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80% of your business value is probably intangible

 

– do you know what it is and how to protect it?

© Katrina Burchell 2017 will explain all.

Katrina Burchell is Founder of Burchell Consulting, IP Consultancy providing strategic and legal advice to small and medium sized businesses.  www.burchellconsulting.co.uk

If you are a start-up or a small business you will undoubtedly have some intangible property which is the result of your creativity, knowledge, goodwill and reputation.  This property is called Intellectual Property and is not tangible like your stock or buildings, but just because you might not be able to physically hold it, doesn’t mean it isn’t a valuable part of your business. In fact up to 80% of the value of your business could be in Intellectual Property so why would you not have a strategy in place to look after it?

Intellectual Property (IP) is a complex area of law but it is vital that it is part of your overall business strategy, both at the beginning when you write your first business plan and as you regularly review your business goals and growth.

Firstly, and most importantly,  you need to identify:

What is the intellectual property in your business now and potentially in the future?

Do you own it? And I mean do you really own it – don’t just assume you do!

That you are not infringing the rights of others

That you have suitable protection for your assets

 

Your company’s intangible assets are what separate you from your competitors.  The way you produce your product, sell items or deliver your services, the way you communicate your brand etc. all make your company unique and these differences can give you a competitive advantage if you identify and protect your intellectual property.

 

Just because it is a complex area doesn’t mean it has to be scary or costly– in fact –  at least to me – there is nothing more exciting and interesting than the value in your business creativity, knowledge and brand and here in the UK we have strong and effective laws to look after business assets so long as you take the right steps.

Your passion for your business should equally excite you to look after your assets so let’s look at some of the property that your business already owns and then highlight some questions to ask yourself to put in place a strategy for looking after it.

Your Company Name, Website, Logo and Social Media Sites

When you had your business idea you may have spent a lot of time thinking about what to call your business and probably spent some money registering your company, domain name and designing a website, having logos designed and printing stationery.  In doing this you will have created IP in the form of trade marks and copyright

  • Your company name
  • Your business or trading name (which might be different from your registered name)
  • Your business logo
  • Your business slogan
  • Your website address (domain name)
  • Your social media sites (and the names they use)
  • Your website layout and design

In the UK we have the benefit of common law rights which means that some rights will arise automatically without needing to take any steps to register them.  There are problems associated with that, not least proving ownership as well as the extent to which those rights can protect you against others suing you.  If you are a planning a new business or extension to your already existing business then you have an obligation to check that anything you plan to use in terms of company name, logo, domain name or photographs and images you use on social media or in brochures and advertising do not infringe the rights of other companies or individuals.  Many small businesses overlook this step and encounter problems down the line when they try to expand in geographic area or product/service offerings or when they start to promote their activities.

Mike Tyson allegedly once said “everyone has a plan until they get hit” but you don’t want to be that business that waits until you inadvertently infringe on someone else’s rights or find your rights being used by another and damaging your business.

This is why careful clearance before you invest in and launch your business is a MUST on your to do list.  It isn’t expensive, much can be done by yourself if you know where to look and forethought and a small outlay will save you a lot of money and emotional distress if you are challenged and have to change your brand and re-print material.

You may want to seek protection for some of your key assets and if you are seeking investment or considering licensing or franchising your business then you will definitely need registered rights but in the early stages of a business you should focus on your freedom to use and review the position regarding registration once you are trading.

Your Products or Services

Depending on what you are selling, your products or services may be subject to rights under patents, designs or trade secrets/confidential information, copyright or trade mark laws.  Various elements of your business may be protected by either one specific right or a combination of IP rights including:

  • Your product shape or design,
  • the way your product or service works,
  • your software,
  • images, photographs, drawings, video clips, presentations, brochures or articles
  • information that you have created and compiled to market your business including customer databases, ways of working manuals and
  • the things you write, sing, perform,
  • the names you give your products and services

The products you make or services you provide are the core of your business.  You need to be clear not only about what rights you might acquire or create but whether or not what you plan to do infringes the rights of others.

If the rights belong to others, for example if your business is a franchise, then you need to make sure that you have permissions to use the relevant IP to help your business grow.

Particularly important when you are starting out, you will need to make sure that if you are sharing confidential information with others, for example if you are talking to manufacturers about getting your product made up or your design prototype manufactured, that you have relevant agreements in place about who owns what and what information can be shared and with whom.

You’ll need to make sure that anyone who works with you or for you understands the value of your Intellectual Property and that they respect it and use it according to the agreed ways and that they are bound by appropriate agreements such as contracts of employment, confidential information agreements and transfer of rights agreements.

