Why your business needs an intellectual property strategy
January is typically a time for declaring bold resolutions and setting goals. Entrepreneurs are no exception.
After reflecting on the successes and failures of last year, you have a better sense of the new heights your team can reach in the next 12 months, whether it be in terms of resiliency, revenue generation, profitability, customer delight, innovation or impact.
You may be looking to make fresh investments in hiring more talent or implementing new technology. Or you may be gearing up to raise capital to scale your company to new heights.
I want you to consider another project for 2021. I want you to consider investing time and effort in creating or updating your intellectual property (IP) strategy.
We think that all of our businesses—or virtually all of our businesses—have pretty darned good moats.
Your IP strategy: A moat to protect your investment
An IP strategy, simply put, is a plan for how you will develop, grow, leverage and monetize your portfolio of IP assets (e.g. patents, copyrights, trademarks, trade secrets, designs and data).
The goal is to give you a competitive advantage or a “moat” in the market, as well as drive your revenues and profitability. Creating a moat is a way to safeguard the investment you, your employees and investors have made into your business given that market conditions change over time.
For example, you may be seeing more competition in your industry or perhaps you see an opportunity to enter a new foreign market for your product. A strong patent portfolio with coverage in key jurisdictions can stop your current and future competitors from manufacturing, selling or using your innovation – thereby positioning you as a formidable force in the market.
Developing an IP strategy doesn’t have to be complicated
An IP strategy can start off as a simple one-page overview of what IP assets you currently own and how you intend to grow this portfolio over time.
This early articulation of an IP strategy is an earnest way to get you and your company thinking of IP as a strategic asset. It doesn’t cost much money and is easy to do, but at the same time provides you with a starting point which you can (and should) revisit at least once per year.
As your company grows or gets further along in product development, commercialization or expansion, it becomes critical that your IP strategy evolves into a more comprehensive document that:
- shows the alignment between your business and IP
- operationalizes how you will establish IP-related goals and infrastructure to support your business objectives
- articulates how you will execute on your IP strategy
Furthermore, it is important that IP strategy development and formation be a company-wide exercise. It is not just a task for the CEO or the chief technology officer but must also include input from key stakeholders such as the board of directors and, ideally, your employees.
Don’t forget that IP doesn’t just cover your patents, but also includes trade secrets and trademarks. Anyone in your company who touches any form of IP in their day-to-day activities—from marketing to finance or engineering—will have a key role to play in contributing towards your IP strategy.
The Canadian Intellectual Property Office has published a step-by-step guide on planning your IP strategy. It is a very useful tool to give you a sense of the various things to consider in developing an IP strategy.
Is having an IP strategy really worth it?
My unequivocal answer to this is…yes!
Again, you don’t have to pull together a hundred-page document, even a simple one-pager will do (at least as a start). Having met with hundreds of companies since the launch of the IP-Backed Financing solution in July this year, we have seen the various benefits of having an IP strategy in your business:
Set yourself apart and increase your market share
We met with a company operating in the global transportation industry, which has high barriers to entry. One of the reasons they have been able to win certain large contracts, despite the availability of competitive options or substitutes, is that their IP strategy allowed them to patent their designs. During a very competitive process, they were able to win a contract because the project decision-maker opted for patent-protected technology.
Become more efficient and increase profit margins
A software company we met has amassed large and strategic datasets that have driven the stickiness of their platform solution. This resulted in lower customer acquisition costs, lower churn and higher lifetime value.
Other excellent examples in this regard are companies that accelerated their entry in the market by licensing other organizations’ IP.
Properly done, this helps companies avoid wasting time and money to research and develop their own IP, instead leveraging what has already been created and published. Seeking out possible licensors through ExploreIP or, in the case of data-driven cleantech companies, joining a patent collective such as the recently launched Innovation Asset Collective, are options for companies with an IP strategy.
Generate additional sources of revenues
Due to COVID, a few medical technology companies we met saw major declines in revenues and needed additional liquidity. They completed comprehensive reviews of their patent portfolios and found ways to license their technologies to other companies, which helped them create new cashflow streams.
Attract more investment or reduce your tax liabilities
More and more, venture capital and private equity investors are seeing the value in using IP strategies to drive company growth.
Furthermore, government granting agencies are becoming more IP aware and look to companies to have IP strategies as requirement for granting funds. According to the Intellectual Property Institute of Canada, a number of provinces have announced IP-driven grants and tax incentives. And, of course, you can talk to us for more patient, flexible and value-added debt or equity financing.
Developing an IP strategy: Your next New Year’s resolution?
The possibilities are endless and the need to think very seriously about having an IP strategy, irrespective of which sector or stage of growth you are in, is indeed compelling.
As we transition to our new reality of living in an intangible economy, I would encourage all entrepreneurs across the country to consider developing an IP strategy as a New Year resolution.