Manage your intellectual property

1.1 Record all innovation-related activities in your business.

Detail relevant research, meetings, designs, plans, and so on in a tamper-proof logbook. Sign, date and, where necessary, witness-sign entries for legal evidence of ownership in any future dispute.

Ensure staff you employ are familiar with the logbook’s existence and know how to use it. Consider introducing an incentive scheme to encourage people to record their innovations.

Study logbook entries regularly. They can highlight IP which might otherwise have been overlooked.

1.2 Carry out regular IP audits.

Consider all areas of your business. IP does not just reside in innovative processes, products or services. There is likely also to be valuable IP in, for example, your bespoke software, the databases you have built, your marketing material and, importantly, your branding.

An audit can also determine who owns your IP and alert you when registered protection should be renewed.

1.3 Clarify ownership of IP created by employees or third parties.

All IP created by employees during the course of their work usually belongs to the employer. To avoid misunderstandings you should cover this issue in employment contracts – seek advice on how to go about this.

Ensure IP created by contractors and freelances is assigned to your business. You have the right to use IP created by third parties in the course of their work for your business for the purpose for which you originally contracted them. However, the IP rights will remain with the contractor unless they have been specifically assigned to you in a written agreement.

For example, if an IT contractor writes bespoke software for you, ensure the copyright in it is assigned to your business so you can use, modify or upgrade it at any time in the future, without costly ownership disputes or licence fees.

2.1 Consider taking out a patent to protect your invention.

Patents prohibit others from making, using or selling an invention without the patent owner’s permission. They are registered with the Intellectual Property Office and can be used to protect a product or process that contains new functional or technical aspects for a maximum of 20 years.

A patent can help you get premium prices for your products or help you to earn royalties through licensing (see section 5). You can also buy and sell a patent.

Obtaining full patent protection, including international protection, can be a lengthy and expensive process. And you need to be prepared to take potentially costly legal action to enforce your patent.

Patenting may not always be your best option. For example, if your innovation is a process which cannot be deduced from the end product or a product you feel certain cannot be reverse-engineered, you may prefer to rely on trade secrecy.

Setting the patenting process in motion is relatively inexpensive and can help you attract interest from potential licensees – possibly helping you to raise enough money to meet the costs of a full patent application.

A patent can help to convince investors about your innovative idea. Venture capitalists in particular will often not be interested unless protection has at least been applied for.

2.2 Think about registering the design of your product or its packaging.

A registered design gives you the sole rights to the appearance of whole or part of a product created by its lines, contours, colours, shape, texture, materials or ornamentation.

It gives you the right to prevent other people from making, using or selling your design.

It requires an application to the Intellectual Property Office. It lasts for an initial five years and can be renewed for up to 25 years.

Design right is an automatic right that lasts for either 10 years from the point of first marketing the design or 15 years from the creation of the design, whichever is earlier. It protects against proven copies, but not against designs that are similar by coincidence. If requested, the owner of the right cannot refuse a licence during the last five years of the right.

2.3 Look at protecting trade marks.

Trade marks can be symbols, signs, words, sounds or shapes. They help customers and other businesses to distinguish the products or services of one business from those of another.

They can be an invaluable marketing device. Your company or product name registered as a trade mark can form the basis of a valuable future brand.

Trade marks can be registered with the Intellectual Property Office for ten years and renewed indefinitely for ten years at a time.

Trade marks do not have to be registered – you get a degree of protection under common law if you have built up sufficient trading reputation and goodwill in a trade mark. But such trade marks can be far harder to enforce than if they were registered.

2.4 Check what protection you will have through copyright.

Copyright allows the creators of original literary, dramatic, musical and artistic works to protect their work against illegal copying, adapting, publishing, performing or broadcasting.

Copyright is an automatic right – there is no registration system. It lasts until 70 years after the death of the author for literary, dramatic, musical or artistic work. Copyright for other material lasts 25, 50 or 70 years.

Copyright ownership can be hard to prove. You might mail a copy of your copyright work to yourself using registered post and keep the package unopened in a secure place. The dated package, opened in court, can prove vital evidence of originality in the event of an ownership dispute.

Alternatively, you might insert deliberate mistakes into work to catch out copyright infringers. For example, this might include inserting lines of dummy code in software or including your own address with a minor, but noticeable, change in a customer database.

2.5 Guard against any public disclosure of your invention before it has been registered.

You seriously jeopardise your chances of future patent protection if details enter the public domain.

Public disclosure can take place on websites, in media interviews and in business plans used to find investment – even during casual conversations.

2.6 Use confidentiality or non-disclosure agreements (NDAs) when you must give details of your invention and you have not filed a patent application.

NDAs are binding and place obligations of secrecy on the signatories for a defined period of time. They should define the nature of the confidential information disclosed, the use to which the receiving party can put it and any remedies if confidentiality is breached.

NDAs should be signed by everyone with whom you have to share details of your IP if it has no registered protection. This includes your potential industry allies, your suppliers, employees and even your IP insurers.

Verbal agreements are legally binding but extremely difficult to prove.

2.7 Keep commercially sensitive information secure.

Guard against disclosure in electronic form by using password-protected systems and installing firewalls and up-to-date anti-virus software. Keep back-up copies of all electronically held information and store them in a separate location.

Lock hard copies of sensitive information away securely.

2.8 Consider insuring your IP against the cost of challenging infringers.

Apply for insurance before your IP is in the public domain. If you do not, you jeopardise your chances of finding an insurer.

Premiums for insurance can be high. However, the cost of litigation in the High Court is much higher. Advertising the fact that you are insured can also deter potential infringers.

