IP rights can help Irish companies scale up their business

Possessing IP rights will also enhance the prospects for funding and successful exits.

IP rights in brief

Irrespective of the nature of a business or the sector it operates in, it will possess some form of intellectual property rights. For most businesses, the most important intellectual property rights will be patents, trade marks, copyright, database rights and trade secrets:

• Patents protect an inventive product or process of a business, enabling the owner to prevent a third party from using its patent without its permission;
• Trade marks are signs used by a business to distinguish its goods/services from those of its competitors. These include names, logos and slogans, to name but a few;
• Copyright gives the creator of an original work, such as a literary, dramatic, artistic or musical work, the right to prevent the copying of the whole or a substantial part of that work;
• Database rights are distinct from copyright and exist to recognise the investment that is made in compiling databases, even when this does not involve the "creative" aspect that is reflected by copyright. Database rights protect against the extraction or re-use of the contents of the database;
• Trade secrets are confidential business information which is not in the public domain. Protecting trade secrets ensures that competitors do not gain access to critical knowledge that gives a business its edge.

How IP rights can be protected

Trade marks and patents are ‘registrable’ rights. This means that they can be protected by way of registrations at local, European or international levels. Obtaining a registration gives a business exclusive rights over the registered trade mark and patent.

On the other side, copyright and database rights are ‘unregistrable’ rights. This means they cannot be protected by way of registration. Instead, copyright and database right protection arise automatically when the copyright work or database is created.

Why IP rights are important for businesses

First, where a company protects its products or processes by way of IP rights, it can derive income by licensing these rights to third parties so they can manufacture and commercialise their own products in exchange for a fee or royalty. Also, like with tangible property, the rights can be used as security to raise funds to fuel and grow the business.

Second, in the event a company’s IP rights are used by a third party without consent, the owner can enforce its rights before the courts in order to stop the infringing activity and seek monetary compensation from the infringer along with other remedies such an injunction.

Possessing IP rights, such as patents and trade marks, often signals innovation, market uniqueness and a readiness for large-scale commercialisation, thereby making the business more attractive to potential purchasers as well as investors.

The importance of reviewing your IP portfolio

Companies should adopt a robust IP strategy as part of their business development plan. Having such a strategy will help them secure competitive advantage, generate revenue, reduce tax liability, attract investors, and mitigate risks.

Every time a company goes through a significant change, its IP portfolio should be reviewed to ensure that the business and its products/services are adequately protected. Failure to do so will make it easier for competitors to copy its intellectual property rights.

Intellectual property rights are a company’s most valuable asset. Businesses should recognise the importance of such rights and leverage them effectively. Doing so will help companies scale their business so they can reach their full potential.

A version of this article was first published by Lexology.