Capturing value: IP as a driver for investment
Patents, trademarks, designs and other forms of intellectual property (IP) play a key role in the success of all modern businesses. By providing a company with a legal means to prevent others from copying an invention, brand or product, IP rights enable inventors and creators to obtain a return on their investments in research and development, and to maximise the potential of their businesses, as Novagraaf's Peter Wilson explains.
Whether directly or indirectly, consciously or unconsciously, IP will play a major role in any company’s future success. A company’s brand value or its product or innovation portfolio are key value differentiators, providing plenty of strategic reasons for initial and ongoing investment. In order to capture that value, however, investors need to be sure that their target companies keep on top of their IP assets, including protecting intangible assets and keeping the associated rights and records up-to-date and in force.
IP attorneys can – and should – be brought in to support investors during the assessment and due diligence phases of a potential investment. Typically, this will include:
- IP auditing to assess the validity and extent of a target business’s existing and potential IP rights.
- Due diligence to ensure the correct chain of ownership is in place and to identify the existence of potential third-party objections or claims.
- Patent landscaping to review IP rights in relation to their technology space, and thereby identify a patent’s strength or vulnerability in light of market activity.
- Freedom-to-operate studies to identify conflicting rights in order to assess how vulnerable the business may be to an infringement suit or litigation.
- IP consultancy to identify strategies for strengthening rights and shoring up portfolios based on vulnerabilities identified during the above analyses.
Getting IP ready for investment
Before investors even get to the due diligence phase, however, most will begin by reviewing potential investment opportunities from an IP perspective. Therefore, companies looking to attract venture capitalists, private equity firms or even industry grants or loans would also be wise to focus on capturing and shoring up their IP assets before they even begin the process of looking for funding or external investment.
Depending on the company, this will typically include asking internal stakeholders:
- Have patent rights been put in place for all core inventions, including defensive filings where relevant?
- Has the company or product’s brand and/or visual appearance been protected as trademark/design rights in all key jurisdictions?
- Is the IP’s ownership clear and up-to-date; for example, where it has been created by multiple stakeholders or passed from one company to another?
- How crowded is the market and technology space for any new/core inventions – is there a risk of a third-party infringement claim?
- Where does the IP sit in relation to competitor activity – does the portfolio need to be reinforced with additional filings?
- Does additional IP exist in the business that has yet to be protected?
- How do the identified strengths and weaknesses of its IP portfolio impact on a business’s value and potential?
In an ideal world, IP will have been diligently captured, maintained and recorded as a company grows and expands; unfortunately, this is not always the case. By overlooking their core assets, however, companies risk short-changing themselves when it comes to attracting investment and maximising their future chances of business success.
It’s also important to remember that not all IP exists as registered rights and so an assessment of all company documents will generally be needed to locate other valuable intangible assets, such as copyright or confidential information, licences or distribution rights.
Bringing in expert support
Speak to your Novagraaf consultant or contact us today for additional insight and guidance on preparing or reviewing IP portfolios for potential investment opportunities.