Writing IP into your Business Plan

Author Grenavitar Licence Public Domain Source Wikimedia Commons

Paternoster Square, City of London

 

Jane Lambert

A business plan plots out the course that a business is to take from its present position to a point in the future.  During that time it is expected to develop new products and/or services that will attract customers.  The design of goods, the technology that the goods or services incorporate or by which they are made or marketed and/or the reputation that the business develops are business assets.  As they are creations of the mind rather than space or machinery they are often referred to as intellectual assets.  The legal protection of those assets is known as intellectual property.

The first step is to identify intellectual assets.  As they are not always obvious, startups and other small businesses should make use of the WIPO's IP Diagnostics and the British Intellectual Property Office's IP Healthcheck tools which I mentioned in Saving Money on IP at a Time of Rising Prices on 19 May 2023.  As a company expands and becomes more diverse its owners should carry out regular intellectual property audits.  In How to Use an IP Audit (13 Jan 2022 NIPC News) I described IP audits as "a tool for identifying 'potential IP assets', that is to say, protectable intellectual assets."  That article discussed the different types of intellectual audits and how they may be used in business planning.

In that article, I warned:

"Like other tools, an IP audit can be misused. The identification of a patentable invention does not mean that a patent must always be sought. Considerable resources may be required to protect the invention in the countries where it may be marketed as well as those in which suppliers of competing products are located. Unless the development, production, marketing and distribution of the invention are already featured in or can be incorporated into the company's business plan. there are likely to be better uses for such resources."

In the next paragraph, I wrote:

"An IP audit can be put to better use when devising and monitoring the implementation of an intellectual property strategy."

I defined an intellectual property strategy as "the systematic application of intellectual property laws to achieve business objectives" in "What is an Intellectual Property Strategy" in NIPC Law on 19 May 2017.  I gave an example of a simple intellectual property strategy in Putting IP at the Heart of Your Business Plan in NIPC News on 2 Jan 2015:

"(1) Identify the likely income streams over the period of your business plan: these may be sales, payments for services, grants, subsidies - any kind of revenue;
(2) Consider the threats to those income streams over that period - most of those threats will be commercial such as competition from other businesses and changing customer behaviour but a few could result from copying your products or riding on your reputation;
(3) Develop responses to those threats - as most of those threats will be commercial so will your responses such as reducing prices and developing new products but such threats as plagiarism and free riding may require a legal response;
(4) Tailor your response to suit the threat and your resources - there is often more than one form of legal protection such as keeping your new product under wraps and relying on the law of confidence to keep it secret rather than seeking patent protection so consider all the options before you actually spend money on searches and applications."

I amplified that last point in Saving Money on IP at a Time of Rising Prices.   Patent prosecution is expensive and comes with the important downside that every invention must be disclosed "in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art," Not every invention needs to be patented.  Much innovation can be protected adequately by trade secrecy or design rights.   

I also emphasised the importance of enforcement in Putting IP at the Heart of Your Business Plan and  Saving Money on IP at a Time of Rising Prices.   Business planners have to beware that a well-funded competitor may attempt to revoke their patent or other intellectual property right or simply infringe it.  While the Small Claims Track of the Intellectual Property Enterprise Court will resolve most types of IP claims for £10,000  or less that can be tried in a single day and there are cost-effective alternatives to litigation such as patent examiners' opinions and the Uniform Domain Nane Dispute Resolution Policy that I mentioned in Saving Money on IP at a Time of Rising Prices, most IP litigation is expensive.  Few startups or other small businesses can afford the cost of litigation in the Patents Court or even the Intellectual Property Enterprise Court multitrack.  The only way many of them can defend themselves is by relying on before-the-event IP insurance. A small number of brokers such as Sybaris Special Risks and Safeguard IP are beginning to write policies for small and medium enterprises.   As I said in Saving Money on IP at a Time of Rising Prices, the IPO has provided some useful guidance on IP insurance and the Chartered Institute of Patent Attorneys and the Chartered Institute of Trade Mark Attorneys. publish a list of specialist IP insurance brokers.

It is now possible to identify the information that can be written into a business plan:

• the intellectual assets discovered by using the WIPO or IPO diagnostic tools or commissioning an IP audit;
• professional fees for carrying out such an audit;
• costs of prosecuting applications for such patents, registered designs, trade marks or other registrable rights as are found to be necessary for devising an IP strategy;
• premiums for intellectual property insurance;
• renewal fees for patents and other registrable rights; and 
• contingencies and other miscellaneous expenses.

