Obtaining IP protection vs. maintaining a healthy cash flow

November 30, 2018

Intellectual Property

A business generating significant revenue doesn’t automatically entitle that business to survive the next 12 months – business must also ensure that cash flowing into the business is greater than expenditure, over a given period of time.

However, businesses seeking to obtain IP protection in the early stages of development may wonder how a positive cash flow can be maintained given the sometimes significant cost of obtaining such protection.

Well, it’s relatively straightforward.

One of the key IP rights businesses benefit from is copyright protection. Copyright is an unregistered right which arises automatically on creation and there is no requirement to formally register copyright in the UK or EU.

This means that there are no formalities, or costs associated with, formalising protection of copyright in a business’ website coding, website text, promotional literature, logo etc. The only thing businesses should ensure they have in place is: i) a written assignment of ownership of those rights to the business (in the event that they have asked an external party to produce the works for it), and ii) evidence of when, where and by whom the work was created.

But what about registered rights, such as registered trade marks and designs?

There’s no way around this for a business – registered rights cost money. But there are also “grace periods” and “priority periods” which can positively impact cash flow for businesses, if they are used in the correct way.

For example, if a business is seeking to register a design in the UK and/or EU, it will have 12 months from the date of initial public disclosure of the design to actually file for valid registration. There is no requirement to protect the design before or even at the time of public disclosure. This allows businesses to:

i) test the market and understand whether the design has real commercial value for the business before incurring the cost of registration; and

ii) better plan for the likely cost of protecting the design, if it chooses to do so, within that time frame.

Businesses should also take advantage of “priority periods”. These periods allow business to “spread-out” the cost of filing for registered protection across territories whilst not compromising protection.

For example, let’s say a business wants to protect its brand in the UK, EU, China and US, but only has cash available to file in the UK. We would advise that the business files in the UK as soon as possible, and then takes advantage of the 6-month “priority period” which allows it to file similar applications in other territories and effectively back-date those filings to the date of the initial UK filing. If and when those subsequent filings register, the business will benefit from protection for those filings as if they had all been filed on the date of the original UK filing. This offers the best of both worlds to business as:

i) they can incorporate the likely costs into their next 6-month business plan;

ii) spread out the costs of filing, benefitting positive cash flow; and

iii) not risk losing protection in other territories during that period.

Our experts at Briffa understand not just IP protection and enforcement, but also the day-to-day challenges business face. If you wish to talk with us, please contact Tom or call 020 7096 2779.

Written by Tom Broster

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