In the know
As business becomes more global, protecting intellectual property is moving up the corporate agenda. Claire Robson asks how to keep your know how in-house.
No company is immune from the challenges of intellectual property (IP).
Whether it's the name you trade under, the products and services you sell, or the processes which underpin your operations, IP drives the business forward.
Many of the most valuable business assets are intangible and safeguarding ideas is key to ensuring the Midlands can compete on the world stage.
Identifying, protecting and ultimately enforcing IP rights is now integral to a robust trading strategy.
"But IP isn't a high priority for most smaller businesses," says Declan Cushley, intellectual property partner at East Midlands law firm Browne Jacobson. "When you consider how much companies invest in research and development and marketing, it's amazing they're not prepared to spend a few hundred pounds on protecting their rights."
A recent survey by Browne Jacobson canvassing Midlands smaller businesses found that just 49 per cent had put in place clear policies and processes to deal with IP. A quarter admitted to taking an ad hoc approach to the issue, while a staggering 22 per cent felt it was irrelevant to their business.
"IP is the life blood of business," says Cushley. "Smaller businesses should recognise it's just as important as any other start-up consideration."
Bringing in a professional to carry out an IP audit will identify the value of IP assets and suggest ways in which to protect them. Some rights, such as confidential information, know how, unregistered designs and copyright works, are unregistered.
But protection provided by patents, registered designs and trade marks requires a far more proactive approach.
And that comes at a price. Managing IP can prove a time-consuming and costly business.
UK patents, designed to protect products and processes from being copied by competitors, take around four years to be granted.
On average, a single patent costs in the region of £35,000 and that figure can rocket for more complicated applications.
"Added challenges arise when you're looking to protect your rights overseas," says Nick Briggs, IP partner at Birmingham law firm Shakespeare Putsman. "When patent costs can move into tens of thousands of pounds.
As more companies look to produce their products in far flung corners of the world, IP issues are moving up the agenda."
Those wishing to extend their protection to cover trade overseas are often faced with hefty bills and a lot of red tape. Although there are international conventions in place, applicants are still required to pay national filing fees, while enforcement in emerging markets can prove a daunting task.
In China, for instance, a lack of an affective legal framework means IP infringements have largely gone unpunished. Be it counterfeit goods or trade mark copying, pirating is rife and sectors such as the software industry have been forced to surrender a large chunk of market share to IP bandits.
"But that's not to say you should give in to them," says Peter Hillier, European patent trade mark attorney from Marks & Clerk. "China has to get its act together with IP protection in order to protect its own businesses from nearby competitors such as Vietnam. UK companies will be able to benefit from that change in attitude. Enforcement may be a challenge, but there are decent local law firms and experts on hand to help."
At the opposite extreme, IP protection in the US is a litigious minefield. "It's a tricky area," says John Hughman, senior technology analyst at Ernst & Young. "Patent infringement suits are becoming ever more commonplace.
Companies with patents for products similar to yours frequently file speculative law suits to chance their arm. You need to be very sure of your legal position and get good advice."
But that advice doesn't come cheap, especially for small companies whose budgets are already stretched. Although most IP disputes are settled out of court, legal action is costly, particularly on an international stage.
A growing number of insurers are offering legal expenses cover, offering smaller businesses reassurance that they can enforce their IT rights.
However, take up of such policies is still minimal.
"Many companies will insure their waste paper bins, but not their name", says John Keen, head of development at Birmingham-based risk management adviser Jardine Lloyd Thompson.
"If you've not got the money to sue, what's the point of protecting your IP? Some level of legal expenses cover is critical because once you lose these intangible assets they can't be replaced."
As ever, prevention is better than cure and there are a number of practical measures companies can take to protect their IP. Drafting confidentiality agreements before disclosing valuable information to other businesses can offer some level of protection, while contracts with customers, suppliers and even your own staff should clarify ownership of IP.
When outsourcing overseas, it is important to closely manage your supply chain and consider using multiple manufacturing partners.
"More than one contractor is used for different elements of manufacture, so the risk of IP seepage is reduced," says Jim Carter, head of the commerce and technology group at East Midlands law firm Nelsons. "None of them have access to all the relevant IP to make anything of it."
It's also important companies consider all forms of IP protection, not just patents.
"One area which is very much undervalued is registered design rights," says Cushley. "They're robust, relatively cheap and don't take long to be granted. They provide more comprehensive protection than automatic design rights in relation to the aesthetics of your product and you can have Europe-wide cover for a few hundred pounds."
Registering trade marks is also relatively cheap and straight forward.
Yet more than half of respondents in the Browne Jacobson survey mistakenly believed that being listed with Companies House gave them rights over their name.
"It's amazing just how many companies either don't know they need to register or decide not to bother," says Hillier. "The trade mark laws changed around ten years ago, meaning that, in general, the first person to register a name gets the rights, rather than the first person to start using it."
Regional businesses are being encouraged to take these issues far more seriously and make IP protection a top priority.
Coventry University Enterprises' Intellectual Property Forum Fillip is funded by regional development agency Advantage West Midlands to raise awareness among smaller businesses and put them in touch with local IP professionals.
"We're running seminars, workshops and one-to-one clinics to highlight the issues and show businesses how best to protect their assets," says Coventry University Enterprises' intellectual property manager Brian More. "If it's successful the programme will be rolled out across the UK."
