets and their value, it next needs to ensure that protection is in place. 

“Obtaining patents for innovative developments and inventions gives you rights to stop others from making, selling, licensing, distributing or otherwise profiting from your invention for a limited period of time in exchange for a public disclosure of that invention,” said Jackie Maguire. “Patents may not always be necessary and there are a range of other tools that can give protection, including trademarks, registered designs, copyright and trade secrets. If trading internationally is on the cards, protection of IP in the areas in which a company is planning to trade should be factored in.”

The third key part of the IP process is to look at how to develop and commercialise the IP. It is important to assess and track the commercial potential of products and services at different stages of development. This process also prompts decisions on how and whether to protect the underlying assets.

Bridgethorne, based in Berkshire, provides a range of professional services encompassing outsourcing, consultancy and training to companies with operations primarily associated with the sales of consumer products. These services are based on a combination of the knowledge and skills of its key staff, the majority of whom have predominantly fast moving consumer goods (FMCG) marketing and sales experience and the know-how that has been developed in servicing a wide range of clients since the company’s formation in the late 1990’s.

A combination of Bridgethorne’s continued success, its ambitious strategic growth plans and informal discussions with intellectual property specialists Coller IP, resulted in the latter being appointed to evaluate the opportunities for the company to secure more comprehensively the value of its intangible assets (IA).

Coller IP worked with members of the Bridgethorne board to develop an understanding of how the different elements of Bridgethorne’s IA contribute to the inherent value of the business and their importance for underpinning the future business growth strategy.

Coller IP was also appointed to carry out an audit of the full range of intangible assets contributing to the company’s value across all its operations.

Following the audit, Coller IP evaluated the company’s IP and IA and highlighted the strengths and weaknesses of the intangible assets associated with its range of operations and services. The company prepared a report and presented key recommendations, both for immediate and longer term action. These actions are subsequently being implemented in an appropriate and timely manner.

“Coller IP provided us with an in-depth insight into an area we knew little about, but which is clearly very important. We have subsequently consulted the team on several occasions and found their input extremely valuable.” said John Nevens, managing director at Bridgethorne. 

Image: Shutterstock

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