Intellectual property (IP) is not just something that designers and inventors need to think about...

1. 18 www.better-business.co.uk Better Business No 199
BETTER BUSINESS INVESTIGATES

2. Better Business No 199 www.better-business.co.uk 19
INTELLECTUAL PROPERTY
I
P is becoming increasingly
important to our economy. Recent
figures from the Department for
Business (BIS) show that investment by
UK businesses in intangible assets grew
by more than 5% between 2009 and 2011
to reach £137.5 billion, while investment
in tangible assets such as buildings and
machinery fell from £93.0 billion to £89.8
billion. Yet there is a danger that small firms
are getting left behind when it comes to IP.
According to a report published by the
Intellectual Property Office (IPO) in 2013,
Banking on IP?, just 2% of micro businesses
found at Companies House had patents
and trademarks, rising to 9% of small
businesses. The report found that many
businesses were sitting on unprotected IP
such as potentially registerable designs or
trademarks, or other forms of intangible
assets.
“There may be a perception that
intellectual property is only relevant to
larger businesses, or those involved in
developing new and innovative products,”
says Victor Caddy, Partner and Trademark
attorney at law firm Wynne-Jones.
“However, that is simply not the case: all
businesses have some form of intellectual
property, but its importance, and the impor-
tance of protecting it, is often underestimated
until it is too late.”
Why bother with IP?
Martin Brassell, Chief Executive of IP
identification and valuation specialists
Inngot, co-authored the Banking on IP?
report. He says two of the biggest dangers
facing firms that don’t pay attention to
their IP are either being copied, or finding
out too late that they’ve inadvertently
been copying someone else.
“If you don’t look after IP, you can lose
everything,” warns Martin. “You’re trying to
establish ownership of things it has taken time
and money to develop, so that if someone
steals them, you can do something about it.”
Another risk is that if your business
relies on information or know-how that
is held in people’s heads, you could lose
it if they decide to leave. For example,
“You want to make sure you understand as
a business who your sales people are talking
to and dealing with and selling to, so it
becomes an asset that the business can
continue to use,” Martin says. “People are one
resource in a business that walks out of the
door every night. Most of them do walk back
in the next morning, but occasionally they
don’t. It’s thinking about all these aspects of
know-how, and things that have been created
through know-how, as business assets.”
Martin also says it’s important for
start ups to make sure they’re entitled
to use particular names for their business
by searching the relevant registers and
databases. “What you don’t want is to start
investing in building up a business and then
find you’re using someone else’s name and
you have to change it, and you’re back to
square one.
“That can be extremely damaging, and
it’s easily avoided.”
In addition, although the Banking on IP?
report concluded that the mainstream
banks aren’t yet ready to start lending on
the basis of intangible assets, a start up
looking for angel finance will almost
Is there treasure hidden
in your business?
Intellectual property (IP) is not just something that
designers and inventors need to think about. Too many
business owners don’t think about IP, in its various forms,
as ‘property’ or an asset with any particular value.
JENNIFER HERBERT investigates.
t
page 20
There may be a perception that intellectual property
is only relevant to larger businesses, or those
involved in developing new and innovative products

3. 20 www.better-business.co.uk Better Business No 199
BETTER BUSINESS INVESTIGATES
t
certainly need to show investors how
they are going to use and protect their IP.
“Private investors always want to understand
how a business deals with competition and
make sure that it has what it needs to trade
legitimately – both of which are closely
coupled with IP,” says Martin. “I’d say with
angel funding it’s really fundamental to have
your IP sorted out, and be able to talk about it
and present it.”
And then, of course, there’s the money
that could be made by exploiting your IP:
until you’ve identified it, you can’t begin to
think about how you could make money
from it.
IP you might overlook
Obviously, you will know if you’ve regis-
tered a trademark or patent, and these are
probably the most well-recognised forms
of IP protection. However, Martin says that
the potential for finding IP in your business
goes much further than this. When carrying
out an audit of a firm’s IP, Inngot uses six
categories – registered rights, copyrights,
contracts, resources, relationships and
endorsements – covering around 60
different types of intangible assets.
“The key thing is to recognise that these
assets are real things and real assets to the
business that generate value, and they need
looking after,” says Martin, who believes
the category of asset most commonly
overlooked by firms is internal resources.
“Quite a lot of businesses have something
secret or proprietary about what they do.
The people who are doing something a bit
different and a bit special often don’t realise
that is an intangible asset of the business
and needs looking after.”
Other potential forms of IP that you
might not have considered include any
software code you’ve developed, which is
automatically protected by copyright, and
customer lists or databases – as mentioned
earlier, if your key salesperson leaves, you
need to make sure you won’t lose the
contacts and relationships they’ve built up.
It’s also important to consider IP when
contracting any external organisation to
produce something for you, because unless
your contract with them explicitly assigns
copyright ownership for the work to you, it
stays with them. For example, the graphic
designer you commission to produce your
website will own the copyright for it unless
the contract makes it clear that it has been
assigned to you. Copyright for anything
produced by one of your own employees
automatically belongs to you, but depend-
ing on the nature of your business, it might
be worth ensuring that your employment
agreements cover these issues properly.
“You just need to make sure as a business
that you own the assets you use every day,”
says Martin.
How you can protect it
There are numerous ways of protecting IP,
and it might be worth getting expert
advice to help you decide on the best
option. The IPO’s website (www.ipo.gov.uk)
has an extensive range of resources
available to help businesses understand,
identify and protect their IP. In particular,
its IP for Business toolkit includes a
free IP health check tool and e-learning
programme for businesses and advisers
to update their knowledge of IP and
intangible assets.
IP specialist law firm Wynne-Jones
suggests the following tips for businesses
to consider when thinking about their IP:
Ensure employment and consultancy
contracts clearly state your ownership
of all intellectual property developed
for you.
Keep a log of evidence recording the
development of intellectual property.
Obtain a commercial intellectual
property audit.
Keep your inventions secret until
you have decided whether or not
their commercial importance justifies
patent protection. Consider filing
an initial patent application for
conceptual ideas to‘plant your flag’
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It’s important to consider IP when contracting any
external organisation to produce something for you,
because unless your contract with them explicitly
assigns copyright ownership for the work to you,
it stays with them

