We offer you legal expertise at all stages of the intellectual property ownership and exploitation cycle. It is easy to miss a trick as you trade through the stages from creation of the asset, raising finance for development through to acquisitions and sale. We have seen many clients through the cycle guiding them over bumps in the road.
Stages of the cycle we help with:
Most of our clients are involved in businesses reliant on intellectual property ownership and exploitation such as technology, media, creative, design and retailers. We can step in when SMEs need help in dealing with agreements with larger corporates to represent them and solve the tricky questions.
Ownership and exploitation – securing the foundations
The foundation for successful exploitation of intellectual property will be to make sure you secure the ownership. Ownership of intellectual property can be established by a variety of means. What is best depends upon your product. For example:
Establishing ownership via commercial agreements
When the asset is being created or developed the agreements need to reflect your ultimate ownership. For example, if you have created software, ownership of the copyright in the software should be recorded in any agreement relating to use of the software. Typical agreements include licences and collaboration agreements.
Establishing ownership via registration
Ownership for some intellectual property assets is capable of registration. For example, trade marks, design rights and patents can be registered. The system of registration of intellectual property for trade marks, design rights or patents can be worked to your advantage. The advantage gained is that ownership can be secured.
Using the system of registration to your advantage
- Oppose a trade mark application – before or during its registered;
- Apply for a trade mark to be revoked – after it is registered;
- Apply to a trade mark to be invalidated – after it is registered;
- Apply to rectify a registered trade mark;
- Prevent others from passing off their goods as yours; and
- Anticipation of infringement in the legal agreements.
For assets which are not capable of registration you will need to rely on agreements to establish ownership and the right to exploit.
Just as the ownership of intellectual property can be secured via a range of routes so can the financing. With bank finance difficult to find, we see financing obtained via other methods such as:
The pooling of existing intellectual property to develop a combined and better product;
Usually a special purpose vehicle for developing intellectual property ideas and taking them to market.
There are a variety of tax attractive arrangements available designed to help young businesses attract investors. The most popular arrangements are SEIS and EIS. Many of our clients have used those schemes to attract investment.
Maximising revenue from exploitation of IP
Intellectual property revenue generation flows from a variety of avenues. We look avenues such as:
Are the terms of agreements for generation of revenue fit for purpose?
Typical agreements we review include patent licences, R&D agreements, manufacturing, supply and distribution agreements, collaboration agreements and, technology transfer agreements.
Will other models for revenue generation work?
Is the corporate structure appropriate?
To expand, the business has to be attractive for future investment.
Ring fencing intellectual property
Ring fencing means that intellectual property ownership and revenue is separated from trading revenue often via a separate company. A licence agreement enables the intellectual property to be used by the trading entity. The benefits of ring fencing are:
- It can safeguard the intellectual property assets against the risk of insolvency of the trading entity; and
- Offer flexibility during sale of the trading entity or maintain IP ownership in an entity as a separate business.
Acquisitions and sales of IP
The final stage of the cycle is the sale of the business. A specialist area for us is the sale and purchase of intellectual property businesses. Using our skills developed over the years we can manage the process for you.
We find the areas you will need to look out for include:
Due diligence on the ownership of IP
The buyer will naturally want to be sure that the seller has good title to what’s being sold. Checks will be undertaken at relevant registries and core legal agreements will be scrutinised. A seller will be asked to warrant ownership and any provide indemnities for claims to ownership of the intellectual property by any third parties
Warranties as to the reliability of the IP
If the business is a software based business a buyer will want a period of testing. The sale agreement will deal with the risk that hidden problems may occur. Our job is to negotiate fair terms depending on specific risks identified.
Assignability of licence agreements
The buyer will be looking to make sure that the agreements in place under licence for the use of your intellectual property are workable. This will include powers of assignment – likely to be required where a buyer intends re-organise after the acquisition. Agreements must also be checked for provisions which entitle a party to terminate the agreement where there is a change of ownership in a company.
Most buyers want to conserve cash and delay full payment of the consideration. The usual method is via earn outs and deferred consideration. Not all shareholders have to be subject to delayed payment – for example investors and employee shareholders might be paid in full with key shareholders and founders subject to an earn out.
Intellectual property ownership and exploitation recent cases
During the life of your typical intellectual property based business problems will arise. What matters is finding support which is practical and specialist. We have illustrated below some of the ways in which we can help you.
- Confidentiality agreement– we reviewed a confidentiality agreement for an innovative tech start-up. This agreement enabled our client to pitch to high net-worth individuals. We registered our client’s intellectual property and know-how for protection. The pitches led to investment at the level sought being secured.
- Copyright protection – we advised on copyright protection for creative productions. Their works were created for a series of books and performances. We documented the group’s rights for licensing revenues.
- Acquisition of a media and branding business – acting for the buyer we put in place a structure for the acquisition with a focus on how the deal was to be financed.
- Sale of an IP based business – we advised the shareholders and the company on a sale of shares. We managed the due diligence exercise, reviewed the sale agreement and reduced the level of warranties and indemnities sought.
- Joint venture – our drafting of the joint venture agreement safeguarded a digital media company in its joint venture with a marketing platform. We drafted the agreement to cover off ownership of enhancements and a continual stream of revenue from the product.
- Licencing – we set up a subsidiary to hold all the parent company’s intellectual property. In future, the subsidiary will grant licences to the parent company.
In today’s competitive economic climate, IP is the key for survival of a business. Our experienced intellectual property lawyers will provide you practical and commercial advice to protect and exploit your intellectual property assets.