A quick question for any business owner: how much is your business worth on the market today? Next question: what is the book value of your business, as according to your accountant? Now what is the difference between the two? In particular, is the market value of your business much greater than the book value? If so, why is this?
A common answer to this question is that much of the market value of your business is due to the reputation, know-how and business methods you use. Reputation, know-how and business methods are really just another way of saying the intellectual property (IP) of your business. In other words, whether you have recognised this or not, you may be the owner of some valuable IP. And if you are a significant owner of IP, you naturally want to manage your IP to maximise its value. The first step towards achieving this is to conduct an IP audit.
An IP audit can be simpler than it sounds. IP will exist in a number of forms, and essentially needs to be recorded in lists or schedules. Types of IP can include:
- Brand names, trade marks and domain names. Businesses should have a register (or schedule) of the brands and trade marks that they have developed and commercialised. Ideally, this register should note when the brand was first used and some proof of this, which can be a dated advertisement, for example. Trade marks can be unregistered (i.e. used in commerce but not registered with IP Australia) or registered (i.e. a trade mark application or registration has been secured with IP Australia). Business owners looking to sell their businesses in the future are strongly recommended to register their trade marks with IP Australia. This helps maximise their value in the future business sale. Even if you don’t recall the date of first use or other data in the IP schedule, just record what you know. Limited data is better than no data. Domain names should also be recorded.
- Inventions and processes. Has your business created new products or clever ways of doing things? A register should be prepared summarising these products or processes, including the approximate dates of development, public release and commercial sale, who developed it, what the invention does, and if the invention has been protected or not. New articles and patterns may be protectable with design protection, and new or recent inventions with patent protection. A secret process can be protected by treating it as highly confidential and putting systems in place to support this. If an invention is valuable to you, consult a patent attorney regarding options for protection. Unless you are very knowledgeable about IP law, never make the assumption that something cannot be protected. You may be surprised by the protection your patent attorney can achieve. An Australian patent (and most foreign patents) may provide up to 20 years of monopoly rights for your invention. Even new types of plants can be protected by plant breeder rights.
- Creative works. This includes documents, websites, artistic designs including logos and artwork, databases, compilations, videos, product designs and concepts, and software. These are automatically protected by copyright. A register should be prepared of these commercially valuable rights, such as the date of creation, who created it, and when they were first publicly shown.
- General trade secrets. This includes customer lists, supplier lists, standard processes etc. These should be regarded and managed as trade secrets and may also be protected by copyright. Any confidentiality agreements signed by the company should also be recorded and copies stored electronically.
- Licenses to use IP (including patent and software licenses). Any licensing agreements signed by the company should be recorded and copies stored electronically.
These schedules can be as simple as a spreadsheet or extend to very sophisticated IP management databases for larger companies. Once set up, they should not that be difficult to maintain and could, for example, be one of the defined responsibilities of your internal accountant, company secretary, technical or R&D manager. Specialised support is also available to assist you.
Want to know more? At least one of the managers in your business should be familiar with the basics of patents, trade marks, registered designs, copyright, and trade secrets, and how these may interact with your business. IP savvy staff are also in a good position to search online IP databases for new ideas, and to see what your competitors are doing.
If your business is IP rich, business owners might also benefit from this knowledge. IP Australia has a useful website, and many of the state and territory governments can provide advice and support. Patent attorneys and IP lawyers are always pleased to provide direct support and staff training, and to secure protection for your IP.
–Mike Lloyd is an IP Management Consultant at Griffith Hack (www.griffithhack.com.au), Patent and Trade Mark Attorneys and IP Lawyers.