Costs are not the only information to be inserted into a business plan,   Assets have value and for many businesses, the most valuable assets may be their brand, their designs, their technology or their creative works.  Estimates of the expected values of those assets should also be inserted into the plan.   It is those assets that are most likely to persuade investors to invest or lenders to lend to the venture.

Anyone wishing to discuss this article may call me on 020 7404 5252 during office hours or send me a message through my contact form.

Direct Access to Barristers on Intellectual Property Matters

Jane Lambert

I am a member of the Intelectual Property Bar Association to which most barristers specializing in intellectual property and technology law belong.  There are over 100 of us.  Most are in London but there are a few in other parts of the country.  Our job is to advise on difficult points of law, draft complex legal instruments and represent clients in litigation and negotiations.  Most of the judges of the Patents and Intellectual Property Enterprise Courts and many of the other judges of the Chancery Division were recruited from our numbers. 

Barristers are often compared to consultant physicians and surgeons in medicine.  Just as a GP might refer patients to specialists for diagnosis or treatment, patent and trade mark attorneys and solicitors seek our opinions, drafts or representation for their clients. Until 2004  we had to be consulted through those intermediaries. Nowadays, many of us accept instructions directly from members of the public on IP matters under the public access scheme.  Earlier this evening, for example, I was asked how to apply for a patent.  Over the weekend I was asked how to challenge a design registration under s.11ZA of the Registered Designs Act 1949,  Other typical requests would be to review a lengthy business format franchise agreement, draft a complaint in a domain name dispute or appear at an online entitlement hearing in the Intellectual Property Office,

It should not be supposed that we do the work of solicitors, patent or trade mark attorneys or other professionals simply because we can be instructed directly.  Our Public Access Guidance forbids us from conducting litigation unless specifically authorized to do so.  Similarly, we do not prosecute patent, design or trade mark registration applications though we draft statements of case, review witness statements and appear before IPO hearing officers and EPO Boards of Appeal.  Our rules prevent us from acting for a client if we believe it to be in the client's interests or the interests of justice for him or her to instruct a solicitor or other professional intermediary.   Far from competing with other professionals, we are actually a source of work for them. 

Though we do not prosecute patent, design or trade mark applications or conduct litigation we may be the best initial point of contact for clients who may need such services.  There are many ways of protecting the same intellectual asset some of which are free such as unregistered design right or the right to bring an action for passing-off.  The optimum method of protection at a particular time and in certain circumstances is not necessarily the most comprehensive.  Similarly, a request for the transfer of a domain name under the Uniform Domain Name Dispute Resolution Policy can be much faster, cheaper, safer and even more effective than a trade mark infringement or passing-off claim in the courts.  Counsel's advice on those matters is objective and impartial. If an attorney or solicitor is required we can suggest intermediaries with whom we have worked satisfactorily in the past.

If a business owner, manager or individual seeks advice on a point of law we can advise on most matters without the assistance of a professional intermediary.  That would include such questions 

• "Is this computer-implemented invention patentable?",  
• "Do I have an action for copyright infringement?" 
• "I have just received this demand for undertakings and pile of documents from that big firm of solicitors, what are my options?" or
• "Can you help me understand this complex agreement that a potential customer has just sent me?"

There are some issues such as "Is this invention patentable given the prior art?" when we would need a patent search or some other information that a professional intermediary can supply. 

When a business owner or manager understands contracts and has negotiated deals before we can draft just about any kind of agreement or instrument for him or her.  If he or she is feeling his or her way we would advise the owner or manager to introduce a solicitor, accountant or another professional to the team.

Most litigation would need a solicitor, attorney or other professional but sometimes the client can do the necessary work and all that is required is advocacy.   Many hearings in the Intellectual Property Office or small claims track of the Intellectual Property Enterprise Court would fall into that category.  On one occasion I have responded to an appeal in the Court of Appeal and there have been several others when I have appeared in the High Court without a solicitor.

If you want to use our services you will need to supply a passport, driving licence or other photo ID and evidence of residence and if you represent a company your authority to do so.  We will specify what we will do when we shall do it and how much we shall charge in a client care letter.  That is your contract with your barrister.   In the unlikely event that something goes wrong, we are all insured and regulated by the Bar Standards Board or other authorities We have approved complaints handling procedures and the ordinary law of contract and tort applies to us just as much as to any other professional services provider.  You can find more information in the Public Access Guidance from our regulator.

Anyone wishing to discuss this article may call me during office hours or send me a message through my contact form.

