Intellectual property (IP) is a great investment for businesses of all sizes and in all sectors. In this article we will explore 5 key reasons to invest in your intellectual property.

1. It is a valuable asset that grows with your business

For many businesses, IP assets account for a significant proportion of their market value, often estimated at over 60%.  This IP may be a combination of registered rights, such as patents, trade marks and registered designs, and non-registered rights, such as goodwill and brand awareness. For brand- or tech-heavy businesses, IP can represent almost all the value of the business.

Unlike other business assets, intellectual property has no fixed value, nor is it tied to any market rate. As your business grows and awareness of your brands, products or services increases, so will the value of your intellectual property.

As such, having legal protection for your inventions, trade marks and designs should be hard-wired into your business plans.

2. IP rights increase the value of your business in different ways

Investing in your patent portfolio provides you with the right to exclude others from using your inventions. Patents can also create direct revenue through their licensing and sale. For tech-heavy businesses, patent rights are almost always a pre-requisite before major investors will consider providing funding.

A registered trade mark protects the value of your brands and can considerably increase the value of your business, especially if you are considering selling the business or floating on the stock exchange. It is also a great tool in anti-counterfeiting measures.

Registered designs can be used to prevent competitors copying your product designs (even for just parts of your products), and ensures that competitors cannot simply ride on your iconic or consumer-preferred designs. This forces competitors to spend their own time and resources developing alternatives.

3. You can license, sell, or otherwise leverage your IP

Your intellectual property assets can be leveraged to return significant profit, for example through licensing agreements.

Licensing of IP can be territory-specific or product/technology-specific. For example, you can license your IP in countries where you do not operate or in respect of product areas/technologies that are not part of your core business. Read more about licensing in our article 5 things to know about licensing your IP.

IP can also be sold much like any other asset and the price will depend on factors such as demand, costs involved in developing the IP, longevity of the IP etc. This can be particularly useful for “surplus” IP that you no longer need perhaps due to a change in business direction but for which there is still a demand.

You can also leverage your intellectual property when selling a business, or as an asset against borrowing from banks, investors, and other financial providers, which may be particularly useful when expansion of your business requires significant cash investment from third parties.

4. It is cost effective

Trade marks are an essential asset for every business. Obtaining protection for a trade mark in the UK and Europe is a quick and easy process. Trade mark protection is relatively inexpensive, particularly as registered trade mark protection lasts for ten years and can be renewed indefinitely.

Registered designs are similarly quick and easy to obtain and last for an initial 5 years, with the potential to renew every 5 years for up to 25 years in total. Registered designs have been used to force competitors to remove entire product lines and prevent cheap imports from around the globe at relatively little cost, so their potential value is considerable.

Whilst obtaining patent protection is generally more expensive than securing other registered IP rights, the payoff from a valid and enforceable patent can be substantial. A valid patent can ensure a significant financial and competitive advantage in a particular market for the duration of the patent’s life. A patent for a key invention or breakout technology can be the making of a business. Without patent protection, your competitors may be able to copy the technology without challenge; with a patent your invention is protected, helping to ensure that consumers choose your patent-protected product over competing alternatives.

Additionally, tax relief may be available through the Patent Box scheme for any product sold which incorporates a patented invention.

5. It can increase your business reputation and attract investors

Unfortunately, some businesses may neglect to protect their intellectual property in the early days. This can lead to considerable problems in the future as most patent and trade mark systems operate on a first-to-file basis, and patents need to be filed before you sell or publicise your invention. Not protecting your brands and technology can be a deal-breaker with potential investors.

A business that is seen to invest in its inventions and brand early on is likely to be considered more commercially savvy, a worthy partner and a sound investment. It shows belief in your technology and/or brands, proving to investors, the media and relevant trade circles that you are confident of your business position, your ability to grow and your ability to fend-off competitors and stand out in the market.

Contact us today to discuss protecting your intellectual property.