Three Good Reasons to audit your IP.
- 1. Your competitors can and will copy you and diminish or ruin your business.
- 2. Lack of IP cover means investors aren’t interested.
- 3. Your opportunity to expand, export and sell your business can be compromised.
Most business owners set up their businesses with a view to making early sales of their products and services, and to generate income as quickly as possible. Understandably their focus is the creation of the best product / service and/ or supply for their customers. However, in the drive to set up a business, get paying customers and the associated revenue, the intellectual property (IP) in the business can and often is over-looked. This is entirely understandable. But did you know that serial entrepreneurs and big businesses put their IP ahead of the game?
In a survey by Entrepreneur Magazine, the number one business mistake serial entrepreneurs admitted making in their early days of business was to over look their IP when they started out.
So why is getting early stage IP important?
Let us explain
- 1. Loss of opportunity and commercial advantage.
In the case of registered IP such as patents, trade marks or registered designs, there is a limited opportunity to register the rights. In fact with patents the window of opportunity is very limited indeed. If registration of IP rights is not undertaken early competitors can easily take advantage of a new entrant to the market. Designs and ideas can be copied. Brands imitated, and technology reverse engineered. In the absence of registered rights, a new company has limited legal power and cash flow to stop this. What gave the new company a commercial edge can be hugely diminished by another competitor imitating the very thing that made the new business different from the rest.
- 2. Investment by third parties.
As a consequence of 1 above and your inability to be unique, investors or other potentially interested third parties will be reluctant to invest. If you have ever seen dragon’s den, then you will know how often businesses are asked if they have filed a patent or have good contracts in place. In one memorable episode Hillary Devey ripped up a distribution agreement as it contained terms that were very unfavourable to the company asking for investment. If you want a bank or an investor to invest in your business then it is vital that you get these things right. An investor WILL crawl all over your contracts and your IP – remember why? See Entrepreneur Magazine! Those investors and those dragons will all have made those IP mistakes. It isn’t unusual for investors to walk away from investment when the company discloses that technology has not been patented for example. Why? Well investors don’t have confidence in a management team that has made that decision.
- 3. Selling the Company and expanding it.
If you are truly building a business with hopes for expansion, growth and even export, then remember, you have to put the right building blocks in place. After a few years it is easy to get complacent and to say your contracts don’t need to be re-visited and IP doesn’t matter. Or to believe that the early stage IP is in place but never re-visit the issue of the value and importance of your IP. However, when you are in your lawyers / accountants offices looking at selling your company, these things matter a great deal. Have you missed vital tax breaks with the Patent Box scheme? Are your trade marks in order? What do your licensing revenue streams and royalties look like – can they be improved? It isn’t unusual to find that you get to the final week of a trade sale and low and behold thousands is wiped off the sale price of the Company because for example your trade mark portfolio is in disarray and needs rectifying. At one memorable completion £40,000 was wiped off the bottom line because the trade mark portfolio needed work on a global level.
At Virtuoso Legal, we haven’t just learned IP from the books; we’ve learned it from our clients.
What you need to know.
IP and the contracts that cover its licensing and monetization are vital to any business. They should be the corner stone of your strategic planning.
IP underpins most commercial and technical innovation in businesses and therefore their future prosperity. As a nation, we are no longer mass manufacturers of goods. Predominantly, our future is in innovation and creation. The UK economy now generates most of its income from bespoke manufacturing, engineering, software, chemicals, pharmaceuticals and the creation of world class ideas, music, TV, brands, technology and innovation for the World to enjoy.
The key to much business growth in the UK is export. You MUST have your IP in order before you export.
If you want repeat business from your customers then brand identity is vital. Consumers these days have masses of goods and services to choose from. If you want consumer loyalty and customers to ask for more of you and not the competition you must have a brand.
IP is a vital business asset. In the past the cornerstone of many businesses was a property portfolio and similar assets. Now it is their IP. Investment in the UK is backed up by Government incentives such tax relief on research. ALL investors and buyers will ask about your company IP. Your competitors will monitor it and may take advantage of chinks in your armour.
Virtuoso Legal – making Intellectual Property easy.
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