3.1 Carry out thorough searches to ensure that what you want to patent is in fact new.

Obtaining full international patent protection can be lengthy and expensive, but it can be tailored to your needs. You also need to be prepared to take potentially costly legal action to enforce your patent, but insurance to cover this cost may be available.

Searching the 52 million patents on the Intellectual Property Office website is free. They also provide a commercial search service.

You will have to pay for more sophisticated searches by a patent attorney or professional patent searcher, but they can prove worthwhile.

3.2 Time your application carefully.

You do not want to fail to get a patent, or a sufficiently protective one, because your plans were at too early a stage. But neither do you want competitors to beat you to it by holding off your application for too long.

It can be worth timing it to rush to market in the time between filing for a patent and that patent application being published in full. Competitors can find out that you have applied for a patent soon after your filing date, but its detailed nature will remain unknown until 18 months later.

3.3 Initially, register as broad an application as you can get away with to catch out potential competitors.

Keep your options open by using the flexibility of the patent-pending situation in which amendments can be made to your application in the first 12 months after filing.

3.4 Consider using spoiling tactics.

You can prevent others from getting a patent for your invention at a later date by having your own patent application published but taken no further.

This is an inexpensive way of stopping a competitor getting exclusive rights to the same invention when you cannot afford to buy those rights for yourself.

Any other kind of public disclosure of your invention – for example, in a magazine article or on a website – will also render ineligible later patent applications from others.

3.5 Hold back know-how where possible.

It may be possible to word your patent application to describe one way, but not the optimal way, to produce your invention. If someone infringes your patent you can enter negotiations to offer them this additional know-how, rather than go down the costly route of litigation

But take care. The law requires that a patent describes your invention clearly and completely in order that a third party can replicate it. Never omit any essential features. Take advice from a patent attorney.

Note that if you register a patent overseas there may be a statutory requirement to disclose the best way to produce your invention.

3.6 Consider protecting your patent overseas.

Patents are territorial and can only be enforced in the areas in which they are granted.

Overseas patents must be applied for within a year of your UK filing date.

Apply for patents in European countries through the European Patent Office.

The Intellectual Property Office’s International Unit acts as a receiving office for International Patent Applications which can be used to commence patent applications in Europe and in more than 100 countries elsewhere.

3.7 Don’t rely on a patent to preserve your competitive advantage.

You need to continue developing your ideas in order to stay ahead of the game.

3.8 Get professional help.

Filing a patent application is a complex process and you should seek advice from a patent attorney.

4.1 Consider commercialising your IP yourself.

You could start up a business to develop, produce and market your innovation, diversify your existing business to do so or spin out a new business from your existing one.

This is most suitable for products that are cheap to bring to market or where you already have a suitable business and production infrastructure.

You will need a thorough and realistic business plan if you are to convince potential investors to part with their money.

Bear in mind that your core strengths may lie in developing IP, but not in the commercial realities of developing and marketing it.

4.2 You could earn royalties by licensing one or more other businesses to develop and exploit your IP.

Licensing is particularly suitable when you have developed your IP to the point that its business potential can be seen, but its exploitation would mean high start-up costs. It can be a relatively low-risk route to realising the value of your IP.

Licensing is also a good option when you do not have the requisite business expertise in house; if you want to be a manufacturing-free outfit; or if a potential licensee is already well established in your market.

It can be a good way to exploit the secondary applications of your IP if your strategy is to concentrate on its primary application.

You may want to consider a possible cross-licensing deal where you give one or more other parties access to your patented technology in return for access to theirs.

4.3 Consider a joint venture to develop and market your innovative product, process or service.

Beware of joint ventures in which your partner doesn’t have a similar amount to lose as you. The best joint ventures are those of equal-sized businesses, where pooling expertise and infrastructure benefits both parties equally.

4.4 Franchising may be a good option in future.

If your trademarked brand has strong value, franchising can be a good way to expand rapidly at home or overseas.

5.1 Find suitable licensing partners.

Look for businesses with the right expertise and the best production, distribution and marketing structure to exploit your IP.

Do a patent search. This can reveal names of those who have previously filed patent applications in your industry area – and you may be surprised.

Use a specialist licensing agent or executive who can also broker a deal.

Find licensees in Europe through your local Business Innovation Centre (BIC) – an EU-funded initiative that can broker matches between the buyers and sellers of innovative technologies.

5.2 Put non-disclosure or confidentiality agreements in place if necessary.

Do this before disclosing details of your IP if registered protection is not in place. See section 2.6 for more information.

5.3 Make your licensing deal as comprehensive as possible.

Have separate agreements for every element of your IP. Exclusion of apparently minor details can result in serious losses later on.

Clarify the ownership of new IP rights should a licensee develop improvements.

Clarify what happens in the instance of technical problems, faulty products and other unforeseen circumstances.

Always include a get-out clause in any licensing contract.

5.4 Build clauses into the licensing contract to ensure you receive fair payment.

Licensees can sit on licensed IP or sell products at an artificially low price in order to further their own technology or that of associated companies. Performance clauses can ensure the licensee fully exploits your IP.

Ask to be paid a minimum percentage of projected annual sales with royalties kicking in only when sales go above this.

Avoid profit-related payments as profit lines are too easily manipulated.

Include a provision for an auditor to check the licensee’s books.

5.5 Clarify who pays to challenge infringers of your IP.

Given the high costs of litigation in the High Court, it can be sensible to accept lower royalties in return for the licensee taking responsibility for tackling infringement.