IP essentials for start-ups and SMEs
New and growing companies often have tight budgets and may think that it is not worth investing in protecting IP. However, inadequate protection of IP may lead to disputes and can ultimately prove more costly in the long term. Here, Jonathan Jackson, patent attorney and D Young & Co LLP partner, offers some advice.
There is little point funding the development and marketing of a new product or service knowing that a competitor can take the idea and launch their own competing product or service if all your hard work and investment creates a successful product or service.
Aside from stopping competitors launching a rival product or service, many companies are unaware that IP assets may even be worth more than physical assets. Businesses can generate income from the sale, licensing or commercialisation of products and services which are protected by IP rights. Indeed the value of some companies, such as ARM Holdings (whose chip designs are in every smartphone), is in their IP as they do not manufacture the chips themselves, but licence the IP in their chip designs to other companies.
What can you protect?
Most businesses generate and create innovative products which could be protected using IP.
This is a list of the variety of types of IP protection that are available:
• Patents – provides legal protection for new inventions – this could be an innovative solution to a technical problem and may be the way in which the product or service technically operates.
• Trade Marks – provides legal protection for your distinctive brand name or logo – this protects your business goodwill and distinguishes your goods and services from those of your competitors.
• Designs – provides legal protection for the "look and feel" of a product – this could be the visual appearance of products and their components, or even a typeface
• Copyright – provides legal protection against copiers of literary, artistic, or musical material.
How to go about it – your project IP checklist
Managing your IP is about managing risk and generating income. You should build IP action points into your business and project plans and be prepared to allocate budget for IP. It is better to be safe than sorry.
• Have an IP strategy.
• Allocate an IP budget.
• Instruct an IP specialist.
• Undertake patent, trade mark and design searches throughout project development to ensure you are not infringing someone else's IP rights.
• Take special care if you are in a joint development so you know who owns what.
• Check contract terms (eg, confidentiality agreements) with third parties (joint development, contractors).
• Record development work and track who is an inventor.
• Look to secure your own IP rights. Consider patents and designs, trade marks and domain names.
A variety of government schemes are available to provide financial support for innovative firms:
The UK Patent Box – Under the Patent Box scheme a company can apply a lower rate of corporate tax payable from 23% to 10% on profits made by any company in the UK that can be attributed to qualifying patents.
Research and development (R&D) relief – This is a corporation tax relief that may be claimed for qualifying R&D costs. Two tiers of relief are available for SMEs, who receive 225% tax relief of allowable R&D costs, and large companies who are eligible for 130% relief.
The Smart scheme – The scheme offers funding to SMEs to engage in R&D projects at key stages of development. Offering a fast (30 day) decision turnaround, it is always open to applications.
The SBRI programme – The Small Business Research Initiative (SBRI) programme seeks to bring innovative solutions to specific public sector needs, by engaging a broad range of companies in competitions for ideas that result in development contracts.
Innovation vouchers – Innovation vouchers are provided to enable businesses to access specialist knowledge for all types of innovation. With a value of up to £5,000, the vouchers are available to start-up, micro or SMEs located in the UK for whom it is the first time working with the selected knowledge supplier.
Collaborative R&D – Collaborative R&D are competitions organised within specific technology themes, with the particular aim of supporting collaboration between businesses, and between businesses and academia.
Horizon 2020 – This is a European Union research and innovation programme offering nearly €80 billion of funding over the next seven years. Various funding opportunities are available including the SME instrument, which specifically seeks to support SMEs with international ambitions.
The range of schemes and types of IP protection available means that no start up or SME should be without it.
For more information, please contact Jonathan Jackson, Partner, on:
Tel: 020 7269 8550
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