Protecting your intellectual property

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Protecting your intellectual property

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It is estimated that around 80 per cent of the value of the majority of companies is located in their intellectual property (IP). It follows therefore that taking precautions to protect that asset is essential.

And yet too many companies don't take the necessary steps because of the myth that the patent process is excessively complicated and will require buckets of cash. Instead people wait to see if the idea will take off with the view of seeking patents then. Unfortunately, if the idea does take off then it's almost inevitable you are going to be copied and therefore it may be too late.

According to Simon Crossley, a technology partner at law firm Eversheds, IP is a high-stakes game, "It is capital intensive. If you prevail, you control the market. The hard part is finding an idea that is going to underpin your business. Once you have, then look at the rights to prevent you being ripped off."

He estimates that for between £40,000 and £60,000, you can gain full worldwide cover for an uncontested patent. In the life sciences, such iron clad protection is a necessity and without it no one would even consider you for investment. In software, you might prefer to rely more on copyright and trade secrets, which are free, but weaker.

Even for technology start-ups, Crossley has taken disputes straight to the High Court in London. In a patent case, each side will generally incur fees of £300,000 to £400,000. Trademarks are normally less technical, so the costs are usually between £30,000 and £40,000. If you win, however, you will get most of these costs back. As a result few are prepared to take the risk and only about five per cent of IP disputes ever reach court.

Enterprises should never think of IP as their golden goose, says Stephen Carter, a technology attorney at Mewburn Ellis: "Sadly, no-one makes any money out of just filing a patent. Returns on innovation only happen when you fit your claim to a stream of revenue. Otherwise, you will find yourself paying a heavy price for exclusivity."

Rather than automatically taking an expansive approach and protecting all your ideas, Carter suggests you identify the cornerstone of what you are going to be offering. If this is done, you will get the most value out of your IP by protecting an idea that underlies everything else. The difficulty is not to be too greedy. He says: "Of course, you would like to find a platform with other applications, but a broad claim is hard to make and expensive to maintain."

Traditional intellectual property assets, such as patents, trademarks and copyrights, are particularly valuable because they enable companies to create and maintain a monopoly position in their market. Key intellectual property rights can provide owners with significant business advantages as evidenced by the fact that the driving force behind many of the mergers and acquisitions completed during the past decade has been the acquirer's desire to obtain the target's intellectual property assets. Now more than ever, the full financial potential of intellectual property is being realized as an additional source of funding to facilitate research and development, acquisitions and other commercial transactions. So it's worth taking the time to protect your ideas and secure your position in the market. And with UK only patents costing as little as £5,000 payable over five years there really is no excuse not to.