What Intellectual Property Might You Have, and How Might You Use It?
A piece of intellectual property (‘IP’), like a patent or a registered design, gives you a monopoly in an intellectual creation, provided you pay fees and maintain its registration. The state grants you this monopoly for a period, to reward you for thinking up the idea and developing it. Softer and more general IP, like know-how and trade secrets, which are protectable via contracts and confidentiality rather than registration, does not give you a monopoly, in that it is open to someone else to use the idea if they come up with it independently, but nonetheless can be very valuable and should be treated like property (i.e. safeguarded, valued, and exploited).
Know-how is anything you know which is valuable and not known to others, and can range from highly technical trade secrets to general business know-how like your market intelligence, your strategy and your processes.
A lot of your organisation’s know-how may lie in the heads of your employees and, in this case, it is at risk of leaving along with them, unless you get that know-how written down and embedded into your organisation. It is a good idea to put in place IP policies and procedures for staff, particularly if you have important trade secrets. Clauses in your employment contracts can also help, especially to reduce IP leakage when an employee leaves.
IP can be valued as part of your business. To do this, you need to identify all the types of IP you own, record it to embed it into your organisation, and establish your ownership of it via a solid paper trail. Anyone looking to buy your business will latch on to any weaknesses in your IP ownership and use them to negotiate a lower price.
In the case of IP which is capable of registration, register it, as a registration provides much stronger protection: it makes it easier to sue infringers, and helps to warn off would-be infringers. It is cheap and easy to register trade marks and designs.
Consider creating an IP holding company, into which your group sells its IP but from which it leases it back. This protects the IP from the normal risks of a trading company.
In addition to boosting your company’s valuation by identifying your IP, you can use your IP to make extra revenue by selling or licensing it out in fields of use and territories you are not looking to exploit directly. If licensing IP, be careful when talking to potential licensees, as they could steal your ideas. Apply for a patent before disclosing the idea, if possible. Use confidentiality agreements which prevent the use of your information and ensure that they restrict use of your information to develop complementary products or processes you might want to develop yourself as second generation products, or accessories, later on. Ensure your licence is effective at actually getting your licensee to launch your product in as many countries as possible, and forces them to put a project manager on the project and not lose interest when another project comes their way.
Why is it important to have IP in your idea?
Companies are not likely to invest in ideas which can easily be copied; they tend to look for at least three years’ exclusivity on the market. IP gives you exclusivity on the market. Consider various types of IP: trade secrets, trade marks, patents; even really good customer relationships can count as IP. All of these can give you the head start against your competitors, but all of them need protecting via contracts, registrations, or internal IP policies.