Workshop: Exploiting IP while minimising risk

Trying to sort out the potential rights of a designer or inventor is never an easy task, yet with the government having announced a desire to press for the UK to become more creative in exploiting its knowledge base, practitioners are going to have to get up to speed swiftly if they wish to retain their position as a trusted advisor for commercial clients operating in this sector.

As part of the push to make business more IP savvy the UK Intellectual Property Office has been tasked with broadening the knowledge base of business advisers advising SMEs, and have announced that resources will shortly be available to a wide range of business advisers, so it is paramount for lawyers who wish to retain their client’s trust to be able to demonstrate a commercial competence in understanding the issues facing their clients.

One of the biggest problems for businesses wishing to exploit their IPR is how to obtain adequate funding both at the initial stages and as the development programme evolves. Consider carefully with the client whether it is prudent for the client to invest his own money or rely on bank funding requiring a personal guarantee secured against the matrimonial home. If the client has previously successfully exploited IPR then perhaps he may have an existing royalty stream which can either be used to demonstrate to a lender the viability of the business or, alternatively, be charged to a bank in order to produce funding. Look also at existing IPR to see if it has been properly valued in the company’s balance sheet. 

One of the perennial problems is to ensure that the client does not take an overtly cautious attitude towards working with third parties. A minority investor funding a special purpose vehicle (SPV) should not be disregarded. 

Discuss with the client the importance of non-disclosure agreements and stress the importance of ensuring that he “has all his ducks in a line” before talking to prospective business partners. Initially, secure at least some IPR, reassure where appropriate that large businesses need a constant flow of good ideas and it is less than likely that a reputable company will seek to ‘rip him off’ but they are more likely to want to pay a realistic royalty.

Experience shows that the client who goes into negotiations whether to jointly develop or license their IPR, who is properly advised throughout the process by a competent practitioner, stands a much better chance of achieving commercial success than the person who decides they can do it all themselves. 

It’s up to the practitioner to ensure that he has the appropriate skill set to deliver the necessary advice.

Register brand.  Search the Intellectual Property Office website to check the name is available and identify potential clashes. If the search is clear, recommend brand registration as soon as possible; the value of the brand name might turn out to be greater than that of the product under development.

Secure web domain. Whether or not the business has a web presence secure appropriate domain names before a cyber-squatter arrives.

Discuss IPR options. Consider the protection available for trade secrets and know-how and be aware of restrictions in the UK and EU of obtaining patent protection for software business methodology (unlike the USA), but consider carefully the strengths of copyright protection and trademark registration.

Evaluate registration options. Weigh up the benefits of a shorter period of protection given by registered designs against the longevity of unregistered designs with perhaps more difficult enforceability issues.

Secure the rights. Ensure the client documents carefully the assignment of all rights from contractors and consultants as well as employees.

Obtain protection overseas. Look carefully at the ways clients can exploit their IPR whether in the UK or overseas, identify the necessity to obtain protection in overseas markets, before they enter them.

Obtain legal expenses insurance. It enables clients to deal with the ?“David v Goliath” issues which are always a concern.

Evaluate the benefits and risks. The client should consider both the risks and benefits of developing the product themselves as a joint venture or by a licencing programme, consider how improvements will be owned with any other participant.