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Does your IP fit your business plan?

Does your IP fit your business plan?

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Patent and trade mark attorneys Jan Vleck and Will Ponder discuss the importance of aligning your intellectual property with your business strategy and provide three practical steps in order to achieve this.

If you are a business based on a Science Park then the chances are that you are generating valuable intellectual property (IP). IP can include, among other things, patents, industrial designs, trademarks, trade secrets and copyright. And if you are a business that generates valuable IP, then it should be an integral part of your business plan.

While you might have a clear idea of where IP sits in your business plan when the company is founded, as your business evolves, it is all too easy for your IP strategy and portfolio to become divorced from your commercial plans. Some of the IP you hold and are paying to maintain may no longer be commercially, or you may not be taking adequate steps to protect IP in a new area of the business. And if you are looking for investors, buyers or partners for your business, it is vital that you are able to demonstrate effective and diligent management of your IP.

So how can you ensure that your IP portfolio and strategy fits your business plan as your business evolves? As with most things, it takes effort and organisation to do it well. However there are three practical steps that can make a big difference.

Keep your IP advisors informed of your business plans

Letting your IP advisors know what your business plans are and the opportunities you see for the business on an ongoing basis will help them provide you with the best advice on how IP can add value.

IP can add value to your business in different ways. It can add value by excluding competitors, can be used to generate revenue through licensing or sale, can be used to take advantage of tax breaks or funding opportunities, or can be used simply as a marketing tool to demonstrate to the market that you are an innovative company.

Sometimes IP is identified first and commercial decisions about what to do with it need to be made. For example, if one of your employees comes up with a new invention, you need to decide such as whether to apply for a patent or whether to keep it secret instead, where and when to file patent applications, and what form of patent claims to include.

All of these decisions should be informed by how a patent application would add value to the business. Other times the commercial situation drives the identification of IP. For example, if you are launching a new product for which you have not filed any patent applications, there could be considerable financial benefit to filing a patent application covering all or part of the product in order to take advantage of the Patent Box tax regime.

Typically, when you first take on a patent or trademark attorney, you will have a discussion with them about your business plans and how IP can benefit the business. But it is important that this discussion is repeated frequently, especially if the direction of the business changes or diversifies, or there is a change in the amount of funds you can devote to IP. It is easy to forget what you have and have not told your advisors, and so a regular meeting in which you provide an update on your plans is good practice.

Pay close attention to IP ownership

If IP forms part of the business plan and is part of the value of the business, then the business needs to own the IP, or at least to have rights to exploit the IP. In particular, you need to be able to demonstrate clearly that you own any IP that claim to own. This will be required by investors, buyers, and business partners and may be required by the courts. It may sound simple, but it can be difficult if ownership is not sufficiently documented at an early stage, ideally before any IP is generated.

Ownership is typically straightforward for IP generated solely by employees. But if, as the business develops, collaborators who are not employees, such as consultants, joint developers or students, become involved, the situation can become complicated. You need to have written agreements that detail who will own any IP generated in place before any IP is generated. In those agreements relevant background IP that was generated by each party before the collaboration should be identified, so it is clear what each party brought to the table.

Even in cases where all inventors or authors are employees, you may wish the IP to be owned by a different legal entity for commercial reasons. In that case, written assignment documents should be prepared clearly showing how ownership of the IP has changed.

Don’t be content to rely on verbal agreements and that ownership issues can be resolved later if needed. It really is worth the time and effort to get written agreements in place at an early stage.

Review your IP portfolio frequently

IP should add value to the business in some way. But some IP, such as patents or IP that you license from other parties, can in fact be a drain on the business if they no longer add value, as they cost money to maintain. Because patents and registered designs need to be applied for before you know if they are going to be commercially successful, the best strategy very often involves filing a number of applications and then dropping those that turn out to be of no or limited value. You should review your IP portfolio regularly and discard IP that no longer adds value to the business or that takes up resources that would be better used elsewhere. This is an important part of demonstrating due diligence in managing your IP.

As well as reviewing your existing IP, you should also make sure that your strategy for pursuing new IP is still appropriate and fits your IP budget.

For your IP to fit your business plan, you need to view it as an asset that needs to be actively managed rather than something that is just accrued over time.


This article features in the Autumn 2014 issue of the UKSPA magazine Innovation into Success. Read online at http://www.scienceparks.co.uk 


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