Intellectual Property Rights – Why Ignoring Them Could Be Disastrous For UK Businesses

Good news for UK business this month. The UK is ranked as the most entrepreneurial country in Europe and the world’s second most innovative country.

The Global Entrepreneurship Index measures start-up progress in the world. Only the USA, Canada and Australia came above the UK. (See the Guardian report).

For innovation we did even better, coming second in the Global Innovation Index 2014.

This is all well and good but as you may have guessed there is a ‘but’ coming.

Intellectual property (IP) law will be relevant to every one of these businesses.  Yet MBA courses, books for start-ups, and entrepreneurship groups neglect IP law to a shocking extent.

Start-up publications and MBA courses ignore IP

A survey of more than 20 books released between 2006 and 2013 that give business advice to fledgling companies reveals that only eight mention IP. And of those, a mere handful explore the subject beyond a brief summary.

It’s a similar story when you look at MBA courses. The one run at London Business School, is ranked number four in the world according to the Financial Times.  But it does not mention IP in its core modules.

Before looking at why IP is dealt with so cursorily, let’s see how many start-ups we are talking about. Currently, start-ups are increasing at a rate of 7% year on year; a staggering 526,446 new companies registered with Companies House in 2013. It is likely that at least 50% of these (most likely more) will not have considered IP at all before registration.

Other IP lawyers are similarly surprised

I am not alone in finding this surprising. Neil J Wilkof who contributes to blogs such as IPKat and IP finance, stresses this point frequently throughout his writings:

“It remains my most vexing professional challenge. The “it” is how to integrate IP/IC into management education. The vexation comes from the seeming paradox that while intellectual property and intellectual capital are routinely described as cornerstones of innovation, if not modern business itself, their systematic presence in MBA curricula remains sporadic at best.”

The world has changed

My theory for this state of affairs is that society hasn’t caught up quickly enough with the dramatically changed role of IP law in the digital age. The fact is that the Internet is creating new rules for many industries, and also for IP law.

In an industrial society IP was a more esoteric subject; one that was of marginal relevance to small businesses. However, in the digital world IP occupies a central role. There are few areas of commerce that are not impacted by IP.

As I explained in my blog on rebranding, the risk of encroaching on other people’s rights is far greater nowadays. A simple search on the Internet may instantly reveal whether a name or image you are using belongs to someone else. In the overcrowded world of businesses, it becomes more important to register trademarks and other IP to protect your business against competitors.

Myths and Misinformation about IP

There is a lot of misinformation around IP law. These myths can be dangerous.

A common misconception is that IP is all about patents. People justify ignoring IP because they don’t have “£50,000 plus to spend on patenting”.  While it’s true that securing a patent may be optional or may not be worth the investment, at other times it may be the essential protection without which a business should not operate.

There are other IP rights apart from patents, such as copyright and trademarks. This could be the critical IP on which a particular business needs to focus.

The right action for one business will differ enormously from another as so much depends on the context, the business concept and the vision behind the business.

Some business advisers acknowledge the importance of IP for a business producing physical products, or to a business that is already successful and established, or to businesses operating in the creative sector.  However, IP should not be ignored by anyone planning a new project.

Many business advisers don’t understand IP

It is concerning that even those who should know better, such as investors and business advisers, still don’t really understand IP. Yet some will advise others about IP based on their own misconceptions. For example, they make statements such as “IP is relevant to certain ‘IP rich’ businesses”.

Whether due to wrong assumptions about IP involving costly registrations, or ideas as to the costliness of IP advice, IP is often not adequately considered when new ideas are implemented.

A serious error is the assumption that IP is all about the protection of what you have. What is less well appreciated is the need to take account of other people’s IP when making choices of names and designs. Also, if you ignore the question of whether or not you will secure necessary rights when you commission someone else to create something like a website for you, then you store up problems for the business down the line.

A frequently made mistake is around the choice of names. That is a whole subject in its own right. For now what is noteworthy is that there is no point in designing a brand around a name that you may not own, or which is otherwise inadequate from an IP perspective. Too often designers who create brands for their clients make fundamental errors that lay them open to negligence claims if their clients seek legal advice from an IP lawyer.

Undoubtedly, for some people IP is just too inconvenient to take on board.  We live in an age when it is so easy to set up a new business by going online and getting the information and templates you need. Legal advice is seen as a nuisance and unnecessary expense. Copyright and trademark law are thought of as simply too much of a grey area and too complicated. And that is precisely why we need more education on IP in books, courses and entrepreneurship groups.