As the pressures of managing and growing a small business take their toll, one item is often overlooked on the “to do” list and that is Intellectual Property (IP).
Business owners juggling several different tasks may believe that IP protection does not apply to them, they may even be of the opinion that they have no IP. This simply is not the case. Up to 80% of business valuations are based on “intangible” assets, IP can be a significant factor in a company’s valuation and future commercial success.
So what is IP. There are effectively 4 different types which we’ll cover briefly here:
Trade marks: These protect what is often viewed as your most important asset of all … your brand. A trade mark adds value to your business but can also be revenue generating if you look to license your products / services or you look to create a franchise.
If your exit strategy involves your company being purchase one day, as part of their due diligence many potential purchasers may be put off by a lack of registered trade mark rights being in place. If the trade mark is available, whilst not obligatory, it is strongly advisable that you look to secure it.
Industrial Design Right (IDR): As the term suggests, IDR is concerned more with how a product looks than how it operates i.e. its shape, pattern, colour, etc. To have a design registered it must be new and display different characteristics to other products already in existence.
IDR comes into its own in terms of importance and value if your business is operating in industries where copying of designs is a constant issue and threat i.e. fashion, furniture, etc.
Patents: These can provide a significant commercial advantage over your competitors. Essentially, a patent prevents another individual or company from producing, using, selling, or importing the patented idea/goods/services without your (patentee) permission. You can also look too incorporate a royalty income by licensing your patent to other organisations.
However, obtaining a patent can be an expensive process, so important questions need to be asked i.e. how could your business exploit the patent? Do you have the ability (desire and resources) to enforce the patent?
Copyright: This can be commercially advantageous in preventing your competitors from copying your creative output. It typically incorporates most literacy works i.e. manuals, computer programs; musical and artistic work like technical drawings, diagrams, etc.
We have only just provided a very brief outline of each of the four kinds of IP, more detailed information can be found at the Intellectual Property Office (www.ipo.gov.uk).