HM Insights

How startups and spinouts can effectively manage their IP

Starting a business or spinning out a company can be a time consuming activity with multiple matters requiring attention.

A lack of immediate trading revenue or investment funding can create a number of pressures, often resulting in founders having to maintain other sources of income.

This gives rise to a lack of available time, and an inevitable ranking of those items which should be taken care of, with those which are most important taking precedence.

Often intellectual property matters fall down the ranking, and are left to the side at the point of start up. This is not necessarily ideal. Where one is not aware of, or has not taken simple steps to address, the intellectual property issues pertinent to their business, one can be exposed.

This exposure can take a number of forms. Brand protection is a good example. Registering a trade mark gives rights in a name, rights which can be used to prevent subsequent market entrants from using identical or confusingly similar brands. Without registration one would have to rely on common law rights against passing off, to protect their use of a particular brand. The presence of rights under the law relating to passing off is dependant upon the existence of goodwill, that is consumer recognition of a particular brand as exclusively associated with one’s business. At the point of start up, generally no trade will have yet been effected, and no brand use made, as such no goodwill will be present – and the protections offered by the law relating to passing off will not be available.

Prior rights searching is also important – if one finds out several months after starting up that the brand they have been using is actually very similar, or indeed the same, as a prior third party brand, significant costs can arise – this risk can be avoided by simple initial searching.

Ownership of IP is another key issue. Without suitable transfers or licenses of IP having been effected, one’s business may exist under threat of withdrawal of access rights to the key IP that it needs to trade. Whilst at the outset all may be amicable, and the lack of formality not an issue, if circumstances change and founders leave for example, introducing that formality at a later date may be problematical.

Consideration of patenting can also be important. Patent rights can be of significant value to a business, both in retaining market exclusivity and leveraging investment. However, if one considers seeking patent rights too late, for example after products have been placed on the market or disclosures of innovation made, the opportunity to patent may have been irretrievably lost.

The above examples should be sufficient to highlight to those starting up or spinning out why they should think about IP at formation, but there are many others.

So how do startups and spinouts cost effectively address IP matters?

One needs to find the right advisor, one who is willing to share the risk at an early stage, understanding the cost and time pressures startups and spinouts are subject to.

At Harper Macleod we understand the issues and challenges startups and spinouts encounter, and we tune our IP services accordingly. This is why we have created out IPEnableTM service.

IPEnableTM is built to help pre-revenue startups and spinouts address IP issues in a cost effective way. Under IPEnableTM we provide free registered trade mark and IP audit services, establishing a solid cornerstone from which business can build. With IPEnableTM startups and spinouts can enter the market, and seek investment, in the knowledge that they have undertaken the basics to address their IP position, giving themselves a head start.