By its nature the creative process can be unwieldy and chaotic—ideas can develop at a rapid pace in a business, particularly when the race is on to beat the competition in bringing an innovation to market. To realize the full value of these ideas, there must be a framework in place for recognizing and managing valuable intellectual property (IP) assets.
This should not be merely a mechanical exercise; the approach should be central to the way a business is run and should be a help in boosting its growth. Taking a proactive approach and developing an IP strategy can help a business to uncover some of its most valuable elements and identify the most lucrative directions for future innovations, as well as helping to decide when and where to challenge competitors who encroach on its ideas.
So where should businesses focus their efforts? To begin to answer this question, it is helpful to consider businesses that have a healthy and successful approach to managing their IP assets. They share several characteristics:
- IP is at the heart of the business, with everyone in the organization understanding its value and significance;
- the IP policy is bespoke, appropriate to the organization and aligned to the overall business strategy;
- there is a good balance between protecting and acquiring rights;
- the strategy is adaptable and mindful of the future direction of the business.
Four steps to success
When advising textiles companies on the development and implementation of a strategy for IP, Potter Clarkson adopts a four-stage process.
Audit and understand
The first stage is to audit the business to understand what IP assets it already owns. Particularly in fast-growing companies, it is easy for an organization to overlook potentially lucrative innovations and ideas.
The audit also establishes a clear understanding of how these assets are being managed daily. For instance, is there an IP policy in place and, if so, is it adequate for the business’ needs? A start-up will have different requirements from a more mature business.
An IP policy may include:
- a review process to ensure adequate protection is being considered before details of a project are disclosed;
- incentives for employees to seek and obtain IP protection;
- the provision of ongoing training to ensure consistency across the business with respect to its exploitation and use of IP.
Once an IP policy is in place, it needs to be reviewed periodically to check it remains fit for purpose as the business evolves, and that it is being adhered to throughout the organization.
Too often, Potter Clarkson finds IP considerations being compromised by other business priorities. In a typical example, the marketing and communications team might be encouraged to raise the profile of an innovation to drive up the value of a business, revealing details before the necessary IP protection is in place. Of course, professional advisers need to appreciate these commercial pressures and account for them in any guidance provided, but at the very least a business needs to be aware of the potential dangers of compromising its important IP.
When reviewing the effectiveness of a company’s approach, therefore, Potter Clarkson looks carefully for evidence that the policy is coherent across all areas and aligned to the wider strategic objectives of a business. The structure of the business is also a crucial factor—particularly in groups of companies where IP rights may not be managed as robustly as they should be, resulting in potential difficulties if part of the business is sold off.
Building a clear picture requires genuine engagement and it is important to include people at all levels of a business to get a real sense for how IP is being managed.
Identify strengths and weaknesses
Once the advisors have assimilated all the information, they start by identifying the strengths and weaknesses in the organization’s approach to IP. From this, they can develop a plan to improve the organization’s approach. In some cases, it is about introducing or tightening procedures; for others, it is about educating teams outside of the legal department about the importance of adhering to the processes.
Often the advisors identify some quick ways to make improvements to a business’ IP strategy, such as re-drafting documents, standardizing the use of non-disclosure agreements (NDAs) and adapting the level of patent filing to suit the needs of the organization. Other elements of the action plan will take longer to implement, but the common aim for every business is to put IP at the heart of the organization.
Adaptation—is the policy still relevant?
Finally, the job of managing IP is never complete. A business’ priorities evolve, so it is important for the organization to make regular checks on its approach and make changes where necessary. For instance, the focus of an IP strategy is dependent on the size and scale of the organization:
- for start-up businesses, and small and medium enterprises (SMEs), the key issue is always managing costs, including the costs of professional advisers. At the same time, companies at this stage are often developing ideas and core technologies, and may be seeking funding of some form, so protection of IP is important. For such companies, a clear understanding of which actions need to be taken immediately and which can be postponed is often the pivotal issue in any analysis of the IP strategy;
- fast-growing companies often have the greatest and most immediate need for an IP strategy. Companies that grow quickly, particularly where the business is built upon innovation and therefore IP, often quickly outgrow their systems and procedures. Typically, they are looking for new commercial opportunities (such as collaborations, and acquisitions and mergers) enhancing the importance of their keeping IP policies, and the supporting procedures and systems, up to date;
- corporate companies usually have in place IP strategies, policies and systems, and an in-house legal team with specific responsibilities relating to them. However, that is not to say that large companies do not have work to do to ensure their IP strategy is robust. It may be out of date or, more commonly, it sets out policies and procedures that are not being properly implemented. A periodic review is always a good idea.
Failure to Act
IP is the only original element of any business—it is the lifeblood of the organization and must be valued and protected. Regularly reviewing and adapting the approach to managing IP assets is hugely beneficial for the overall health of the organization, helping to protect and maximize their value, as well as maintaining focus on the business’ core priorities. Without an effective IP strategy, businesses not only lack a clear direction, which can seriously impact on their growth potential, but they are also vulnerable to the risk of costly litigation.
Audit in action—a case study
Recently, Potter Clarkson conducted an audit on behalf of a major fabric manufacturing group, which involved investigating the IP position in relation to the group’s companies operating in multiple jurisdictions.
It quickly became evident that there was no centralized policy or framework for capturing, managing and exploiting IP across the group. Each company had its own approach and IP was not being approached in a consistent manner (for instance, some divisions used outdated logos and not all were adhering to the use of
In response, the advisors worked with the organization to embed a single-stream model for IP support and management, designed to promote consistency across the group. At a practical level, this involved drafting the IP policy and an employee-friendly handbook to put the policy into practice.
Almost immediately, there was greater communication and consistency across the group with such as historic and inconsistent logos disappearing quickly. Today, there is a centralized model with a clear route for the reporting of new IP, and all the group’s companies are seeking advice at an early stage. Consequently, valuable IP is being captured more effectively, offering the potential to deliver additional revenue across the group.
In addition, the audit identified gaps in the group’s trademark portfolio, as well as existing registrations which were no longer used. By abandoning redundant registrations, the group made savings that it redirected into new filings.
It emerged that the group needed many trademarks across its key retail and manufacturing territories, so the advisors devised a phased strategy for new filings, starting with those needed to protect the group’s key brands in the most lucrative retail territories.
Having previously faced issues with infringements, and considering the expiry of certain patent rights, brand protection is high on the agenda for this group. By understanding the strengths and weaknesses in its portfolio, the group is now able to address any gaps, which will put it in a stronger position to defend its brands in a highly competitive market.