Using down time to plan for the future – the value of an intellectual property audit
Back when passenger planes regularly flew long haul, I was always confused by people who dreaded the prospect.
Putting aside the superficial pleasure of sitting down for an entire day with food and drinks delivered at the press of a button, I always found the time invaluable in thinking about the part of the business I was currently working on. The enforced break from phone calls and emails presented, to coin a cliché, an ideal time to work “on” rather than “in” the business. Unfortunately, very few of the strategic ideas that would take my business to the next level saw the light of day, buried as they were by the humdrum of my day-to-day practice when the plane eventually landed.
The current conditions imposed by the Covid-19 epidemic present an ideal opportunity for managers to spend some time thinking about their business on a macro level. While the majority of those thoughts will, understandably, focus on short-term viability; for businesses confident of their ability to endure shut-down, longer term strategy should also be on the agenda. This includes consideration of the current and future intellectual property (IP) position of the business.
Why intellectual property?
IP is often the most valuable but least understood asset of any successful business. Things like brand outlay or research and development (R&D) are regularly regarded as expenses, rather than an investment in assets that have the potential to provide a return. Treating your IP as an asset will help you to align key strategic decisions around the activities that create value in your business. Managed well, your IP can become a powerful tool for attracting more customers, improving margins, increasing productivity or competing more effectively in the market.
A business that can identify which IP is central to its competitive advantage, and how best to leverage it for long-term value creation, will have a far better chance of surviving, and perhaps even thriving, during the Covid-19 shut down. Reflection may also identify unused or under-used IP that could be sold, licensed or used in some other way to enhance revenue, cut costs, or leverage new partnerships.
Intellectual property strategy and your business
IP rights come in many forms, each of which can provide a different competitive advantage or commercialisation opportunity. Rarely does a successful business rely upon just one form of IP protection: it’s typically a combination of rights that create the value. Understanding the role IP plays in your business requires the development of an aligned IP strategy and regular IP ‘audits’ to assess how your plans are tracking.
Having evidence of your intangible assets is important when selling a business, licencing a product line or seeking investment, but may also be invaluable in the event of a dispute. If a competitor hires one of your previous employees or contractors, then develops a product suspiciously similar yours, having evidence that proves your ownership allows you to make a case for the competitor to cease and desist, or to threaten or commence litigation if required. This will save significant time and money in the long run as you won’t need to spend all that time finding records (if you can find them), getting statements from employees that may have moved on, and getting your ducks in a row, ready for action.
Intellectual property strategy starts with an audit
The IP audit process starts with a list, schedule or spreadsheet compiling all of the IP assets owned and/or used. While this sounds complicated it’s actually very easy. If you’ve never done, this you should try it. The next step is to identify which rights are valuable to your business, and which are not but could be sold or licenced to generate revenue. Any remaining rights can be culled (who isn’t currently looking for ways to save money?).
Once underway, the IP audit process can be integrated into your regular business operations and procedures can be developed to automatically add newly generated IP to your list and to remove stale or expired IP on a regular basis. The same process can be used to identify and record who in your business created something and when they did so; retain drawings, plans and prototypes; obtain assignments from staff if you are required to prove ownership, and the like.
Common examples for such a list include:
- Copyright – essentially all the documents used in a business, including standard letters, diagrams, photos, website content, manuals, plans, computer files (such as CAD files for cutting out components of a product, e.g. furniture or machinery);
- Trade marks – both registered and unregistered. This includes aspects of branding and presentation (such as the appearance of a product or distinctive packaging);
- Trade secrets / confidential information – all the non-public or ‘secret’ information that makes a business tick. This includes customer and supplier lists, price lists, recipes, processes and tricks of the trade;
- Patents and patent applications – these are easy to identify as they are formal registered rights and are typically pursued and maintained consciously, with a dedicated spend;
- Designs – like patents, registered designs should be relatively easy to identify. Unregistered designs are not formal rights but will commonly be protected by a form of copyright or like protection, so are worth listing;
- Domain names – include all the addresses you own or use, including redirects. Consider including addresses that you don’t own, but would like to, so you are ready to purchase them if they become available.
The value of regular intellectual property audits
There are many businesses that rarely evaluate their intangible assets and some that have never engaged in a structured review of them and are unaware of the significance they hold. Like any asset, it is important to regularly ask ‘how is this adding value to my business?’. IP investment should align to your strategy to ensure that what you’re protecting is worth protecting.
The process of reviewing and compiling a list of your IP may sound intimidating and time consuming, but it doesn’t have to be overwhelming. What is needed is a logical and structured process that allows you to prioritise what matters most, enables you to chip away at it, and to delegate to distribute the workload.
These are uncertain times and it is okay if you don’t know where you expect the value of your business to lie going forwards. Why not use this time to engage with your employees in a formal ideation session to identify the challenges faced by your business and its customers, and the possible solutions? Keep the process as broad as possible and use subsequent sessions to identify those ideas which are technologically or economically feasible and merit further time and resource.
What better time to do this than now? When else will you have an opportunity to work ‘on’ and not just ‘in’ the business? The important thing is to make a start. By the time we get back to ‘business as usual’ you may find that you have identified a range of IP you never truly appreciated. That IP could be used to generate income and protect your patch as the economy heads back to a normal footing.
If you’re keen to undertake an IP audit yourself, we’re happy to discuss the steps you can take to get the process underway. If you’d like more formal assistance, we have a team of experienced IP strategists that can lead the process for you. Feel free to get in touch for a no obligation chat.