Turning Ideas into Assets: Practical Insights for SMEs and Startups

Eureka! – you’ve just had an idea with promising business / income potential – perhaps it is for a new product, an innovative method of manufacture, a paint formulation, an eye-catching product shape, catchy song lyrics, or a distinctive and memorable brand name.

Once you’ve identified an idea with potential, capturing and protecting its value becomes necessary. However, many SMEs and startups often undervalue the significance of intellectual property (IP) management, perceiving it as both expensive and overly complicated. Yet, IP often accounts for a significant portion (in many cases, the majority) of the company’s worth. It is vital for securing competitive advantages and attracting investors.

After developing a great idea or a collection of inter-related ideas, it is important to promptly consider which aspects of those ideas can be protected, and just as importantly, in what ways others could legitimately compete with you.

For the purposes of this article, it will be assumed that the idea is new, inventive, innovative, original, or distinctive. However, it is always wise to verify that assumption before spending time, effort and money developing that idea further.  Public disclosure or sale of an invention before filing a patent application can jeopardise the ability to secure patent or design protection. However, some countries offer a grace period for disclosures made shortly before the application is filed. If you believe you have a protectable invention, it is important to consult with a patent attorney as soon as possible for an evaluation.

On the other hand, copyright protection does not depend on novelty and can be secured regardless of prior public disclosure. It requires the work to be original. Similarly, trade marks can be protected if they are distinctive, regardless of how long the product has been sold.

Understanding IP and Managing IP in Your Business

IP can be protected in various ways, each suited to different types of innovations. Main forms of IP protection include patents, trade secrets, registered designs, copyright, trade marks, the tort of passing off, and plant variety rights. For patents, registered designs, trade marks, and plant variety rights, protection is achieved through a formal registration or grant system. In contrast, copyright protection is automatic in New Zealand and does not require registration.

For SMEs and startups, recognising the commercial value of  IP is an important step in building a successful business. A strong IP portfolio not only protects your ideas but also becomes a valuable asset that can improve your company's appeal to venture capitalists and investors. These stakeholders often look for businesses with unique and protected innovations, as this can show a competitive edge and long-term growth potential. IP can also serve as a powerful tool in negotiations, whether for securing partnerships, licensing deals, or raising funds. In some cases, it can even be leveraged to secure financing, providing much-needed capital to grow your business.

Licensing strategies offer another key advantage. By licensing your IP to other companies, you can generate a steady revenue stream while avoiding the significant costs and risks associated with manufacturing and distribution. This approach is particularly beneficial for startups with limited resources, allowing them to enter new markets and scale their business more quickly. Additionally, a well-managed IP portfolio can act as a deterrent to competitors, reducing the risk of others copying or infringing upon your innovations. Beyond just protection, IP becomes a strategic asset that supports growth, strengthens market position, and increases the overall value of your business.

Managing IP effectively means taking a thoughtful and proactive approach to make sure your ideas are protected and their value is fully realised. You may want to start by helping your team understand why keeping sensitive information confidential is so important and the risks that come with careless disclosures, whether inside or outside the business. Regularly checking your IP portfolio might help you spot valuable assets that could benefit from further protection, like securing trade marks for your brand or patents for new developments. You may also find it useful to have someone in the business responsible for keeping an eye on IP matters to ensure nothing gets overlooked. Thinking about IP early on can save you a lot of trouble down the line. It lets you protect your ideas before they’re accidentally shared or made public, which might make them harder to protect. Plus, it gives you the chance to figure out which parts of your innovation have the most potential, so you can focus your resources on what really matters and set your business up for long-term success.

A resilient IP strategy must be an integral part of every stage of your business plan. Treating IP as an afterthought can result in missed opportunities and increased risks. By identifying protectable assets early on, conducting regular reviews of your IP portfolio, and exploring options such as registering patents or trade marks, SMEs and startups can protect their innovations and maximise their value. This also allows your business to remain competitive and well-positioned for growth.

By taking a proactive and strategic approach to IP management, SMEs and startups can unlock the full value of their innovations, protect their competitive edge, and secure a strong foundation for long-term success.

Are You Comfortable with the Patent Bargain?

“It is mine, I tell you. My own. My precious. Yes, my precious.” -Gollum in The Fellowship of the Ring by JRR Tolkien

If your idea is looking like a good candidate for patent protection in most instances that protection is usually worth pursuing. Trade secrets can maintain a competitive advantage indefinitely, provided confidentiality is preserved. Unless it is nearly impossible for someone to reproduce your invention through reverse engineering, patent protection may offer greater security than relying on trade secrets.

However, obtaining a patent involves the 'patent bargain', which requires you to disclose your invention in exchange for up to 20 years of protection in most countries.

Are you there yet?

Timing is important.

For example, filing a patent application too early, without sufficient technical details, may result in a patent that does not meet the basic requirements for validity. It is important to assess whether you’ve sufficient technical information to justify seeking formal patent protection. Filing too early, without enough experimental results or sufficient disclosure, can leave your claims vulnerable to challenges, as they may appear to be based on wishful thinking rather than concrete innovation.

On the other hand, waiting too long increases the risk of public disclosures or missed opportunities. Delaying the filing could lead result in public disclosures, whether intentional or accidental, that might compromise your IP rights. Worse still, if someone else files a similar patent first, their application could take priority even if you had the idea earlier.

Often, the most valuable aspects of an idea evolve during later stages of development. Consulting a patent attorney on time can help you navigate these complexities, ensuring your invention meets the necessary standards for patentability while protecting ongoing refinements. They can advise on the best timing for filing, help refine the scope of your patent claims, and ensure that early disclosures do not undermine your ability to protect future refinements.

Might Third Parties Be Involved in Developing or Testing Your Idea?

Experience teaches us that turning ideas into reality are easier said than done! Chances are proving or testing your concept will involve third parties. If so, you must decide whether to secure some provisional protection before disclosing (at least part of) your idea , or rely on confidentiality or non-disclosure agreements (NDAs). Again, consulting a patent attorney at this stage is invaluable. They can advise on whether there is enough substance to your idea for the purposes of provisional patent protection and how to manage IP when third parties are involved.

Conclusion:

Protecting intellectual property is not an optional extra but an essential step for SMEs and startups aiming to stand out in competitive markets. From patents and trade secrets to trade marks and copyright, choosing the right mix of protections ensures your ideas are secure and positioned as valuable, long-term business assets. IP protection isn’t just about ticking legal boxes, it’s about creating opportunities for growth, attracting investors, and building a strong foundation for future success.

By consulting a patent attorney as early as possible, you may be able to protect your innovations from being copied or misused, giving you an edge over competitors. Robust IP protection helps you to establish credibility, whether with potential partners, customers, or financial backers. For startups especially, a solid IP strategy can open doors to licensing opportunities, collaborations, and even higher valuations. Investing in IP protection isn’t just safeguarding what you’ve created, it’s about maximising the potential of your ideas to drive your business forward.

Authors: Pritesh Lohani and Quinn Miller

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