Companies often claim that people are their most important asset but it’s probably not the people themselves but the knowledge in their heads that is irreplaceable or at the very least, costly to reproduce.  Protecting that knowledge by confidentiality or non-disclosure agreements and documenting key ways of working or company knowledge in protectable documents could add considerable value to your business.

 

Geographical Considerations

Your business may just be local or UK wide or it may cross international boundaries. All Intellectual Property rights are “jurisdictional”.  This means that they are protected only in the country where they are created or registered.   However no business however small can ignore the impact of Intellectual Property laws if they have a presence on the internet and this is particularly important for trade marks and copyright.  The internet has changed the shape of the law in terms of where problems may arise and if you are trading with or advertising to a multinational audience you need to be aware of these points.  If your business is growing and expanding to other countries then you need to think about IP protection beyond the UK borders and changes afoot such as Brexit will have an impact on this.  Further if your products are manufactured abroad then you may need to ensure suitable protection there and will almost certainly need to think about counterfeiters if your dealings are with China.

Your Advertising and Marketing

We are all constantly thinking of ways to effectively promote our business from shop signs, brochures, business cards, presentations and leaflets handed out at networking events.  Increasingly businesses are using social media to advertise and market their products and services.  Getting this right can make a huge impact on the success of your business.  Getting it wrong by infringing another company’s IP rights could embroil you in a lengthy and costly legal battle.  IP claims against you might cover not just use of others photos and images but their slogans, claims, layout or designs or linking to their websites or other promotional material where you create a connection or association with another company.  Ensuring you have a list of your digital assets with dates when they were created could also significantly support your claim against another company who wrongly uses the return on your investment.

And who owns all of this valuable property?

If you watch Dragon’s Den you will know that one of the key questions the investors always ask is “do you own the intellectual property?” – there are two elements to this question that you need to make sure you get right

who owns the intellectual property – you and/or your partners or co-directors as individuals or as a business, anyone you commissioned to create it on your behalf, your employees or former colleagues? and

Are there registrations for your trade marks, designs, patents or clear claims to your copyright which will help establish what the intellectual property is and what it covers?

After investing your time and effort in all this creativity – are you sure, and I mean absolutely sure, that you own it?

Who designed the website?

Who took the photographs for your brochure or social media?

Have your transferred ownership to a legal entity where you have control.

Many companies have come unstuck with their domain name registrations which were registered by employees or using email addresses which are no longer used resulting in missed renewal dates.

In many cases intellectual property will be your most valuable asset to secure finance for company growth and will need to be valued and protected if you are seeking funding.  Investors baulk at questions over ownership or disputes with former partners, colleagues or employees.

 

What steps should you take today?

Whether you are a start-up or young and growing business you need to have an IP strategy in place in your business.  Ask yourself the following questions and if you don’t know the answers or how to find them then seek professional help from your business advisor or from an IP lawyer

  • Have I identified all the IP I own or might own in my business? What are the things that distinguish me from my competitors that if they used they would gain an unfair advantage over me in business.
  • Do I have a strategy in place for checking that anything I use in my business is clear for me to use without fear of a costly claim from another company?
  • Do I or my business own all relevant IP or do I need to update any agreements or arrange for transfer of important key assets from designers, my partners, employees?
  • If I am using someone else’s rights, e.g. under a Franchise, do I have the necessary licenses in place to ensure that I have appropriate permission? Am I following their instructions with regard to good practice in terms of trade mark use.
  • Do I have systems and agreements in place with suppliers, manufacturers, employees to make sure that they respect and look after my intellectual property?
  • Do I understand the strength of my intellectual property and where its weaknesses are? What am I doing to try to improve that position?
  • Do I have rights which I have let others use or could let others use which would add further value to my business?
  • Have I considered suitable protection either by things I can do myself or where I might need the help of a professional? Do I have a budget plan in place to explore suitable protection at key stages in the growth of my business?
  • Do I have budget and resources in place or planned for an appropriate time in the future as my business grows to acquire registered rights in my intellectual property that will add value to my company and help protect my business?
  • Do I have a plan in place if I am challenged for wrongly using intellectual property? Where will I go for advice and support?

Your IP strategy doesn’t need to be complicated, but you need to understand your business landscape and be proactive and aware about what you are creating and how you will protect it.  Like any business strategy your IP plan needs to evolve and adapt over time so put a task in your diary to actively review the position now and update it regularly.

Many IP specialists will give you initial advice or information sheets free of charge.  You can find an advisor local to you at:

Chartered Institute of Trade Mark Attorneys – https://www.citma.org.uk/home

Katrina Burchell is Founder of Burchell Consulting, IP Consultancy providing strategic and legal advice to small and medium sized businesses.  www.burchellconsulting.co.uk

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