I recently came across a 2012 blog posting on New Morning IP (find it here) which was tweeted for re-consumption by all of us who dream of IP when we sleep. The blog caught my attention because firstly, the author’s point on the value of patenting within a start-up really resonated with my own thoughts on that specific topic. In the post, the author urges that start-ups evaluate the cost/benefit of patenting within the context of their business model. If benefits brought on by patents outweigh the costs involved (with some certainty) in filing, prosecution, maintenance and enforcement of that patent, then patent away. Whilst my thoughts on this are not as formulaic as the blog’s author, I do agree that start-ups and investors alike should think hard as to whether patenting is crucial in order to allow the business to prosper. Patenting is an expensive process – one which can burden start-ups already limited in funds, and one which allegedly only leads to revenues in excess of the patent costs 5% of the time.There are, however, alternatives to patenting which can be as equally effective when done in accordance with a sound IP management strategy. Surprisingly, the blog fails to mention these additional options, which brings me to my next point.
The second reason the blog captured my attention was because it seems to draw an exclusive relationship, whether unintentionally or otherwise, between patenting and an IP strategy. That is, if patenting is not on the cards, then an IP strategy is not really needed. This fundamentally erroneous supposition can be misleading to a reader who is not all that familiar with IP. Regardless of whether formally registered, IP assets which underpin competitive advantage exist within virtually every company. Such IP assets include brand and goodwill, trade-secrets, know-how, and software (just to name a few) and require diligent management in order to ensure that they are secured and leveraged in a manner which maximises value and continues to support a start-up’s competitive advantage. Disregarding IP because patenting is not a business focus is an effective form of self-sabotage committed by that start-up – or any established company for that matter.
A week ago, I met an investor from a local investment firm with focus on industrial – manufacturing companies. As we started discussing IP, he echoed the false notion I highlighted above – his portfolio of companies focused on the tangible nature of industrial manufacturing, and therefore patenting was neither a focus nor an option, in his opinion. As a result, the companies failed to recognise the significant IP assets which existed within their respective businesses, necessitating the creation of a robust IP strategy. It took a bit of probing before we reached a moment of epiphany and recognised that, although his companies did not rely on any patents, they relied on a vast amount of manufacturing know-how and data which underpinned their competitive advantage. If any of this know-how was to leave the company building and make its way through the doors of a competitor, a sizeable competitive advantage could be lost.
Whether or not patenting is an option or a focus, nearly every business within the knowledge-economy – be it a specialist tea supplier or a pharmaceuticals R&D firm – holds a vast amount of IP in various forms, including brand, trade secrets, know -how and specialist data. These assets are most likely to underpin a start-up’s competitive advantage, and will significantly contribute to the revenues generated through sales of services and/or products. Additionally, these IP assets can be monetised in the short term via out-licensing agreements (for example to a company operating in a different market or technology space) so that the start-up can generate immediate revenue whilst further developing its own products or services. An IP strategy combined with proactive IP management are required to ensure that these IP assets are recognised, protected and leveraged, and that risk is properly mitigated so as not to affect future valuations or investment opportunities.
Metis Partners’ Metisology™ is a proven appraisal model which helps businesses identify and assess all IP assets that are, or could be, owned by a company beyond formally registrable IP such as patents and trademarks. Furthermore, we offer a unique “virtual Chief IP Officer” service which allows IP conscious start-ups and SMEs to subscribe and rely on proactive and ongoing IP strategy and management support backed by the IP expertise of Metis Partner’s multi-disciplinary team. By identifying and protecting the wealth of intangible assets which exist within start-ups, SMEs or established businesses, companies can truly approach IP in the strategic, accessible and cost-effective manner the blog post seeks to encourage.