Ten steps to developing a successful IP strategy
31 May 2011
Intellectual Property (IP) issues seem to be on everyone’s radar at the moment. Hardly had the ink dried on the Hargreaves Review, than we had another report into the IP challenges faced by UK manufacturers and engineers, which urges companies to take an holistic approach to IP - or risk the consequences.
The report - ‘Plan, Protect and Prosper’ - was published last week by law firm DMH Stallard, and is based on interviews with directors of leading UK manufacturing companies operating globally. It reveals how businesses can best overcome potential pitfalls by ensuring that their approach to IP not only covers the obvious high value designs, technologies and brands, but also the people and processes involved in the design project.
Report co-author David Seall, a former chief executive of EEF South and DMH Stallard’s strategic manufacturing adviser says the overriding sentiment that emerges from the interviews is that manufacturers need an IP strategy that engages with every part of their business, including R&D, processes, people and products. Moreover, he believes that manufacturers must be certain how to deal with any transgressions, wherever in the world these occur. The key message is: IP strategy for manufacturers needs to go way beyond copyright, patents and trademarks.
Joint author, Tim Ashdown, a partner and head of IP and IT at DMH Stallard, concedes that IP means different things to different companies, depending on where they happen to be in the supply chain. However, he asserts that the most successful manufacturers have identified the key technologies, designs and processes that differentiate them from the competition and found ways to value them. More importantly, they have engaged with their people in a systematic approach to enhance their competitive advantage in order to make sure they continue to succeed.
For a global economy in which data can travel the world at the blink of an eye, there is a myriad of threats to innovative UK businesses. Brand infringements are commonplace along with the theft of IP; some products are quite easily reverse engineered from products bought in the open market; and there is always the threat of staff taking IP to competitors.
According to DMH Stallard’s report, while China is becoming less visible on the counterfeit and copy radar, other emerging economies continue to represent a threat to UK innovation. Indeed, the debate over the risks associated with manufacturing in China is moving on, with many UK companies now believing that investment in China is the best form of defence when it comes to protecting their IP assets. Certainly there is evidence that those manufacturers seen to be adding value to the Chinese economy benefit from an increasingly robust legal framework when it comes to protecting trademarks and patents.
So much for the risks – what of the remedies? To help manufacturers protect their IP, DMH Stallard’s report sets out ten steps to developing a successful IP strategy:
Value IP - Work out how much IP means to your business. How much would it cost to develop from scratch and how much damage would be done if competitors could access and use your IP without your consent?
Audit and record IP - Audit the whole company for IP; look beyond product design to processes, trademarks, brand, even the way you deal with customers.
Use a multi-layered approach - Consider securing a number of IP rights at the same time in order to create a package of enforceable rights. Don’t just rely on registered rights such as patents, registered designs and trademarks. Remember copyright and rights in databases, as well as the ability to prevent the use of your confidential information and prevent passing-off.
Process is important - Don’t just think of products, look at processes and think of protection strategies.
Create natural barriers - Securing effective IP rights and creating a robust trading model creates natural barriers to market entry. Design around brand, use bespoke components, control part numbers, design around production processes, team with other suppliers, use tooling which may be unique to the way you do things. Work with suppliers on capital equipment to create a barrier to entry.
Protect from unscrupulous customers - Be careful with customers and keep trade secrets to yourself. Try to adapt tooling to your way of doing things. Always assume that your IP is under threat and be aware that customers may even try to patent your IP.
Collaborate and work in partnership with overseas contractors - Avoid a 'colonial' approach when working overseas. Invest in partners and suppliers, and think about sharing IP or consider licensing agreements.
Use a carrot and stick approach with employees – With employees, restrictive covenants are only a partial and temporary solution. Consider incentive schemes and recognition schemes. Invest in developing key staff and show career development opportunities
Be prepared to protect yourself and enforce your IP rights - Be vigilant and be prepared to show your teeth and take legal proceedings against counterfeiters and companies infringing your IP, including your customers. Be prepared to litigate if required. Become familiar with the risk of making unjustified threats of patent, trade mark or design infringement; getting it wrong can open potential claims for damages from the ‘infringer’.
Do not stand still - Be aware that competitors are still improving. Do everything you can to maximise the IP in your business and protect it.
“At a time when manufacturing is leading the UK into recovery, protecting the designs, technologies and processes that underpin the success of our manufacturers and engineering companies in global markets has never been so important,” says David Seall. “It is vital for our economic future that industry ensures that it reaps the rewards for its creativity and innovation.”
A full copy of the report can be freely downloaded from www.dmhstallard.com
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