4. Better Business No 199 www.better-business.co.uk 21
and give you some protection while
developing the ideas. Contact a
patent attorney for further advice.
Contact a trademark agent for advice
on using and protecting the name(s)
of your business, products and
services, or any logos or other trade
or brand names you are using or plan
to use.
Make sure you also consider whether
or not international protection is
required for your intellectual property.
Identify any designs (i.e. shape and
appearance of part or all of a product)
that are worth protecting.
Identify materials that are automati-
cally protected by copyright, add
the © symbol with your name and
the date of creation to emphasise it.
Consider enforcing your rights by
identifying breaches, but always
take legal advice before initiating
any action.
Small firms may believe that they don’t
stand a chance against a big company
who infringes their IP, but Martin points
out that if they have protection already in
place, they at least have a‘bargaining chip’
that could help secure a settlement out
of court.
In fact, recent figures show a
dramatic increase in traffic through the
new Intellectual Property Enterprise Court,
set up to give small and medium-sized
firms a more streamlined and less risky way
of challenging IP infringements, suggesting
there is growing confidence and awareness
among businesses that they can act to
protect their assets. The court dealt with
287 cases in 2013, a 52% increase on the
2012 figure and more than double the
number brought during 2011, its first full
year of operation, according to figures
compiled by law firm Hugh James.
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What is it worth?
Trying to put a value on your IP is difficult,
but, Martin points out, if you can put a
figure next to it, you can start to think
about what you spend on these assets
being an investment rather than just a cost.
There are three main methods for
doing this, which can be summarised as
follows:
The cost method – how much it costsl
to create it;
The market value method – howl
much other people are buying and
selling IP for; and
The income or economic benefitl
method – how much you earn from it.
The IPO has published a booklet with
further details on the different methods
of arriving at a price for IP, which you can
read online at www.ipo.gov.uk/iprprice-
booklet.pdf.
In practice, says Martin, most people
go for the income method. He suggests
imagining that you are licensing your IP
to someone else in order to decide
what it could be worth: how much would
someone else be prepared to pay for it,
given how much money you think could
be made from it?
One obvious implication of this is that
IP is only worth as much as you stand to
lose – or someone else stands to gain –
if it’s stolen. A patent doesn’t have any
inherent value if there’s no market for it.
“You come across cases where people assume
that a patent is vital for them to have, and
that the patent is worth money,” says Martin.
“Actually, it’s more what the patent enables
you to do that’s worth money. A patent is a
negative right – it’s a right to stop other
people doing something. It doesn’t necessarily
mean you will be able to do something
fabulous.”
Businesses that are particularly rich
in IP may want to have a thorough IP
audit carried out by a professional. IP audits
worth £2,500 are available to eligible firms
in England through the Government’s
Growth Accelerator scheme – go to
www.growthaccelerator.com for more
details. The IPO and Companies House also
run joint business support events around
the UK to help firms understand how to
protect and exploit their IP – go to
www.ipo.gov.uk/getitright.htm.
Hold onto your IP
Are you sitting on a goldmine? Or even just
a few nuggets? Why not set aside some
time to find out more about different types
of IP and produce an inventory of your
intangible assets and how much they’re
worth to your business. You may unearth
something that could make you money –
or expose an area of vulnerability in your
business that you need to address. nIP is only worth as much as you stand to lose —
or someone else stands to gain — if it’s stolen.
A patent doesn’t have any inherent value if
there’s no market for it
Martin Brassell
is Chief Executive of Inngot
www.inngot.com
The Intellectual Property Office (IPO)
has a range of useful resources
available on its website
www.ipo.org.uk
INFOBANK
INTELLECTUAL PROPERTY