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Protecting intellectual property for small businesses

For any company, securing funding and managing cashflow can be two of the most challenging parts of the business. Often finding the budget to protect your Intellectual Property (IP) can be difficult.  IP may seem like an unnecessary cost or one that you simply can’t afford. Robert Games, Managing Director of Albright IP explains the importance of turning these perceived IP expenses into investments….

So, you are starting out in business, you’ve spent money on research, product development, branding and marketing. These are all necessary costs, but if you don’t protect these aspects of your business then they will only ever be expenses, because you are not adding any long-term value to the business.

However, if you protect the work you do by registering your brand as a trademark, your designs through registered designs and your technical developments as patents, then you're creating value and investing in the future of your business. 

Do I need to protect my IP?

IP allows you to quickly create value in the business. In the UK, trademarks can be protected indefinitely; designs can be protected through registration for up to 25 years and patents offer protection for up to 20 years. This IP value (dependent on what you do) could last for the lifetime of the business, or certainly for the lifetime of the product that you're trying to promote.

On the other hand, it can be a very costly process if you spend money on development and branding but don't consider IP early enough. For example, if you haven’t checked to see what other similar brands exist, or what other patents or designs exist in your field of operations, you run the risk of unwittingly treading on someone else’s toes.

Changing a design and/or packaging is an expensive process and negotiating away an infringement position can be stressful.  You can save yourself money and stress by thinking carefully about what it is you are trying to achieve and then undertaking some research.Once you are satisfied that your branding and product is different to the competition, you need to protect yourself, otherwise you won’t gain a monopoly on the work that you have done. This means that you are potentially giving something away to your competitors and handing them a head start on your position. In a competitive trading environment, that could be highly detrimental!

Why use a patent attorney?

The legal process of obtaining patents is relatively complex. It is also essential to get it right first time. This is because if your first attempt at a patent application falls short, you have essentially disclosed your product to the competition without protection. 

When applying for a patent there are many ways you can potentially handicap yourself from the outset. For amendments to the application to be allowable downstream, they must have basis in the application as it was filed. It is therefore essential to include plenty of descriptive wording at the beginning that can be drawn upon later for amendments. A patent attorney will be experienced at crafting such wording and will have a good idea of what may come in handy later.

As mentioned above, filing a patent application is expensive, so you need to have confidence in the content of that application. If the original drafting was poor, it could cost you a lot more money to fix it further down the line, particularly if that application gives rise to several foreign or divisional applications which would inherit the same problems. 

It is therefore essential that your application is initially drafted in the correct way to make the most of your business opportunity. Inventors will of course understand the technical complexities of their own products and innovations, however, they may not be best placed to phrase these technical features in the kind of language expected by patent examiners.

Patent offices apply rigid and highly specific rules to decide whether an application is allowable, and it can be difficult to foresee and understand their objections if you are not familiar with these rules. An experienced patent attorney will know what to expect and will be able to draft your application with the examination in mind, giving you the best possible chance of obtaining a granted patent.

IP can help you build your business

To build a business around a product or a series of products, you need to protect your IP. If not, then you are very much at risk of being copied. With the prevalence of copying, particularly in China, and the low value which is associated with most commodities these days, without IP rights your product may have very little value associated with it.

To gain value, you need to obtain a monopoly through IP rights (this might involve filing one patent or multiple patents around the same product). Only then will you create a significant deterrent to third parties copying you.

It is possible that an infringer will not be deterred by your patents, trademarks and designs, or will not be aware of them. However, the vast majority of infringement cases settle out of court and so it is relatively easy to use your IP rights to stop infringers.

This is where product marking comes into play. Marking your products with ‘patent pending’ or ‘patented’ lets people know that you've filed a patent and deters them from infringing. You should mark your packaging and products and put notices on your website to keep people up to date with your IP filings. This also ensures that infringers can have no excuse.

Keep improving

As a business, it is very likely that you will continue to develop your products and it’s essential to keep protecting these innovations. These advantages or improvements can effectively help you to extend the life of your patent protection. If you're five years into a patent and you develop an improvement on the patented technology, then you will be able to file a new application to the improvement, limiting infringers to copying outdated versions of your products when the original patent term runs out. This way, you can ensure that you are always ahead of the competition. This can create significant tax benefits, as income from patented products or processes is subject to significant tax relief under the patent box scheme.

Overseas Protection

IP rights are territorial and if your business has ambitions of manufacturing abroad, then it's very important to protect in these locations as well. The ethical practises overseas are not the same as the ethical practises in the UK and the competition can be much harsher, so it is imperative that you seek protection wherever you plan to manufacture your product. 

This will add additional costs to the IP process. You will need to budget for these costs 12 months after the original patent application, which is the deadline for overseas filings. To buy more time it is possible to use an international application under the Patent cooperation treaty, which effectively extends the window for foreign filings for another 18 months. 

When you start, prepare for the end

It’s very hard when starting a company to think about succession planning and your end game, but if you eventually want to sell your company then IP will play a big part.  As part of the due diligence for a sale, any purchaser will want to know that they have the exclusive right to use the brands and products which have been established. They will also want to know that they are not at risk of infringing other people's patents. The seller will need to show that all their IP has been filed correctly to get maximum value.

Invest now to save in the future

My advice would be to talk to a patent or trademark attorney at the earliest point to develop a strategy setting out how you should approach your IP. The penalty for getting it wrong can be severe. The IP disclosure rules mean that if you accidently disclose your invention then you won’t be able to get a patent and your options for protection will be extremely limited – this could mean the end of your company.

Investing in IP can also be thought of as a form of tax planning, due to the previously mentioned patent box tax relief scheme.

Build access to funds into your business plan at an early stage to enable you to get some protection in place through an attorney. It's always difficult at the start of any business to try and find sufficient funds to protect your products and brand, but ultimately protecting your IP is a very worthwhile investment which will create value in the company and more importantly help to keep it there.

Robert Games is a patent attorney and Managing Director of Albright IP, writing on behalf of the Chartered Institute of Patent Attorneys.