Managing your IP: Leveraging your IP
Managing your IP: Leveraging your IP

Disclaimer!

The content in this SMEs corner is provided for educational purposes only, and does not constitute legal, tax, or business advice. For guidance tailored to your specific circumstances, please consult a qualified professional.

Leveraging your IP

Once you complete your IP valuation, it is worth considering what exploitation opportunities are available to you. 

Between 2007 and the first half of 2023, the European private equity and venture capital industry invested €809 billion in 56,042 companies in the European Union. Of these investments, 20% went to companies owning  patents, 40% to those owning trademarks, and 15% to firms with both.1 These figures show that investors often select IP-active companies.

Private equity and venture capital are not the only funding options available to SMEs. This section also covers EU-wide initiatives and funding opportunities available to SMEs.

You can also learn how to use, manage, commercialise and enforce your IP.

Finally, you can discover success stories shared by other SMEs.

Step 4. Select your IP Strategy

With protected IP and secured funding, SMEs can follow multiple strategies. Achieving your commercial goals depends on adopting a well-aligned IP strategy.

Before exploring some examples, it is worth noting that a strategy need not be static. The entrepreneurial journey is rarely predictable, and it is common to adjust both the strategy and even the business model over time in response to market changes, funding opportunities, and other factors.

When building your IP strategy, several factors should be considered. These include your geographic footprint, key target markets, products and services, licensing models, and distribution channels.  At the core of the strategy lies the question: How important is IP to the business?2  To find the right answer, let’s take a look at three different approaches to that question.

  • Defensive Approach

    Defensive Approach

    In a defensive approach, IP supports your current or planned revenue-generating activities.  This approach is often suitable for companies seeking capital investment. At this stage, IP registration helps reassure investors and reduce uncertainty surrounding the company’s assets. 

    Defensive IP strategies typically incorporate “due diligence” activities such as clearance searches to identify prior conflicting rights. These prior conflicting rights, if existing, may pose risks to your organisation when it comes to using and registering your IP.3

  • Offensive Approach

    Offensive Approach

    In an offensive approach, the goal is to protect IP and actively leverage intangible assets to reinforce your competitive advantage. A well-organised offensive strategy typically encourages other companies to license-in your technology. To that end, IPRs are designed to be broad enough to prevent competitors from developing easy design-around alternatives. You should also be prepared to enforce your rights in the event of infringement.

    To implement this, first assess how effectively your products and sales channels can be protected in relevant markets. Then evaluate the strength and enforceability of your existing IP rights.4

  • Minimalist Approach

    Minimalist Approach

    In a minimalist approach,   the IP strategy focuses on managing risk rather than building a large IP portfolio. It suits businesses where a serious IP dispute is unlikely and, if one arises, manageable. It still involves basic due diligence, such as checking for conflicting rights before launching new products.5

    IP strategy is not static. As markets and business models evolve, the approach may need to be revisited.

Step 5: Enforce your IP 

Securing patents, trademarks, designs through formal registration does not automatically ensure that others will respect those exclusive IP rights. When unauthorised use occurs, it becomes necessary  to consider how IP can be enforced.

Consider, for example, someone selling a low-quality shirt bearing your logo, or an electronics manufacturer distributing devices that incorporate your patented technology without permission. Although filing a lawsuit is an option,  SMEs can first rely on other measures. 

Cease and Desist letter

A Cease and Desist letter is often the first step in addressing an IPR violation. It notifies the infringer of their infringing actions, demands that they stop, and warns that legal action may be taken if the contested behaviour continues.6

Such a letter usually informs which IP right has been violated,  demands specific behaviours, such as, to stop the unauthorised use, and sets a deadline for compliance. The letter may also specify the territory where the infringing action occurred.7 It is advisable to consult a legal practitioner when drafting the letter.

IP Scan Enforcement

The EUIPO offers IP Scan Enforcement as a consulting service to detect and address IP infringement early. 

The service is delivered in three steps. 

  1. Preparation - The SME completes a self-assessment questionnaire to help the assigned expert understand the case background. 
  2. Analysis - The expert interviews relevant employees to assess the situation, any measures already taken, and the associated risks. 
  3. Report - The SME receives a comprehensive report with findings and recommendations, followed by a meeting with the expert to discuss next steps.

