Intellectual property and its role in business success
Chief Executive. Trevor Baylis Brands plc
October 2009
Most small businesses concentrate their attention on cash flow and profits to survive; but intangible assets may be vital for the long-term survival of the business.
For many large businesses their valuations are now driven much more by their intangible assets such as goodwill, know-how, and their intellectual property portfolio. This trend towards identifying and securing these assets is becoming important for smaller businesses as well.
Optimizing investment
For a small business there could be nothing worse than spending scarce resources developing a new product only to find out too late that it's already been protected by someone else in the target territory. Patent and trade mark searches can give important insights into competitors' strategy, and by checking out new ideas at an early stage a company can create strong patents and trademarks to protect its own products.
Evaluating business ideas
At Trevor Baylis Brands we look at a hundred ideas each month—totalling over 6,000 so far from individuals and small businesses. We look for novelty, need, and quality.
The most important feature that we look for is market need, but that can be hard to determine at the outset. So first we check to establish whether the idea is novel. We search patent records, business catalogues, and web sites to find similar ideas. We consider whether the idea is patentable or just an obvious advance on what already exists. Over 90 per cent of the ideas we see do not make it past this point.
If we think that the idea is novel then we look at what we call the quality issues such as the technology needed, safety and environmental issues, and of course the costs.
So having understood the novelty of the idea and its quality features we turn back to the market need. Could a product or service based on this idea find a worthwhile market? Obviously the clear winners are those ideas which have protectable intellectual property, for which there is a clear market need, and which can be produced at a price and in a form that would be acceptable to the market. Less than one per cent of the ideas that we see come into this category.
Ideas that aren't new or that can't easily get IP protection
Many of the ideas that we see have been done before but if the idea addresses a clear market need then we need to ask if it infringes intellectual property rights owned by someone else and can it be made with features and a price that would be more attractive than competing products? A cheaper mousetrap might find a market.
Ideas in this category may be difficult to license or sell but it may be possible to build a brand based on the idea and protect that brand with trade marks. Many software or service based businesses come into this category.
Ideas that have no obvious market
If the idea is novel, but no market need is obvious, then the issue is whether the market can be created. Selling the first fax machine is tough to do. Selling the second one is much easier. Would people want mobile phones if they cost USD 10,000 each and weighed five kilograms? Probably not. Would they want them if they were sold at commodity prices and fitted into your pocket? Look around you. Ideas in this category may only be viable if there is a lot of money spent developing technology or on marketing. No one 'needs' an iPod™.
New ideas that don't fit the market need
We may uncover a new idea that addresses a clear market need but for some reason isn’t compatible with the market requirements. The issues may be about technology, pricing or packaging. These are typical business challenges which can usually be solved given the necessary funds. The mobile phone in the example above needed to be engineered to sell for less than USD 100 and fit people's pockets in order to be successful.
What to do next
Ideas that are novel should have their inherent intellectual property protected by patent or design rights. Business ideas can be protected by a brand strategy and trademarks. It depends on how the idea is going to be exploited. An initial patent filing requires no fees for the first twelve months in the UK and other IP rights are not expensive, so IP fees need not be a barrier to getting early protection. This early action can give up to a year of breathing space while the IP position is refined and improved. Patents can be enhanced and filings under the Patent Cooperation Treaty can be made to secure overseas rights.
Today more companies are operating in markets that cross national boundaries but with legal frameworks for IP operating within those boundaries. The costs and delays of securing their rights may be a major issue for a small business so it is important to get it right. A CBI survey reported that most small and medium-sized enterprises are unaware that IP rights secured in Britain do not apply abroad.
The ideal combination
The ideal business idea or invention is of course one that has novel and protectable intellectual property that meets a clear market need with an acceptable price and performance.
Ideas that don't have a market need either actual, or capable of being created, have no chance of success. Novel ideas that meet the market need are the best.
What Trevor Baylis Brands tries to do is filter ideas so that businesses can develop those with the best chance of success and not waste time and money on ideas that won’t make it. We do this by applying a well developed filtration system and then protecting the underlying intellectual property in a way that is going to enhance their value. Intellectual property is going to be the foundation of future businesses and prosperity and it is vital that both business and government understand that.
About the author
David Bunting is Chief Executive of Trevor Baylis Brands plc, which offers practical help and advice to help inventors patent or protect qualifying ideas or products.
Additional information
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