How the IP Bill affects Inventors

Source Wikipedia

The Intellectual Property Bill has completed its passage through Parliament and will shortly become law. Although most attention focused on HM government's proposal to criminalize registered design infringement the Bill makes a number of changes to British patent law which will affect inventors.

Overview 
This is a very short legislative instrument consisting of 24 clauses in 4 Parts and one Schedule.  Part I which consists of 14 clauses relates to registered design, registered Community design and unregistered design right law. Part 2 is concerned with patents, Part 3 with amendments to the Freedom of Information Act 2000 which will prevent premature disclosure of sensitive technical or commercial information relating to research and a new duty upon the Secretary of State for Business Innovation and Skills to deliver an annual report to Parliament on how the Intellectual Property Office and IP legislation generally have facilitated innovation and growth in the UK and Part 4 with the implementation of the Bill once it becomes law. The Schedule contains minor amendments to the Patents Act 1977.

Part 2: Provisions relating to Patents
These are as follows:

Clause	Provision
15	Infringement: marking product with internet link
16	Opinions service
17	Unified Patent Court
18	Sharing information with overseas patent offices
19	Minor amendments to the Patents Act 1977

Infringement: marking product with internet link

At present s.62 of the Patents Act 1977 protects an infringer from an award of damages or other pecuniary relief if he or she can prove that that at the date of the infringement he was not aware, and had no reasonable grounds for supposing, that the patent existed. The appearance of the word "patent", "patented" or any other word or words expressing or implying that a patent had been obtained shall not suffice unless the number of the patent accompanies the word or words in question.

Clause 15 inserts the words “or a relevant internet link” after "the number of the patent" in s.62. The words "relevant internet link" are defined by a new sub-section (1A) to s.62:

"The reference in subsection (1) to a relevant internet link is a reference to an address of a posting on the internet—
(a) which is accessible to the public free of charge, and
(b) which clearly associates the product with the number of the patent.”

It is still necessary to notify the public of the number of the patent but it is no longer necessary to engrave, emboss or otherwise mark it on the product itself. That concession should make for cost savings and improve the appearance of the product concerned.

Opinions Service
S.13 of the Patents Act 1974 inserted a new s.74A and s,74B into the Patents Act 1977 which enabled the Intellectual Property Office to deliver an opinion as to whether:
(a)   a particular act constitutes, or (if done) would constitute, an infringement of a patent; or
(b)   whether, or to what extent, an invention is not patentable because it was not new or obvious.

This is a very inexpensive form of alternative dispute resolution ("ADR") for disputes over infirngement and validity which has proved to be very popular since it was introduced in 2005 (see the "Requests for Opinions" page of the IPO website).  Clause 16 (1) will give the Secretary of State power to extend this ADR service to other types of patent disputes by substituting the words “an opinion on a prescribed matter in relation to the patent” for the present paragraphs (a) and (b) of s.74 (1). 

Clause 16 (4) will give the Comptroller power to revoke a patent if he finds that it is invalid for want of novelty or obviousness.  Clause 16 (2) will limit the rule making powers of the Secretary of State in relation to reviews of decisions and and clause 16 (3) applies s.74A and s.74B to the legislation relating to supplemental protection certificates.

Unified Patent Court

Probably the most important provision of the Bill so far as inventors are concerned is clause 17 which allows the UK to implement regulations for a European patent for most of the member states of the EU including the UK (the "Unitary Patent") and an agreement for a Unified Patent Court to resolve disputes relating to such patent.  The clause inserts a new s.88A and s.88B into the Patents Act 1977. S.88A will enable the Secretary of State to make regulations relating to the Court and s.88B to designate the Court as an international organization of which the UK is a member. To understand why the Unitary Patent is important see my article "Unitary Patents: Good News from Europe" 27 Dec 2012.

Other Reforms

Clause 18 allows the IPO to share information relating to unpublished patent applications with other patent offices and clause 19 and the Schedule make minor amendments to the Patents Act 1977.  Clause 20 inserts a new research exemption into the Freedom of Information Act 2000 which could assist inventors who have disclosed information about their inventions to public authorities in support of grant applications or for some other purposes. Inventors could also be helped in the long term by the new reporting obligation under clause 21 on the activities of the IPO and the operation of IP legislation in promoting innovation and growth.

Further Information
If you want to learn more about the Bill you can attend our seminar The Intellectual Property Bill at 4-5 Gray's Inn Square between 16:00 and 18:00 on 19 May 2014. Admission is free but you have to book in advance either by calling George Scanlan on 020 7404 5252 or through this website.