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IP Management and the SME: Key Takeaways from the Trenches

Startups @ McMillan Written By Startups @ McMillan
Posted December 4, 2019

When starting or scaling a company, it can be overwhelming to figure out how to prioritize intellectual property (IP) in your overall business plan in terms of budget and competitive strategy. Representatives from two successful start-ups, Synaptive Medical (a privately held medical device and technology company) and BlueRock Therapeutics (recently acquired by Bayer in a deal valuing BlueRock Therapeutics’ at around US $1 billion), shared their insights with the Toronto Licensing Executive Society (LES) on how they capture the value of their employee’s inventiveness. As one of the speakers said, being an emerging company is like “building a plane while flying it”. Here are their quick tips on how to manage IP:

  1. Educate your employees on IP

When onboarding your employees, it is critical that time is spent at the front end educating them on how to recognise and protect the company’s intellectual property.  A quarterly lunch and learn session in which you present a core PowerPoint presentation on IP can help the employees understand how their contributions add value to the company, and is a great incentiviser. The session should touch upon different types of intellectual property: patents, copyright, trademarks, industrial designs, plant breeder rights, know-how, and confidential information or trade secrets.  The importance of the nondisclosure of patentable subject matter, the concept of freedom to operate, when to avoid having written records on prior art, and whether licenses are needed are all key aspects to keep in mind. Startups@McMillan can help you generate that core PowerPoint presentation that you can then recycle, checking in with counsel annually to make sure that the presentation content is up-to-date with the state of the law.

 

  1. Have an invention disclosure form and rank your ideas

Often times companies, management, and employees have innovative ideas that never make it to paper. Unless ideas are memorialized, there is a real risk of a loss of intellectual capital. Implementing a standard invention disclosure form is a quick fix to address this potential problem. An invention disclosure form contains questions, which asks the inventors to describe their invention and its advantages, describe what problem it solves, identify who was involved in its conception and where the invention was conceived, identify the closest existing solutions to the invention, and describe how the invention is different from those existing solutions.

In addition to the voluntary submission of inventions by the employees, many companies add an IP review as part of their product development cycle.  The IP review is conducted prior to product announcement and release, and aims to identify any IP that needs to be protected.

After an invention disclosure form is completed, it is submitted to be assessed internally by upper management and technical experts to determine how critical the invention is to the company. For example, is the invention a ground-breaking one which is going to make the company a pioneer in a particular field? Alternatively, is the invention an improvement to a pre-existing technology? Making that assessment early on in the life-cycle of your product is an integral part of knowing how to have conversations on budgeting and strategic planning.

 

  1. Keep a pulse on the competition

Small and Medium Entities (SMEs) know that it is all about survival of the fittest. At all times, you company needs to know what your competitors are doing and what they are not doing. There are software packages that can assist with understanding and monitoring the IP landscape in a given technology space and generate reports.  Accordingly, you can see what patents and trademarks your competitors are filing. However, it is important that you not allow your product developers to search patent databases. In the US, there is a concept of treble damages where a court may increase damages up to three times in cases of willful infringement. If an invention covered by an issued US patent is found in your product, it is easier to make the case that the infringement was not willful if you can show that your product developers never look at patents.

 

  1. Business strategy and IP strategy should go hand in hand

Having an IP strategy is critical to developing a healthy business. As one of the panellists stated “IP strategy is business strategy”, at least for IP-intensive businesses. IP is often an afterthought by many new companies given that an initial upfront investment is required.  However, it is important to realize that making an investment in patents, trademarks, and protecting confidential information and trade secrets through robust non-disclosure agreements not only generates significant investor value but can also be seen as a critical marketing spend, especially when there is no immediate direct commercialization opportunity. Serial entrepreneurs often quickly realize that had they invested in IP with their first business, they would have had significantly more bang for their buck when it came to valuation.

 

  1. Understanding the value of trade-secrets – they’re a ticking time bomb

The value of trade secrets depends on the lifecycle of the product to which it relates. In a nutshell, the longer the lifecycle is of the product, the harder it will be to protect it as a trade secret. However, if you are dealing with a product that will be grandfathered in six months time, it is easier to keep the trade secret status as it is easier to keep the information in a black box. It is also worth considering how you plan on dealing with your know-how, and whether it should be written down. If that’s the case, it is essential that strong control provisions be put in place to ensure that the information is kept out of the hands of competitors or disclosed to the public. Sometimes a decision has to be made regarding the value of keeping some know-how a secret, versus filing for a patent application thereby risking the dissemination of the know-how amongst potential competitors when the application is published.

 

A failure to educate, invest in, and budget for your intellectual property can in many ways dictate whether your company can eventually become an industry leader. The above tips should provide you with some food for thought as to how your emerging company ought to tackle its intellectual property.

 

By Christie Bates, Sherif Abdel-kader and Tilaye Terrefe



Categories: Intellectual Property