Why you need an Intellectual Property (IP) strategy
“Do you have IP?”, “have you secured your invention and/or brand?” I bet you have heard these questions at least once during your entrepreneurial career.
The members of Dragon’s Den just love to bring up the Intellectual Property (IP) subject when grilling the brave entrepreneur on national TV. Not surprisingly, as IP is considered a risk-reducing asset that, if present, shows the entrepreneur knows what he or she is doing.
Drop the IP subject at a networking breakfast session and thoughts about marble-floored law offices in the Shard, expensive Harvey Spectrelike 3-piece suits (SuitsÒ, a US-TV show) and pay-by-the-hour for a phone enquiry rise quickly. After all, IP is a legal matter, a necessary expense right?
IP matters are often addressed during critical phases such as inventions, fund raising, infringement, M&As, insolvencies etc. At these times, a consultant (i.e. attorney) is hired to tend to IP matters, hence IP is booked as an expense on the balance sheet.
With over 80% of an SME’s value in so called intangible assets (of which IP is a large part of), it is surprising that the subject that is crucial to the business is not constantly checked and updated by the management. IP should be in alignment with the company’s business plan (and deserves more than that 1½ a page section in the business plan, please).
For instance, UK-based company A is focussed to grow via franchising, hence their brand is of key value. Their brands are protected in the UK, but their marketing has already reached the EU (hello Brexit...) and China, increasing the risk for copycats. Just Google StarbucksÒ vs Xingbake.
It’s not all bad however. Within the Oxfordshire region, the importance of securing inventions via patents is well understood and the entrepreneur has a plethora of capable providers to choose from.
Inventions often form the basis of the company and are protected by patents, which include a list of claims to keep the competition out. As the majority of companies’ exit strategy is to sell the business, IP due diligence and valuation highlight the strength and value of the IP portfolios.
Did you know that carefully drafted patents with brief and broad (rather than that lengthy lists of) claims easily are worth one more digit? Add a second digit if it could be used for litigation purposes.
The key message here is make sure your IP is treated like your product development, marketing and sales. It requires a strategy to get the most value out of it, otherwise it remains an expense and liability. The strategy should outline processes to capture, protect, value and monetise the IP during the entire lifetime of the company, from foundation to exit, and involve all members of the company.
Table 1 shows an overview of some of the key factors to consider in developing an IP strategy. Companies that provide this commercial and legal IP advice, such as Coller IP, are present in Oxfordshire to address these challenges.