How SMEs can build an IP strategy

Ahead of World IP Day 2021, Cherrie Stewart, Gretha Cachia and Saumya Mishra from MacLachlan & Donaldson discuss the importance of intellectual property to SMEs for taking their ideas to market.

People come up with new ideas every day, ideas which could potentially make their way from the drawing board to the market. In fact, all the small and medium-sized enterprises (SMEs) in the market today have started from an idea which an individual came up with and thought to expand upon.

When working in the area of intellectual property (‘IP’), we are lucky to work with creative individuals whose ideas grow into something bigger. The manifestation of these ideas into a distinct form needs to be protected.

The theme for this year’s World IP day is ‘IP & SMEs: Taking your ideas to market’ and we want to share with you some information about IP and how to protect the products and services you are taking to the market.

What is IP?

IP, or to give it its full name Intellectual Property, are the intangible property rights which can be obtained to protect creations of the mind, such as new inventions and modifications, literary and artistic works, the outward appearance of a product, and symbols, names and images used in commerce. 

IP protection includes trademarks, copyright, patents and trade secrets, among other forms. The different forms of IP provide different rights and obligations and have different rules for claiming protection.

Like other types of property, IP is protected by law which allows the proprietors of such property to earn money or recognition from their inventions or creations while preventing others from making use of this property.

• A Patent is an exclusive right granted for an invention. Generally speaking, a patent provides the patent owner with the right to decide how – or whether – the invention can be used by others. In exchange for this right, the patent owner makes technical information about the invention publicly available in the published patent document.
• An Industrial Design constitutes the ornamental or aesthetic aspect of an article. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or colour.
• A Trade Mark is a sign which allows consumers to recognise and distinguish the goods or services of one enterprise from those of other enterprises. Most businesses make use of names and logos as the most basic identifier of their products. Sounds, shapes, patterns, colours, motion marks and hologram marks can all act to identify a product or service as well and can be registered.
• Copyright is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs, databases, advertisements, maps and technical drawings.
• This right arises automatically to benefit the author and it protects the tangible form of an idea that is the expression of an idea in a visible or audible form. Copyright does not protect ideas or concepts while they are in vague form.
• Trade secrets are IP rights on confidential information which may be sold or licensed. Typically, a trade secret protects a recipe, a process, formula, pattern or method. If such information is used or disclosed without consent by others contrary to honest commercial practices, it would be regarded as an unfair practice.

Significance of various forms of IP Rights (the value of IP)

IP is an integral component of any successful business. Companies of all sizes are at risk of having their unique ideas, products or services infringed upon, even if they are on the other side of the world. It is clear that IP protection applies to businesses of all sizes. Even huge corporations have had their ideas infringed upon and have filed multi-million currency lawsuits.

In case of small and medium sized businesses too, it’s very important to protect any unique products or services that you own because copy-cats can reduce your market share, resulting in slow growth or loss of revenue. Losing market share early on in a business’s development can be devastating as well as costly and time consuming and ultimately futile if you try to chase off the guilty party without any legal protection. 

According to a WIPO report on Intangible Capital in Global Value Chains, “IP and other intangibles add twice as much value to products as tangible capital”. It was estimated in this report that about a third of the value of products purchased by consumers comes from intangible assets like branding and technology.

This link between IP and economic growth has also been demonstrated in a joint study carried out by the EUIPO and the EPO in February 2021, whereby companies that own IP rights have 20pc higher revenue per employee than companies that do not. This revenue premium rises to 55pc and even higher for SMEs.

Thus, when a business is establishing its presence in the marketplace, protecting and managing its IP is critical as it can mean the difference between success or failure.

Protecting your IP protects not just your current marketplace but your future marketplace as it safeguards your ability to expand geographically.  Additionally, IP rights can be bought, sold, used as a lien or as security and can generate income through licensing.  

Identifying and protecting your IP may increase the worth of a business in the eyes of investors. For example, while intangible, the goodwill imbued within a trade mark can be one of a company’s most important assets and should be protected just as more tangible physical assets are protected.