The service is available in several languages. Up to 90% of that service cost can be reimbursed, subject to applicable limits. Check the availability here: IP Scan Enforcement 

EUIPO Mediation

Resolving an IP dispute does not always require going to court. One alternative is mediation. It is a consensual process in which a neutral third party helps the disputing parties reach a settlement. Mediation can save time and cost, help preserve business relationships and, protect your SMEs reputation. 

The EUIPO offers a mediation service through its Mediation Centre, free of charge, in multiple languages. The service is available both online and in-person at its premises in Alicante. See more: EUIPO Mediation

Patent Mediation and Arbitration Centre of the Unified Patent Court

For patent disputes, the Unified Patent Court's Patent Mediation and Arbitration Centre  also offers mediation, arbitration, and expert determination, with seats in Ljubljana and Lisbon. See more: PMAC.

WIPO Arbitration and Mediation Center

The WIPO Arbitration and Mediation Center provides mediation and arbitration for a broad range of IP and technology disputes. SMEs receive a 25% reduction in center fees, plus free procedural assistance. See more: WIPO Arbitration and Mediation Center.

Step 6: Commercialise your IP

Registering your IP is only the beginning. The value of IP comes from using it commercially in your business. There are several ways to commercialise your IP. Which one is right for you depends on your business goals, resources, and the level of control you want to keep over your assets.

The most straightforward way to commercialise your IP is to use it yourself. If you manufacture products using your own patented technology, or sell products and services bearing your own trademark, you are already doing this. You keep full control and collect the value of your IP directly. This works best when you have the capacity and market access to bring your product or service to market on your own.

An assignment means selling your IP outright to another party. The buyer becomes the new owner of the IP rights, and you can no longer use it without the authorisation of the new owner. This may be an attractive option if you do not have the resources to exploit the IP yourself. It can also be a way to convert your IP into immediate monetary benefits. Learn more.

Licensing allows you to let others use your IP while you retain ownership, usually in exchange for royalties or a one-off payment. It can open up new markets and revenue streams without giving up your rights.

There are three main types of licence. 

  • An exclusive licence gives the licensee sole rights to use the licensor’s IP. The licensor cannot use it themselves or license it to anyone else. 
  • A sole licence means licensor keeps the right to use their IP but agree not to license it to anyone else. 
  • A non-exclusive licence permits the licensor to license the same IP to multiple parties at the same time.

Licensing works well when you cannot capture the full value of your IP alone. For instance, in a scenario when you want to expand into markets where a local partner has better reach or expertise.

Franchising is a way of expanding your business by allowing others to replicate your model under your brand. For example, as a franchisor, you license your trademark, know-how, and business systems to a franchisee. The franchisee will run their business independently under your supervision and standards.

If you have a proven business model, franchising lets others replicate it under your brand, allowing you to expand with less investment and risk. 

A joint venture is a collaboration between two or more companies that pool their resources to achieve a shared goal. Each party typically brings its own IP into the arrangement, and new IP may be created during the collaboration.

This can be a good route if you want to collaborate closely with another party. It is suitable for pooling resources, sharing risk and cost, or combining complementary strengths to jointly develop new IP. Learn more

IP commercialisation is not a one-time decision. As your business priorities change, the right approach may change as well. The key takeaway is that your IP should be continually and actively contributing to your business. This can be achieved through your own products and services, a licensing deal, a partnership, or a new venture built around it.

Looking for funding?

Sources:

1 - Invest Europe and European Union Intellectual Property Office (EUIPO), Protecting European Innovation: Private Equity’s Role in European Intellectual Property Rights (November 2024) https://www.investeurope.eu/reports/euipo-report-2024/static/Invest_Europe-EUIPO-guide-241122.pdf , p.6.

2 - Spruson & Ferguson, Developing an IP Strategy ( August 2019) www.spruson.com/app/uploads/2019/08/sf_developing_an_ip_strategy_a4_brochure_aug2019_web.pdf.

3 - ibid.

4 - ibid.

5 - ibid.

6 - EUIPO ’ What to do next’ https://www.euipo.europa.eu/en/trade-marks/after-applying/what-to-do

7 - Hannah Peedikayil, Cease and Desist Letters: Defined, Usage, and Samples (Legal Resource Center, California State University, Long Beach, 30 September 2021) https://www.csulb.edu/college-of-business/legal-resource-center/article/cease-and-desist-letters-defined-usage-and