Remember your intellectual property when trying to attract investment

How can you use your Intellectual Property rights to attract investment into your business?

It is well known that IP rights’ primary function is to protect intangible assets such as ideas, inventions, brands, and information. However, there are additional, less obvious benefits provided by maintaining a portfolio of IP rights. One of these benefits is the ability to leverage IP rights to encourage investors to provide financial support for your business. This advantage is often underappreciated, especially by early stage companies looking to attract funding to continue their growth.

We’ve put together a handy list of our top tips on how to best use your IP rights to attract investment:

Identify gaps in your IP protection

To have the best chance of using your IP to attract investment, your business’s core areas must be protected. Any gaps in your protection could be exploited by your competitors, potentially reducing your business’s value in the eyes of investors. For your business to be in the best possible position for investment you should regularly review your IP rights and the protection they provide. For example, key inventions should be protected with patent rights, core branding should be protected with trade marks and/or design rights, and all contracts and agreements should include IP provisions. Additionally, you should ensure your business has protection in all key markets around the world, not just the UK.

One of the most effective ways to review your rights is an IP audit carried out with your IP attorney and potentially partially funded by the UKIPO. Illustrating that you have reviewed your IP portfolio to ensure it is comprehensive will encourage investors to put their money on the line.

Develop a sensible IP strategy

Another important consideration that will show investors you are serious about your business’s IP is developing an IP strategy. It is important to note that there is no “one size fits all” for IP, and your IP strategy should be tailored to your business’s specific needs. With trade marks, you should plan the trade marks you wish to use for any future products and services. You must take early action by registering the trade marks in countries where you want protection and carrying out searches to check that your mark won’t infringe any previously registered trade marks.

With patents, it is vital to educate your employees about the importance of confidentiality. It can also be advantageous to introduce an “invention harvesting” procedure to identify any technical innovations that may be protected with patent rights. It is also essential to think about registered and unregistered design rights that protect a product’s shape and appearance rather than its function. It is important to keep records of all new designs and their creation date.

A sensible IP strategy helps build valuable IP within your business as it develops, ensuring that all bases are covered when the time for investment is right.

Mark your products to highlight your IP rights

Marking your products shows investors that you believe in your product and do not want any competitors riding on its success.

You should mark your products that are associated with your registered trade marks using the ® symbol. Use of the ® symbol is reserved for registered trade marks. Where your products are branded with unregistered trade marks, this should be highlighted with the TM symbol. You may also mark your products associated with a pending patent application as “patent pending” or “patented” for products protected by a granted patent. Marking your products can boost the reputation of your company as an innovative business.

Additionally, highlighting your IP rights can also act as a visual deterrent, having a dissuasive effect on anyone looking to copy your products. Care should be taken when marking a product as “patented” or “patent pending” as you may be fined for any misstatement. Product marking is a key method of highlighting and increasing the value of your IP in the minds of investors.

Make sure you are aware of who owns the IP rights

Ownership is a core aspect of IP rights as it is the owner of the right that is able to control its use. The owner is also the person who is able to assign or licence IP rights. Therefore, ownership of IP rights is very important.

Some confusion may arise when, for example, an employee invents a product or process for your company. Importantly, a patent for the invention will belong to the employer where the invention was made in the course of the employees’ normally or specifically assigned duties and the invention was made in circumstances under which an invention might reasonably have been expected to have arisen from carrying out those duties. Further criteria apply where the inventor is considered to have a ‘special obligation’ to their employer, for example directors and company owners. Where the ownership of an invention is unclear, it may be useful to have your patent attorney review the inventors’ contribution and contract.

Further issues may arise when embarking on R&D collaboration ventures or with contractors. In these situations, it is important to be aware of where the ownership of IP falls. Again, it may be useful to have your IP attorney review any joint venture agreements you have in place. Investors will want to know whether you have full ownership of your IP or whether some of it is co-owned. Of course, ensuring the ownership of your IP is resolved is important to investors, and is a focus of any due diligence before a deal completes.

We have a number of podcasts and blog posts on confidentiality and how to mark your products. We will soon release a podcast episode on IP ownership. Why not subscribe to our podcasts to make sure you don’t miss this episode?

For further information, please contact us.