Growth: How do you identify, protect and exploit value within your business?

Tips on exploiting and protecting the intellectual property (IP) generated by your business, as a busy manager or founder of a growing technology company – from the 2017 series of Threads discussions.

Discussion host: Rory Suggett, Partner at Ashfords LLC.

Context

As you identify and build IP through innovation, you’ll want an approach that strikes a balance between protecting the IP and moving nimbly to exploit its business value.

When to patent new technology

The decision to patent, or not, is often driven by the culture of the business. Businesses lead by founders with an academic background, or those who champion a strong IP strategy are more likely to encourage patent applications. 

Well funded businesses may patent first to build a thorny hedge from which to defend. Start-ups may build an early product and consider patents only when they have revenues to defend them.

Commercial value of IP patents

Patents are of limited value in themselves, although they may be traded as a currency among larger companies. It would have to be a very special collection of patents that convert to real value without the supporting knowledge, application and delivery.

Investors and accountants often like patents as they can be counted, but patents provide only a limited way of demonstrating that you have IP. The real value likely lies in your people, your product and your customers.

If you’ve developed some IP which seems both novel and key to the business, take a pragmatic contextual view before investing time and money in patenting. Think; do we need to protect this idea? And; what benefit will we gain from a patent for this IP?

Patent searches often just muddy the water by unearthing ideas that look similar but aren’t. You will only know what’s really out there when you attempt to patent the idea and see what, if anything, gets thrown up.

Extracting value from your IP

Route to market will likely be your biggest blocker to extracting value from your IP. Understand and address this early, as upfront investment in sales and marketing is usually the best way to generate market interest.

You can’t hide from the market. Avoiding the bad news is costly. Much better to expose an early product to a thrashing from prospective customers while you can still address issues and improve.

When pitching your product compare it directly with your competition to fully understand why your product is better and to improve upon it. Investors like to see this happening too.

Proof of concept, before patenting

SME’s are often advised to first get a business plan in place and then patent to protect ideas. Remember that this isn’t mandatory! It’s often better to prove the idea before adding formality. However, bear in mind that you can’t validly patent anything in the public domain, including your own disclosures. Therefore, if you are interested in seeking patent protection, then keep quiet about the details of how it works.

Don’t get starstruck by consultants or service providers. Use them for guidance rather than leadership, and always seek alternative views.

Navigating open source licencing

There are numerous open source licences but there are three that are used most broadly: MIT licence, GPL license and the Apache license. Understanding the basics of these three licences will provide a good foundation.

Top tips:

• Check what the latest version of the open source software (OSS) is: sometimes the version that is freely available as OSS is not the latest version which may only be available if you purchase it
• Understand how you are using that OSS and remember you will be required to support your own version
• Keep a register of all OSS that you use – this is often required by users, partners and investors.

GPL falls under a classification called ‘Copyleft Licenses’, which in summary means if you modify or enhance the source code of a GPL-licensed project, you must give back all those changes in source code form.

The MIT and Apache licenses are the polar opposite and are classified as ‘permissive’ licenses. As long as they keep the MIT/Apache copyright message, users can do whatever they want with the code, including making modifications.

Algorithms and implementation are patentable

It’s both the algorithm and its implementation in code that’s patentable. Generally there needs to be a technical improvement in a patentable area (e.g. improved Human-Computer Interaction, speed of processing, battery life, memory usage). A good patent attorney can sanity-check where the strengths of an invention lie.