Understanding your IP assets is an essential part of business planning.
As your business grows, it is important that you identify and keep an inventory of your IP assets. This is called an IP audit and it will help when it comes to seeking protection for your intellectual property.
Identify your IP assets
The first steps in an IP audit are:
- identify the products or services that are important to your business (create a list)
- identify your IP assets and the legal rights that relate to them in relation to your goods or services (eg. can you register a trade mark, patent or another form of legal protection)
- understand what market advantage these rights give you (what are the costs, performance, timeliness).
Value your IP assets
You should value your IP assets just as you would any physical assets.
For instance, your customer list or database is often a competitive intangible asset you need to identify and protect.
As a starting point you can try to calculate how much time would be required to develop these assets from scratch, or estimate how much a competitor might pay for them. An accountant can help you to value these assets and place them in the context of your business.
Consider the types of protection available
Once you have identified your IP assets, make sure you have appropriate IP protection. This may include a trade mark or a patent. The types of protection available are:
| What’s protected | Type of IP protection | What it means | Example |
| Product designs | Registered design | The visual appearance of a product is protected, but not the way it works. | iPod kitchen appliances footwear fashion items |
| Logos, words letters, numbers, colours, a phrase, sound, scent, shape, picture, aspect of packaging or branding – or any combination of these | Trade mark | A trade mark identifies the particular goods or services of a trader as distinct from those of other traders. | Qantas |
| Inventions and new processes | Patent | A patent protects how an invention works or functions. | Polymer bank notes Anti cervical cancer drug, Gardasil |
| Drawings, art, literature, music, film, broadcasts, computer programs | Copyright | The owner’s original expression of ideas is protected, but not the ideas themselves. | Sons of Anarchy TV series |
| Trade secrets and confidential information | Other | These types of IP rights give creators certain rights and privileges depending on the type of IP protection. | KFC’s secret herbs and spices has used trade secrets to keep its formula from becoming public for decades. |
| New plant variety | Plant breeder’s rights | Plant breeder’s rights protect the commercial rights of new plant varieties | Cotton plants with insect resistance and the pink iceberg rose |
Consider the IP rights of others
It is important to ensure that you understand the IP rights of other people or organisations you have dealings with.
For example, a large amount of off-the-shelf software is limited in the way it can be used by a licensee. You may find that if your products or services rely on such software, you may be breaching the licence conditions and infringing someone else’s IP rights.
Once the audit and valuation process is complete, you can look at your options to commercially exploit your IP.
Next step: from audit to strategy
The audit process will enable you and your lawyer to determine:
- the best IP strategy for your business
- the likely costs, risks and benefits of that strategy
- the best way to maintain your IP assets
- whether you are likely to infringe someone else’s property rights.
Commercialise your IP
Commercialising Intellectual Property (IP) is about getting your products or services into the market place. Your commercialisation strategy depends on many variables; your individual circumstances, business capabilities, competitive environment and access to finance.
Licensing is the most common commercialisation method, but it is just one of many options for taking your IP to the market place. You need to consider questions such as:
- Do you want to commercialise in-house or with a partner?
- Do you want to manufacture, market or sell your product?
- Do you want to outsource?
There are also different issues to consider when commercialising internationally.
Traps to avoid
Regardless of whether you decide to commercialise in-house or with a partner, be aware of the two most common traps:
- failing to keep your IP a secret before applying for protection
- failing to secure ownership of your IP
Summary of key concepts in commercialisation
- Commercialisation is the process of getting your IP to market.
- You can commercialise on your own, through a partnership or a combination of the two.
- There are different issues to consider when commercialising in Australia and internationally.
- Make sure, regardless of how you commercialise your IP, you maintain confidentiality arrangements with all parties.
- There are a number of options available when commercialising with partners.
- In licensing, the owner might give up the right to commercialise, but not the ownership of the IP itself.
- Exclusive licences are the most common form of commercialisation.
- There are a number of shades of exclusivity – product, field, territory restrictions or a combination of these.
- Licences include trade mark licences and franchises.
- Assignment is not licensing, it involves transferring or selling the IP – the owner retains no rights to the IP.
- Other ways of commercialising IP are through a start-up company involving a venture capitalist or a joint venture with other parties or established companies.
- Royalties payments associated with licences can be calculated in a number of ways.