Protect and survive
As the recession bites and companies try to safeguard their futures by tightening their belts, now is a good time to get on top of intellectual property protection.
Talk of recession is all around us. For some businesses that is bad news as orders dry up, forcing redundancies and even bankruptcy. Yet for others, business contraction in one area has actually resulted in a positive outcome in another. The marketplace has many resilient entrepreneurs who are determined not to let the downturn beat them. In some cases, rather than plough the same furrow only to see diminishing returns, they have chosen to approach matters in a different way.
A number of organisations are re-evaluating their product or service offerings and making some decisions about what to change. This of course can have profound effects across the organisation. All aspects of the business may need re-appraisal, from staff skill-sets and new target markets, to premises and location. One aspect that is sometimes forgotten about during times of change is an organisation's intellectual property (IP).
When business is hard to come by the last thing you want is someone stealing your branding or ideas and leaving you with even less potential for survival than you had before. There is a danger, in times of change, of throwing out all the hard-won assets you have created, including your wider intellectual capital. Even though these assets may not be part of your business going forward, to another type of organisation with a different business model, they could be useful.
Organisations are sometimes surprised to find they can obtain a good market price for the assets they no longer plan to trade with. There may be opportunities for instance to bundle packages of intellectual property (patents, trade marks designs, domain names and suchlike) that have value elsewhere.
A related consideration in times of change is this: if you are planning to use the recession as an opportunity to move into different areas, your IP needs to change with you. All too often organisations apply for registration of patents and think that the IP box has been ticked forever. What many businesses do not understand is that value resides not merely in a particular invention, but in the entire way you do business. An organisation's business plan and its IP need to evolve in tandem - it can be easy for them to get out of sync.
Case study: absolute robotics
The need to protect IP does of course apply to newly established companies as much as it does to more established ones, including those who are undergoing major changes. IP registration is growing massively - the number of patents doubles each decade. Some 80 per cent of company value is now in intangible assets. Manufacturing is moving to emerging economies, where IP is key to value generation and economic growth - developing countries are recognising the importance of IP.
An example of an organisation that has recently sought IP protection is Absolute Robotics. Based in Leighton Buzzard, Bedfordshire, Absolute Robotics was set up three years ago to develop a concept that upgrades standard industrial robots to make them suitable for advanced manufacturing and aerospace applications.
Many attempts have been made over the years to use robots in the manufacturing industry. However, the problem that many businesses have - including the aircraft industry - is that it is difficult to use robots in the construction process or for advanced manufacturing because of their lack of capability for absolute accuracy, networking and large-volume in-line manufacturing. Previous attempts to overcome these problems have usually resulted in expensive, customer-specific solutions that suffer from several limitations.
Absolute Robotics has set out to address all these problems, including designing an innovative robot that would provide a solution to the absolute positioning problem. This meant finding a method of dispensing with restrictions on the working envelope of the robot; compensating for temperature as well as stiffness-related errors due to randomly applied static and dynamic loads and allowing networking capability in absolute space - that is, allowing robots to relate to their work objects and to other robots while fixed or moving within the production cell. The robot needed to have scalability for large-volume manufacturing, adaptability, and to be able to check the quality of its own performance on-line, so as to eliminate mistakes. Absolute Robotics has now succeeded in designing a robot that overcomes many of the problems that have prevented widespread use of robots in the manufacturing industry.
Clearly it was necessary to ensure that the intellectual property of such a breakthrough would be fully protected right from the beginning - a step that some organisations miss out, often to their later detriment. Absolute Robotics contacted us at Coller IP Management, a company that helps organisations to understand the value of their IP and to protect and manage it effectively. CIPM prepared and applied for the required patent applications on behalf of Absolute Robotics and helped it evaluate the search reports on the inventions to enable the distinctive and innovative features to be identified.
Andreas Demopolous, managing director of Absolute Robotics says: "The concepts are now open to interested parties and investors for commercial exploitation via exclusive partnerships and licensing agreements."
Absolute Robotics is currently presenting the concept to interested parties and a number of organisations are evaluating it. The next step for the company is to form a partnership with appropriate relevant businesses and create a working prototype. Absolute Robotics thinks that this is most likely to be for an in-line measurement application and that its chief role will be as key technical integrator of the various technologies involved.
What to protect
What exactly does an organisation need to protect, and why? Take the case of a software developer. There are many aspects of IP that could apply here. Patent protection - which has a wider scope in the USA than in Europe - is one. There is copyright in code, user interfaces, documentation and media content; there are trade secrets in algorithms and coding; there are database rights, trademarks and know-how in use and applications, which often add significant value.
Investors deciding whether a company was a good bet would of course want to know what the technology behind the products is, but also what IP is held so that they understand what they will have on exit. They will want to know what patents have been granted, what trademarks registered and in what territories. They will ask whether inventors and developers are available to support future development. They will also want to know about risks, as well as other supporting intellectual capital. And they will want to know that those running companies in which they are planning to invest understand what IP is held by other players in their market.
If an organisation does not have the skills or resources to discover the answers to these questions in-house, external consultancies can help by using proven analytical tools and methodologies. Of primary importance is the need to discuss with each client the context of the work being commissioned and to develop sufficient knowledge of their need to allow the consultancy to produce relevant results.
Much of the analysis will be based on published information, in particular patents, which provide a good source of both technical and commercial intelligence. Analysis of the potentially thousands of publications normally necessitates the use of software-based tools. Such tools allow information to be analysed in many different ways. For example, to review the age profile of a portfolio or group of patents; to identify which areas are key to the operations of competitors or potential collaborators; to help establish the validity of client's patents and highlight how their portfolio might be strengthened. Any outside consultant should explain clearly and concisely why they have reached specific conclusions, and, importantly, what implication that has for their clients' business.
Those seeking investment should be able to show clear, documented ownership; clean rights for exploitation; assignments of IP; patent filings, searches, prosecution correspondence and evidence that IP fees have been paid. Conversely, what can kill a deal are issues over ambiguity/disputes on inventorship, ownership uncertainties, absence of documentation on contracts and IP rights, inadequate or confused agreement and the IP not aligned with the business plan.
Not only investors, but also some banks are now contemplating investing in start-ups from a venturing perspective, as they realise that the vast majority of corporate value today is represented by intangible assets. A patent can give more than exclusivity on sales - if done well, IP protection can be a revenue generator.
In many instances when working with clients we have found that the due diligence process has revealed new development opportunities for companies that have subsequently received funding. Where necessary, any issues relating to competing IP, technologies and processes have been flagged up early for prompt resolution between the investors and companies concerned.
Whatever the size of your company and whatever stage it is at - start-up or established - and whatever the state of the economy, it is vital to understand the value of your intellectual capital and have a plan to protect it, to have a clear route to market and understand the competition. This is important at any time, but particularly so in a downturn. The best performers share the characteristics of focus to maximise competitive advantage, have their intellectual capital aligned with this competitive focus, and protected, and have an IP vigilance process in place coupled with agility to follow a robust route to market. They have a map of the key players in their sector and an understanding of the risks, as well as a plan to manage weaknesses and fills gaps. The value in the business - its intellectual capital - can take years to build, and a second to lose.
Jackie Maguire is with Coller IP Management [new window] and is a specialist in commercial IP management and valuation.