Intellectual property (IP), when leveraged strategically, can be a powerful value multiplier for companies. Companies with IP are 3.6x more likely to scale. And the big players prove this: 91% of S&P 500 companies’ value is in intangibles. For startups and entrepreneurs, IP can make or break the opportunity to compete in your target market and being strategic can enable exclusivity for your product or service in those markets.

What Can Founders Do to Ensure They Have the Right IP Protection?

Build an IP Strategy

Develop an IP strategy that aligns with and supports the business strategy/goals of the company. It is imperative when mapping out the IP strategy to properly consider the innovations that will drive success.

In developing your IP strategy, first identify the core innovations that are required for the success of each product or service. How do these innovations drive your competitive advantage? What market need do they serve? Get specific. Perhaps the product the company makes is generic enough (e.g., an insulated water bottle) but the difference from competitors lies in something only conceived by the company (e.g., a leakproof, heat-sealant technology in the lid, attractive branding, etc.).

Value lies in what sets you apart — that’s where the valuable IP is found. Innovators must connect whatever the company is considering for IP protection back to the business strategy/goals in order for the spend on IP to reflect a return on investment.

Identify and Protect Your IP

How does the company already protect these core innovations? Are the inner workings kept a secret? Has the company developed a brand? Does the company already have a patent or trademark?  

Different products/services will benefit from or require one or more different forms of IP protection, often in a layered approach for best results.

• Trade secrets may be appropriate for innovations that cannot be reverse engineered or easily discovered from use of the product/service, which embodies the protected innovation.

• Patents may be more appropriate for new, useful, and non-obvious innovations that could be independently discovered by a competitor, thereby defeating the exclusivity of trade secret protection. Patents are often leveraged as assets on the bottom line, too, creating wealth and demonstrating an innovative culture to the world.

• Trademarks can support the brand of your company, product, or service, creating a recognizable presence in the market.

• Copyrighted code, images, writing, and marketing collateral allows development of a company voice that can be protected from others. Plus, a copyright symbol is an easy way to demonstrate that the company is prioritizing IP.

All of these approaches may be applied to innovations, either simultaneously or at different times in the product/service lifecycle.

Note: not all IP comes from the R&D department. Everyone generates IP – it’s up to the company to capture it, determine its value, and protect it accordingly. Take employee know-how as an example: difficult to quantify, impossible to hold, yet extremely difficult to replace if it walks out the door.

Choose Compatible IP Service Providers

While much of the forethought and business strategic planning can be done in-house, founders should involve exceptional counsel whenever possible in developing their IP strategy so that important details and opportunities are not missed, which could lead to expensive or catastrophic shortcomings later.

When it comes to implementation of the IP strategy – filing patents, registering trademarks, writing agreements, licensing assets, etc. – companies should always work with an IP service provider who understands what the business is trying to accomplish and is suited for the task at hand. IP service providers should have an educational background in fields related to what the company does, as working with those people may fast-track some of the explaining otherwise required in getting someone else up to speed.

How Can Founders Evaluate if Their IP Portfolio Will Drive Value?

There are many factors that a founder should consider when reviewing their IP portfolios, and each factor may be afforded a different weight based on the business and IP strategy of the company. These factors should be weighed during the analysis of both existing IP portfolios and in determining gaps where resources should be devoted to developing or acquiring IP.

Consider the following:

• Available resources

• Budget

• Talent

• Time

• Relevance of existing or potential IP to the business strategy and current product/service portfolio and any future innovation

• Applicability and coverage of patent claims in relation to current products/services

• Ability to defend or enforce IP against known competitors

• How IP is treated in certain jurisdictions and what benefit the company gains from having IP in that country. Protect your IP in accordance with the following:

• Principal place of business

• Current markets

• Manufacturing locations

• Potential or future markets

• Competitors’ market & locations

• Associated costs (issue, maintenance/annuity, translations, foreign/domestic agents, etc.)

• Remaining term (applicable to continuation applications for existing IP and potential IP to target for acquisition)

• Licensing potential for existing or potential IP

How Can Founders Make Sure Investors Are Happy and Willing to Invest in Relation to Company IP?

Investors like innovative, value-rich companies with value multipliers. IP can be an indicator that a company has innovative practices, and an IP strategy multiplies that indicator by demonstrating that the company has been strategic in filing IP in order to support their value proposition and deliver a return on investment.

It is important that the IP strategy be clearly articulated. Weave the IP story into the company pitch. A founder should be able to demonstrate how the company has acted on the IP strategy in its development and acquisition of IP in order to position the company’s products and services at a competitive advantage over others in or about to enter the target market.

Who Can Help?

There are many resources to help business leaders learn about, pay for, and protect IP, like Intellectual Property Ontario (IPON) for Ontario-based businesses. Find out which resources are available to you by researching IP support in your area and connecting with your local innovation hub for guidance.