IP protection on the rise

Written by: Anthony Albutt | Published:
Anthony Albutt, partner at D Young & Co

You may remember that we repeated our annual survey exploring views and experiences of intellectual property (IP) earlier this year. Anthony Albutt takes a look at the results and addresses some of these IP concerns

Key findings this year

The percentage of respondents who actively assess their business’ IP position on a regular basis still remains quite low at around 50%. This may be because of the spread of business sizes responding to the survey, with larger companies being more likely to monitor and assess their IP position.

There has been a 10% increase in the number of respondents who believed that their business’ intellectual property was properly protected at 53%. This compares with the remaining 47% reporting either that they did not know or that they believed their IP was not adequately protected.

An impressive 91% of respondents (virtually the same as the last survey) claimed that they understand what IP they possess and a figure of 85% for respondents who understand the importance of IP to their business.

Exploitation also remains largely static at 53% who believe their business adequately exploits their IP assets.

Respondents to the survey also provided valuable insight into the reasons for their scores and many highlighted their worries and concerns.

What is worrying you?

There remains a trend in the statistics that shows that whilst a large number of businesses actively monitor and protect their R&D investment using intellectual property rights (IPRs), and indeed some exploit it in the form of licensing, there remains a lot of skepticism as to just how IPRs can help SMEs.

There were four concerns cited by the respondents to the survey that stood out most prominently in the results. These were, in no particular order:

    • the perceived costs involved in IPR protection;
    • the speed of the system and the time burden on small businesses;
    • loss of technology or know-how through staff loss; and
    • put bluntly: China

Over the three years that we have conducted the IP survey, time and cost in particular, have repeatedly been cited in the results. This year the volume of respondents who had experienced issues with staff taking technology away and who had concerns over China were very surprising.

We will deal with each one as follows.

Time and cost associated with IPRs

Readers of our articles over the years will know that we have tried to dispel some of the misunderstandings about IP rights and in particular the costs of obtaining the monopoly that the right patent protection confers. There is no escaping the fact that it will be expensive if you are seeking an international patent portfolio. However, in the UK obtaining a patent is normally good value, not least because the government fees are incredibly low. Aligning your patent application carefully with your commercial interests without seeking to claim too much of a monopoly can radically reduce the time and cost to obtain a UK patent. See our earlier articles (they are all on the Eureka website at www.eurekamagazine.co.uk/design-engineering-features/ip-advice/) or visit the D Young & Co website for further information.

Losing technology or know-how through staff losses

This concern featured prominently in this year’s results. Some examples of the problems respondents had faced included:

Contracted designers working for competitors;

Suppliers selling bespoke machinery to competitors

Key R&D staff leaving and taking know-how technology with them

Each of these issues can pose significant problems to a business. A detailed analysis is beyond this survey report but in short the following should be borne in mind:

Consider your contracts with external suppliers and designers carefully and ensure that they include suitable intellectual property clauses. It is very common to require that any designer or sub-contractor assigns any rights to intellectual property generated through the contract to your business. Failure to comply would then be a breach of contract.

A word of caution: having obtained rights from external designers, if you then decide not to register them (for example in the form of a patent) you do not have a monopoly right to prevent others using your technology, including the designers.

The same applies to suppliers you may be cooperating with to modify or re-design existing machinery to your specific requirements. Again, make sure your contracts include suitable protective clauses.

What can you do to negate the danger of staff taking technology when they leave?

One option is to ensure that the contracts of employment your staff work under include suitable and appropriate restrictive covenants. However, such covenants can be interpreted narrowly by the courts making it difficult to prevent ex-employees continuing to work in your technical field.

Another option is of course to protect it yourself. Patent law in the UK clearly states that an invention made in the normal course of employment is the property of the employer. This means you have the right to apply for the monopoly of, say, a patent. It follows that if you have a granted IP right you can seek to stop a competitor infringing your rights, irrespective of who they employ.

However, this comes at a price and as we have seen again from this year’s survey results many small businesses are reluctant to spend money seeking protection in this way.

China….

By far, the most frequent concern facing respondents is the perceived dangers posed by Chinese companies. This includes concerns relating to manufacturing in China and more specifically Chinese companies copying products and importing them into domestic markets.

Stories of the extent to which Chinese companies copy products are widespread in the press. One such case was illustrated in a previous article by D Young & Co in a recent issue of Eureka magazine entitled ‘The China Syndrome’.

Many companies design in the UK and manufacture all or sub-components of their products in China and stories such as Land Rover’s paint a very dismal picture of the IP situation in China.

This particular situation arose because of the very narrow scope of registered design protection in China. Is the same true for patents?

In short, no. China has come a long way in the last decade in terms of patent enforceability. The country now has more experienced courts which hear intellectual property cases and the preconception that the Chinese companies always win has been eroded.

However skeptical you may be about patents in China, the unfortunate bottom line is that if you do not register your rights you have no power at all to stop competitors or indeed suppliers from copying your products there (other than possible contractual agreements or goodwill).

Ok, but what about the cost?

One solution is to look at the cheaper patent option in China. You can save money and still obtain some protection in China using a basic patent called a ‘utility patent’. This is not assessed in the same strict way a normal patent is and is much cheaper to file and secure. These patents are far narrower in legal scope but they do have a number of advantages, most notably speed and cost. In fact this has been a preferred route for many cost conscious Chinese companies seeking to protect themselves in their own market.

A common thread readers will have seen through our articles is that you should remember that your IP is an asset of the business. If you do extend your IP protection to China, remember that you have the same opportunities there to license or sell your technology in return for a royalty or lump sum.

If you decide not to proceed in China you still have the option of selling your right to apply for a patent there. So, how about selling your right to the highest bidder and let competing Chinese companies have the fight through their own courts using the IP you sold them?

‘Made in Britain’ applies to IP too…..

Once again we were grateful for the volume of responses provided to the questions we posed.

Anthony Albutt is a partner at D Young & Co


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