Small Business IP Matters

The article below was taken from the Daily Telegraph newspaper from 31st March 2011 and highlights the two sides of a dispute about the reality of Intellectual Property (IP) and small businesses in the UK. Is registering and protecting a company’s IP is actually worthwhile?

The overriding issue is that once a company registers its IP (i.e. Trade Mark, Patent or Design), the cost of taking action against an infringing party usually outweighs any other decision-making factors, so the question becomes “Why register IP in the first place if the owner is going to find itself out of pocket by enforcing its ownership rights against infringing parties?” It therefore becomes a business issue, rather than a pure legal ownership right.

Despite this “chicken and egg” scenario, my advice to clients is always to protect one’s brand through IP registration. Whether or not you decide to proceed with an alleged infringement action when the circumstances arise is a question for the future, but at least you will have the choice. In addition, the world will be “on notice” that the mark, design or invention is yours.

A cost benefit analysis is always key. The types of questions I usually find myself asking clients centre around the commercial reality of the IP owner, the infringement, the Defendant and any enforcement action i.e. What is the nature of the infringement? What is the value of the infringement to the infringing party? How much has the IP owner actually lost? Who is the defendant? Do they have deep pockets (in which case they may decide to take it all the way to court) or are they a “one man band” who are unlikely to refrain from their infringing activity (in which case it even a court order may be unlikely to deter them)?

Ultimately, the decision is down to the client. Taking action against an IP infringer is a staged process; from the early infringement notifications, to letters of claim, to settlement discussions and negotiations, to litigation. The client should be aware that once it reaches litigation, it’s effectively out of the parties’ hands. Costs escalate. Fast.

My opinion is that there needs to be a more “IP Owner Friendly” system of enforcement. It makes no sense to have a reasonably priced, open, user-friendly application and registration system if enforcement proceedings are prohibitively expensive and time consuming. We live in a world where time is of the essence and is a real commodity. Everyone promises – and expects – “instant”. This, together with the “era of austerity” in which we live means that businesses and individuals are time and money sensitive. The current system therefore needs to catch up and be dragged into the 21st Century.

Small companies ‘unaware’ of how to protect their ideas

Entrepreneurs need to do more to protect and exploit their intellectual property, according to Government agency.

Just 15pc of small businesses have ever sought advice on safeguarding their ideas, according to a survey by the Intellectual Property Office (IPO).

The research, based on a survey of 20,000 businesses, also found that just one in ten small businesses assign responsibility for managing intellectual property (IP), compared to 43pc of larger companies.

The IPO, a Government agency, warned that this meant small businesses “risk missing out on valuable income from their creativity”.

Intellectual Property Minister Baroness Wilcox said: “It’s clear that many smaller companies aren’t aware of how to make the most of their intellectual property.”

She urged more small companies to make use of “a range of information and services” that help companies identify and benefit from their inventions and designs available through the IPO.

However, John Mitchell, chairman of the SME Innovation Alliance, said that the problem was as much about an inadequate patent enforcement system as any lack of effort or understanding about IP among small companies, with entrepreneurs often lacking the resources to defend their IP in court.

“Many small businesses do know how to make the most of their intellectual property,” he said.

“The UK enforcement system fails small businesses in particular so it is hardly surprising that they do not seek advice from the IPO, who have no part to play in enforcement matters.

“The UK cannot generate any ‘big businesses of tomorrow’, as the Prime Minister says the economy needs, if we continue to offer an enforcement system that only large corporations can realistically benefit from.”

An independent review into the UK’s IP system is currently being carried out by Professor Ian Hargreaves. His findings will be published next month.