10 Tips for SMEs to Get the Most Out of Their Intellectual Property

May 14, 2020

10 Tips for SMEs to Get the Most Out of Their Intellectual Property

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Many SME owners, particularly those in the tech sector, will be aware of the importance of intellectual property (“IP”) rights to the success of their business. However, many SME owners would benefit from taking some basic steps to identify, protect and exploit their IP rights.

We’ve put together our top 10 tips for SME owners to maximise their business value.

1. Take stock of what IP you have.  A lot of SMEs don’t have a clear idea of what IP they actually own – and undertaking an IP audit can be a useful way to identify what you own, as well as highlighting ways you can protect it. We offer a partially-funded IP Audit, which is a cost-effective way to get a better understanding of your IP.

2. Maintain good records. You should always keep good records of all IP development work, particularly during the start-up phase. If a dispute arises with a third party, it may be important to be able to prove that you created particular IP, and when.

3. Keep your ideas confidential. Be careful about sharing details of your IP with others, particularly during the early stages, when your IP may not be fully developed or properly protected. Use confidentiality agreements where possible, but draft them carefully to ensure you are properly protected.  If you are hoping to secure a patent for your new invention, confidentiality agreements are a must – openly telling others about your new design will be fatal to a patent application.

4. Make sure any third parties that contribute to your IP assign any ownership rights. Whether or not someone is paid for their work, if they have contributed to your IP the chances are that they will own their designs unless you have agreed otherwise in writing first.  This trips up a lot of businesses, so make sure that any ownership rights in the IP are properly assigned to your business. This can be achieved in their terms of the business, or by a simple assignment.

5. Be careful to avoid infringing any third-party IP. When developing your own IP, be careful to avoid infringing any third-party IP. If you need to incorporate third-party IP into your own IP, make sure that you have a proper licence to do so and that the third party will not have any ownership rights in your IP.

6. Protect your IP from your employees. You need to ensure that the ownership of all IP created by your employees automatically vests in your business. It’s therefore important that your contracts of employment and staff manuals contain robust IP and confidentiality clauses. Also, consider having a dedicated IP policy for employees and consultants.

7. Check contracts with suppliers and customers. Before signing, always carefully check contracts with suppliers and customers to make sure that you don’t inadvertently give away any of your IP. Even if you are proposing to grant an IP licence to a customer, you will want to make sure that it’s no wider than necessary.

8. Agree IP ownership when undertaking joint development work. If you are proposing to jointly develop a new product or solution (e.g. with a customer), it’s important to agree the ownership of the IP before work starts. This will hopefully avoid costly disputes arising in the future.

9. Leveraging the value of your IP.  If you’re looking for outside investment, or thinking about your exit strategy, ensuring your IP is identified and protected will make your business a more valuable commodity for would-be investors or purchasers.  On a day to day basis, speak with your accountant to make sure you are maximising your entitlement to R&D tax credits which will assist with cash flow.

10. Take professional advice where appropriate. Paying for good professional advice will pay dividends in the long run by enhancing the value of your business.