Building an IP strategy

An IP Strategy is a plan, in line with your business goals, to acquire or maintain IP assets and to gain the most possible value from such assets.

The key elements to an IP Strategy are as follows:

1. Develop and identify innovation, new designs, new brands or new trade secrets (formulas/recipes);
2. Apply to protect the innovation, designs, trademarks or document the trade secrets;
3. Renew any existing patents, designs or trademarks;
4. Value your IP, if applicable;
5. Licence or enter in other agreements taking advantage of your IP or collaborate in the knowledge that your IP is safeguarded; and
6. Police and enforce your rights against infringers, if necessary.

Having an IP Strategy provides a competitive edge in the market.

Implications of recent challenges on IP Rights

The coronavirus pandemic has had a great impact on the economy. Businesses around the world have cut costs and stopped any unnecessary spending. In this context, it is important not be tempted to make risky cuts to IP budgets. Rather, one must maintain IP protection to make sure that there are the necessary measures in place for the business to continue functioning efficiently.

It is advisable to focus on your IP strategy and prioritize according to the needs of your business. The answer might be to look at more leverage through sale, transfer, licence and/or retention which is properly calculated and planned.

Daren Tang, the WIPO Director General has recently commented on IP application trends and suggested that “because IP is so connected to technology, innovation and digitalization, IP will become even more important to a greater number of countries in the post-COVID world.”

Apart from the effects brought about by the pandemic, January 2021 brought about the implementation of Brexit, whereby several IP Rights have been affected.

Registered European Trademarks and Designs

While domestically registered trade marks and designs in the UK remain unaffected, Brexit has affected the protection afforded in the UK for those who have registered European Union Trade Marks (“EUTMs”) or designs. EUTMs and designs have ceased to have an effect in the UK. All granted EUTM registrations and designs before Brexit will automatically have a corresponding UK national trade mark registration created, thus preserving the priority, filing, seniority and renewal dates of the EUTMs and EU registered designs from which they derive.

New EUTM and design applications filed now, will not cover the UK and so, if you require protection within the UK it would be necessary to file a separate UK application.

An important development you may note is that following Brexit, UK-based attorneys representing EUTMs have lost their capacity to act before the EUIPO and owners will require an EU-based representative to communicate with the EU Office.

The opposite scenario also applies where EU-based representatives cannot act before the UK Intellectual Property Office and a UK-based representative would need to be appointed.

• Unregistered Trademarks and Designs: The law of passing off, which can be invoked to enforce unregistered trade mark rights remains unaffected in the UK. EU Unregistered Designs will automatically have a corresponding UK national design protection. It is important to note that unregistered rights arise in the place in which the design has first been disclosed and therefore, registering designs has now become more important in order to have more control over their protection.
• Copyright and Database Rights: These rights have not been appreciably affected in the short to medium term since the UK is still party to the Berne Convention which governs international copyright and therefore, copyright protection will remain unchanged in the immediate aftermath of Brexit.
• Patents: National UK patents remain unaffected and for those applying for patents in the UK nothing much has changed either. This is because the UK is a party to the Patent Co-operation Treaty and the European Patent Convention, neither of which rely on EU membership for effect. On the other hand, the coming into effect of the Unitary Patent and the Unified Patent Court (UPC) could be significantly delayed as the UK is a compulsory member for the UPC to take effect.

The way forward

If you have an idea which might be worth protecting, it is advisable to talk to an IP Attorney who may guide you and advise you on the best course of action to take before sharing your idea with the public.

If you are already running a business, it is also advisable to regularly seek advice regarding your existing IP portfolio and any new forms of IP.

MacLachlan & Donaldson have substantial experience working with companies and investors and understand the time, effort, and resources that go into creating new IP. By working closely with clients they can recognise new and emerging IP, and the potential value it can create for a business if properly safeguarded. To learn more email To learn more email mail@maclachlan.ie

Published: 13 April 2021