Explainer: The seven ages of intellectual property

By Peter Groves

Intellectual property is the oil of the 21st century. So said Mark Getty, whose family knows a thing or two about oil, back at the start of the millennium.

Mr Getty also knows a thing or two about intellectual property, being the co-founder of the world’s biggest picture agency, Getty Images Inc. Whatever the downside, and there’s no doubt that it is huge, there is also no doubt that without oil the 20th century would have looked very different.

Intellectual property is influencing the shape of the 21st century no less than oil did in the preceding 100 years. And all businesses, if they are going to thrive, need to be alert to the needs of their intellectual property assets like never before.

A business has seven ages, like the seven ages of man identified by Shakespeare – or of woman, as in Baldung’s earlier painting. At every stage of a business’s life, IP must be high on the agenda, from assembling the IP portfolio that encapsulates the business idea to realising the assets or disposing of the business. Here, with suitable apologies to the bard, are the seven ages of intellectual property.

Infant

Commonly, intellectual property will belong to the founder of the business, the individual with the idea or vision. At this stage, keeping it secret will be paramount – the law on breach of confidence is what gives protection.

If the business is based on innovative technology, a patent application will have to be filed at the outset – you don’t get backdated protection for it – and this is often in the name of the founder.

Copyright protects computer code automatically, but using freelance programmers (who doesn’t do that?) can create a host of ownership problems if you’re not careful. Consulting IP solicitors from the outset can save a lot of trouble – and expense – later.

Schoolchild

Once you devise a corporate identity for your business, you will need to file applications to register trade marks to ensure that no-one gets in before you. If your products have an appealing shape, you will have to register designs before placing anything on the market.

With the business now taking the form of a limited company, for reasons of tax and personal liability, thought has to be given to the terms on which the business will use the IP – will the founder transfer it to the company, or will they grant a licence? Angel investors might have a view about which model they prefer. Whichever solution is right for you, we can help devise the right structure and put the necessary arrangements in place.

Lover

Growth will probably require you to raise finance from new sources, and again this will have ramifications for the company’s IP portfolio. Are there any gaps in protection?

Could you improve the protection you have, to make prospective investors feel more comfortable? Did you ever get a formal assignment of copyright from that freelancer who wrote the app for you?

We audit clients’ intellectual property portfolios to tease out problems like these, so they can be fixed before you have to answer questions as part of an investor’s due diligence investigation.

Soldier

In Shakespeare’s time, once a man had grown up his military duties had a big influence on his life. For a start-up business that has gone through its initial growth phase, it’s a matter of getting on with what needs to be done.

You’ll have to be alert to others trespassing on your IP. Your patents are valuable, and if someone is using the protected technology without permission you have little choice but to try to stop them – or at least ensure they pay for a licence.

Using a similar trade mark, or making lookalike products, could divert business away from you, and damage the value of your goodwill. We can maintain a watch for conflicting trade mark applications and monitor new patents, as well as taking action against others who make use of your IP assets without permission.

Justice

Businesses don’t succeed just by resting on their laurels, of course. The established business will be looking for new openings, seeking to diversify or leverage its existing assets to do something new.

There might be technical improvements to patent, new designs for existing products to protect, new markets in which to register trade marks. Intellectual property is nothing if not dynamic.

We assist clients in this phase of their development by advising on the most effective way to expand their IP portfolios, whether that means international trade mark registrations, improvement patents, or any of many other possibilities.

Maturity

We don’t want to see anyone’s business to fail, of course, but inevitably sometimes demand will change and a business will find it (or one of its divisions) hasn’t a market any more.

Kodak went through this, and what was a traumatic time for the business was made better by the fact that it had many IP assets, including patents, that still had a value, sometimes considerable.

In an age in which owning vast portfolios of patents is an important defence against competitors’ claims that you are infringing their patents (if you can find in your collection a patent that they in turn are infringing a settlement becomes much more likely) even old and little-used IP assets can get a good price.

We can help you identify opportunities to realise surplus IP assets and ensure that they are efficiently disposed of, including by licensing them to a third party.

Exit

The seventh age of a business is not terminal in the same sense as that of a person. Whatever the exit plan, the business will be more attractive to a buyer if its assets have been well cared-for and nurtured, and that goes for IP as well as tangible assets.

Whether you’re selling shares or business assets, the purchaser is going to do a lot of due diligence, and predicting the questions and investigations that you’ll face so as to make sure the answers are as positive as possible is an essential part of the preparation for this.

Your IP solicitors will help you make your business’s IP portfolio not only strong, but well-organised and attractive.