Is intellectual property strategy relevant to SMEs?

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Adamson Jones

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In this insight we explain why IP strategy could be relevant for your business.  

UK SMEs are amongst the most innovative in the world

UK innovation is widely considered to be world-class. A global innovation index for 2016 published by the World Intellectual Property Organisation has identified the UK as the third most innovative country, just ahead of the US in fourth place.

The true value of intellectual property rights 

However, the difference in attitudes towards the commercialisation of intellectual property rights between the UK and US still seems prevalent in many areas of technology. It is perhaps trite to say that US companies are keener to own IP rights and are not afraid of IP litigation. In contrast, many UK SMEs do not take up IP protection options on the basis that enforcing IP rights can be an expensive endeavour.   

In practice, very few patents, trade marks or registered designs end up being the subject of litigation. The overarching mindset in the UK is one of respect for other people’s IP rights and so the true value of IP rights is typically realised away from the public gaze, for example during negotiations with customers, collaborators, suppliers, distributors and the like.

How to determine whether IP strategy is relevant for your business 

IP strategy in the UK is often seen as a niche area of interest reserved for start-ups bringing new technology to market or multinational manufacturers. But the question of IP strategy is equally important to SMEs, especially when one of the strengths of SME’s is the ability to innovate quickly.  

Companies typically value themselves higher than the sum total of their assets and existing orders. This reflects an ability to sustain future profitability. The starting point for an IP strategy is therefore to ask the question ‘to what extent is our future profitability reliant on our know-how, creativity and innovation?’ Based on that answer there are four general approaches to IP.

Four general approaches to IP

  1. IP dismissive: don’t want/need to know about IP protection
  2. IP reactive: aware of IP but don’t take action unless a clear need arises
  3. IP proactive: actively plan to protect IP and avoid competitors’ IP rights
  4. IP led: only pursue business options where strong IP protection is available

Your ranking in this list may well impact the degree of control you have in negotiations with other companies. The start of an IP strategy simply requires an honest acknowledgement of which approach you are currently taking and which approach is best suited to your plans for the future.

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