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Leveraging that knowledge to attract external investment is one way that companies can raise additional capital, access to which, in the early stages of a business, can make the difference between extinction and survival.

Broadly speaking, investors will want to maximise profits, but also to minimise their exposure to financial risk. To invest in your business, at a minimum they will want to know how you plan to deal with the competition. Being first-to-market can provide an initial advantage over your competitors. However, this will not last; late entrants to a market have several advantages over the pioneers, including; lower investment in R&D, the opportunity to learn from the mistakes of the first entrants and of course not having to invest time, money and effort in establishing a market and consumer-base in the first place!

Using IP to protect your product or service can insulate you from the negative effects of competition and crucially, allows you to sustain that initial competitive advantage. From an investor’s perspective the ability to exclude others from the market or to apply rent to competitors in the form of license fees in order to access the market can help to mitigate the financial risks associated with investing in your business.

Consequently, implementing an IP strategy which underpins your commercial strategy can be extremely beneficial for growth. Consideration of the following points will help to ensure that your IP operates to support the commercial aims of the business.

  1. Make discussing IP part of your normal business planning
    • What is the source of your unique competitive advantage? What stops potential competitors from doing the same thing? Is it important that nobody can do what you do (at least for a period of time)? Are the barriers to market entry low; for example can your product easily be reverse-engineered to discover how it is made? Consider using patent applications to raise barriers to entry.
  2. Are you free to operate?
    • Other people may be able to stop you from making and selling your product. Being aware of this can help to avoid litigation, as well as to identify opportunities, potential licensees and customers.
  3. Business priorities change, your IP strategy should reflect that
    • Be flexible. Is your IP aligned with your current commercial priorities? Does it cover what you sell and where you sell it? What about where potential licensees might operate? Regular assessment and management of your portfolio is key here.
  4. Know what you already have and find out where the gaps are
    • Keep good records of your developments and product optimisation. Prosecution of existing patent applications can be used strategically to identify opportunities and direct R&D activities into areas of interest which are not yet explored. Consider protecting ancillary developments, which may become commercially important or can be used to generate additional revenue streams to support the business.
  5. Be realistic
    • Tailor your expenditure on IP to your budget and prioritise areas of protection. Focus on key products and markets. Consider strategic protection in the markets of any potential licensee (and/or competitor) to generate income, drive to potential collaborations or access resources. Consider IP protecting future products. Jettison IP that is no longer commercially relevant.

Dr Ben Tolley is a European Patent Attorney with FRKelly in Dublin. He advises on intellectual property matters in relation to a range of life sciences technologies, with a particular focus on plant and algal biotechnologies, synthetic biology, AgriTech and pharmaceuticals. He works with a range of clients including multinational corporations, SMEs, universities, research institutes and investors. Contact: This email address is being protected from spambots. You need JavaScript enabled to view it.

BenTolley

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