Why Every Business Needs an Intellectual Property Strategy

Nowadays there is increasing awareness about the value of “intellectual property” and brands. Yet “intellectual property” is a term that alienates many people because they don’t understand what it means or how it applies to them.

According to IP Asset Maximizer, more than 50 % of corporate value today lies in the form of intangible assets. So it’s worth developing an awareness of your IP. Every business has the potential to have some intangible assets.

Intangible assets will comprise IP like patents, trade secrets, copyright, trademarks, and contractual relationships. Employee knowledge is also valuable IP and is one reason why it’s worth having a know-how system in place to capture knowledge to preserve the company’s intellectual capital.

However, IP assets don’t just exist without more. They need to be identified, captured, protected and commercialised in order to realize their value. Whatever size of business you are, you need to manage your intangible assets.

While the importance of an IP strategy is appreciated in larger organisations, it’s not so well appreciated at the smaller company level. An IP strategy is just as important for smaller businesses, including early stage businesses.                                          

Some entrepreneurs, especially those in start-up mode, are skeptical whether it’s actually worth spending money protecting something that has little or no immediate value, such as their name. An analogy to the physical world may help explain this.

If someone built a house on a plot of land that didn’t belong to them you’d wonder why they were spending time and money on such an inherently risky project. The owner of the land could evict them at any time. Even if the land was for sale, it would make sense to first buy it in case someone else beat them to it and bought the plot first. Demolishing your house and finding another plot to rebuild it on would be very expensive.

So, if you don’t want to register your name as a trade mark, an appropriate IP strategy can accommodate that, and you have various choices for approaching this. Effectively, you could decide to just to build a temporary shed on the plot for now, with a view to building a house later, either on that land or elsewhere once your fortunes improved.

Not securing the intangible rights to something like your brand name is the equivalent of building a house on a plot of land you don’t own. It’s far easier to buy the rights at the beginning than to conjecture whether you would have strong enough rights to fend off someone else who beat you to the punch and registered the name first.

Moreover the name you choose determines how good your plot will be to build on. Some name choices will give you a completely clear area to call your own. It’s as if your land were in the middle of countryside with few neighbors looking on. On the other hand, other name choices would put you in a heavily overlooked area with the likelihood of trespassers constantly coming onto your land no matter how hard you worked to ring fence your patch.

If the aims of the business are to first see whether it is viable before incurring costs registering rights, then an appropriate IP strategy might be to rebrand in a couple of years if the business succeeds.  However, it is a mistake to then completely neglect all IP issues.  There are some IP rights which are lost forever if not addressed in the early days. Once the business succeeds its intangible assets acquire value.

So even a modest start up needs an IP strategy. If the business will generate IP rights which others are unlikely to freely sign over if left until the business succeeds, then the IP strategy will involve securing those rights immediately rather than postponing this.

I hope this post will serve to demonstrate that an IP strategy is not set in stone. Its details will vary for each business, based on the industry, the available budget and resources, and most important of all, the business’ goals.

If you have yet to set your IP strategy, now might be the time to do it. The economic climate is tough, and deferring decisions about IP protection can mean that important IP issues are neglected. Neglect is not an appropriate IP strategy for any business.