Inventions and ideas are the core of your business, yet many fail to protect them and expose themselves to dire consequences. If this is you, here's what to do next.
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There are 470,000 technology-based businesses operating in the UK, with over 50% of them created post-2007. Clearly, a large number of these businesses belong to the thriving start-up scene, which is set to grow as our economy strengthens and more emphasis than ever is placed on growing technology and digital-based companies.
But many of these businesses fail to protect their intellectual property (IP), which is a mistake, because it takes a backseat at the start of a business. Building the team, structuring the company, attracting investment and developing the product, key partnerships, sales channels and marketing plans are typically all-consuming tasks for business founders.
What many don’t realise is that ignoring IP at this stage can be extremely damaging. Business owners must prevent valuable parts of the business from being lost because of IP theft - particularly since the majority of small businesses could not afford a legal bill which could bankrupt their firm even if they won.
So how can entrepreneurs and business owners protect what is rightfully theirs first time, every time?
1. Keep it secret
This one sounds obvious but it is surprising how many are caught out by letting their IP fall into the wrong hands. Entrepreneurs often want to shout about their great new business ideas from the rooftops, when it is in fact the worst thing they could do. I'd advise not to tell a soul until you've consulted a professional and know you're fully protected.
2. Protect yourself
Of course, it's sometimes just not feasible to keep your idea completely to yourself. In a situation where disclosing information is unavoidable, you should ensure those in your close circles – Research & Development personnel, funders etc. – sign non-disclosure agreements (NDA's).
Your IP could end up getting a lot of exposure, so it's worth taking steps to stop it getting pinched
These should be fully checked by a professional – something which some fail to do as they are concerned about what it might cost. In fact, writing up an NDA often costs much less than expected – usually between £150 and £750.
It's essential that you don’t just assume downloading an NDA off the internet will be enough – often these are wracked with inaccuracies and could cost you significantly more in the long run.
3. Consult a professional
The next step should involve speaking to a professional to get an idea of exactly what you've got and how it can be protected. This will be the stage where you will gather a better idea of whether it is worth paying for trademarks, patents and copyrights for example.
A commercial or IP lawyer will be able to give you a commercial evaluation – including buy ability and cost to market - to see whether your idea is worth much and what the best ways to exploit it will be. While all entrepreneurs are passionate about their ideas from the outset, for some it just simply will not be worth the time and cost investment.
Regardless of how professional you believe your advisor to be, don't forget to make them sign an NDA too before you discuss anything with them. Only when you have considered these three steps should you actively go out looking for funding or investors.
The types of IP entrepreneurs should consider
Three relevant types of IP start-ups should understand are patents, copyright and trademarks. Their relevancy and importance will differ depending upon the nature of the business but it is extremely important to understand each of them, and how they might fit into your business:
This form of protection tends to be relevant to most businesses as it protects generic things such as company names and logos. It's worth bearing in mind that when selecting a company identity, it should be synonymous with your values and not be too generic, as this would mean you might struggle to secure a trademark.
It varies on a case-by-case basis but trademark protection is fairly simple to acquire online on Gov.UK, generally lasts five to 10 years, and can usually be acquired for under £200.
Copyright protection can last up to 50 years and generally covers media related items – usually images, text and video - so lends itself more to creative, artistic and literary works. For this reason, it is more relevant to businesses operating in the visual creative, broadcast and media fields.
Don't be fooled by the 50 years mark though, it's often necessary to renew copyright agreements depending on the nature of the contract.
What could be seen as the most important aspect of IP protection, trademarks tend to cover completely novel ideas, inventive steps, or those which progress a science. They could even extend to an amalgamation of existing properties or ideas.
Stiff market competition means that patents only generally last anything from three to five years as it is likely something new will have surfaced before the need for a new patent comes along.
What exactly is putting entrepreneurs off?
Cost implications – or at least the perceived cost implications - tend to be one of the main reasons early-stage entrepreneurs forgo legal advice. Actually, the cost of protecting your work from the start tends to be far less than having to worry about it further down the line.
Often entrepreneurs are too keen to rush to market and secure funding as soon as possible, wrapped up in the excitement of their new idea. IP often falls to the bottom of the basket, amongst the whirlwind of other considerations when starting up.
Unfortunately, many entrepreneurs fail to realise that even if owning IP during the course of the business isn’t particularly important, when it comes to exiting, it's hard to sell something which was never actually owned by them in the first place.
A risk too great to ignore
Not taking steps to protect IP can lead to a number of issues down the line, not least bankruptcy. By failing to protect what is rightfully yours, you'll have little protection against copycats. Of course, the cheapest solution is to just keep something secret in the first place – something which is often easier said than done.
Mistakes in managing IP are usually extremely hard to move on from and it is an issue that is only set to escalate as the start-up market becomes even more saturated. For this reason, entrepreneurs and start-ups should make IP protection one of their key priorities, alongside the most commonly considered issues such as cash flow, funding and business structure.