Intellectual property: a starting point for young companies
Patricia Barclay explains the importance of protecting your intellectual property and well crafted licences.
The most valuable parts of any young business will normally be its ideas so it makes sense to take steps to protect and grow these assets.
These assets can take various forms: patentable inventions, registered designs protecting the aesthetic elements of functional products, copyright in written, artistic or musical forms, trademarks, or trade secrets. One of the first things to consider is whether these assets should be contributed to the business or merely licensed by the originator. A well crafted licence can still permit the business all the rights that it needs and it is possible for the licensor to require the licensee to cover any registration costs however the capital value of the company and perhaps its access to certain grants may be improved if the new company actually owns the assets. Where the business is being set up by several parties and its future is as yet a little uncertain however it may be in the interests of the originator initially to license the assets to the company so that if things do not go to plan he can more easily recover his assets.
The next question is how to grow intellectual assets within the company. This is usually done by inserting clauses in the contracts of employees, directors and consultants to protect the confidentiality of new ideas being developed within the company or on its behalf and to ensure that ownership of these assets ends up within the company. Remember that while employee inventions generally belong to the company those of consultants will not unless the contract specifically requires their assignment. The business may also own less commonly appreciated intangible assets such as customer lists, databases and methodologies for accomplishing particular tasks and these can all have individual value and should be treated as important assets of the business. For service companies you might increase the value of your methodologies by branding them and in effect turning them into products which can then form the basis of further products and services or opportunities for expansion such as through franchising.
Some forms of intellectual property retain or develop value only as a result of how they are protected or used which must be incorporated into your business processes. For example legal protection for trade secrets such as the formula of a soft drink or a manufacturing process also requires a business to show that it has taken steps to treat this information as a very special secret by ensuring that access is only on a need-to-know basis and that these secrets are both physically and contractually secured. Trademarks need to be used within a branding context and should never be used as a verb e.g. I'm hoovering the carpet or for similar products sourced from others as this can lead to the word acquiring a generic use and losing its distinctiveness as a trademark as for example happened with aspirin once a valuable trademark of Bayer.
Patricia Barclay, www.bonaccord.eu, is a solicitor with more than 20 years' experience in helping science based and other innovative companies commercialise their ideas.