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Thursday 6 June 2013

Exploiting Your IP For Commercial Advantage

There were a couple times over the last week when I have bumped into Intellectual Property (IP), the first was that there are tax breaks if you exploit it and second IP is still hugely valuable even if you cant patent it. Both occasions incidentally were through group discussions on LinkedIn.
Graph showing European patent applications fil...
Graph showing European patent applications filed and patents granted from 1997 to 2008. (Photo credit: Wikipedia)

My first instance was a post in my own Linked In group about the "Patent Box" which was a UK tax incentive come concession which over the next 5 years will enable businesses to claim corporation tax of 10% for that portion of the business based on patents. I'm a little fuzzy on the detail but true to form there was virtually no publicity around this change in tax breaks which is clearly designed to start to change the culture of British enterprises to recognise the commercial value of IP.  If you are a manufacturing, engineering or high tech business, what are you doing to protect your IP? Could you protect your business assets by patenting your new ideas?

Now there is often a basic misunderstanding of what is patentable. It doesn't have to be new, but a idea of a product has to demonstrate that the components have been put together in a novel way to provide a unique solution to a and existing problem or using known components in a way that solves a completely different problem to that originally envisaged.

Image representing iPad as depicted in CrunchBase
Image via CrunchBase
Many of you will recall that Apple recently went to court over their patent on the slide control for the iPad and iPhone. Making that control isn't new other than the idea to use it for power up and power off, yet it is patentable.

The importance for a company is that IP offers some protection for their ideas and will stop competitors freely stripping down your product and blatantly copying it. In the longer term having patents will add value to your business enabling you to get a better price on exit that you would without them. The degree of additional value obviously depends on the patents you hold.

Lots of ideas and development of existing products could be protected by patents but the engineering and RandD functions seldom tend to connect the idea with commercial value as innovation is just what they do. As a business owner it is up to you exploit the commercial advantage of holding patents. Yes, there is a cost but a simple ROI analysis will tell if its worth it. Additionally good internal practices can significantly reduce the cost of getting a patent by doing a lot of the basic work before it ever gets to a patent lawyer. 

The other area of IP is that which is not patentable but still delivers great commercial advantage. This IP is typically about how we go about performing our business. Its more about ideas and business processes which enables you to be seen to be offering an advantage over your competition.

The importance of IP to high growth businessesGoing back to my time with Admiral Computing we had IP in our estimating process which enabled us to use metrics to accurately estimate projects and importantly as part of the sales process we would give a detailed copy to the prospect which explained how we had reached our price. We would always say "if you can find a mistake in our estimates we will certainly change them but we consider that this detail will demonstrate why our estimate is what it is". 

We were very seldom the cheapest but we were nearly always the only one who could quantify our estimate.  This led the customer to understand that our price and certainly our effort was an accurate measure of what was required. 

As they had more confidence in our numbers we were selected as a low risk option and in the vast majority of cases they were proved right as we came in on time and to budget.  

My experience is that a high proportion of high growth businesses have this kind of IP and find a way to exploit it to their commercial advantage. 

If you are the business owner do you know what ideas and processes you have that might give you a competitive advantage and what are you doing about?

Exigent Consulting provides specialist services to the Small and Medium Business including Managing High GrowthBusiness Turnaround, and Mentoring. We help business owners improve the profit performance of their business.