Viable Companies Protect IP at the Beginning; Successful Companies Protect Their IP Early and Often
When it comes to protecting intellectual property (IP), there are always “miles to go before you can sleep.” A mid-stage business with proven concepts, realizing revenue and planning for growth, revisiting, and building a robust IP strategy is a critical foundation for long-term success. As companies mature, they accumulate valuable assets—from brand recognition to proprietary processes and even innovative inventions—all of which need to be safeguarded.
IP Protection is a Continuous Journey
In the seminal book, “The Lean Startup” by Eric Reis (advised to EmergeCounsel clients as a “must have”), there is ample discussion on how the business strategy should always be a “build-measure-revisit/learn loop.” The point is when businesses start; they have a rough hypothesis or belief of why the business is viable and/or has a competitive advantage. As the business grows, there are points to measure to test and fine-tune the hypothesis and then steps to take once that point is reviewed.
For example, a startup dog food company thinks it will gain a competitive advantage by selling cola-flavored dog food (a blue ocean idea, as no one sells that). After two years, it noticed consumers were resistant to the cola-flavored dog food but liked its chicken-flavored variety. Armed with the data, it modified the formula to taste more like the chicken variety but still include cola for brand panache.
The Same is True for IP Strategy
According to the US Bureau of Labor Statistics, approximately 65% of businesses ultimately fail. It is safe to say that if a business has done nothing to protect its brand, image, sales collateral, “secret sauce,” etc., it is quite possible in that 65%.
Many other businesses begin the IP process in the early stages of business…and then stop. At the early stage, IP protection often focuses on foundational elements: filing for trademarks, securing patents for key inventions, or protecting trade secrets. Working with an attorney is a relatively straightforward exercise. For example, to clear the brand and file a trademark application or two.
As Business Grows
As businesses grow, their IP considerations almost exponentially evolve. For instance, one product line can become ten or stay one but have multiple iterations. As the company builds new product packaging, it is in development mode, testing formulas or creating a truly novel product. They begin receiving orders from Canada and the UK and decide to outsource manufacturing to China. Perhaps they have a new way of explaining the product or an instruction manual or have hired independent contractors entrusted to write the sales collateral.
Almost inevitably, there is more to evaluate and act upon. Brand evolution becomes a key concern, as expanding product lines or entering new markets often requires additional trademarks or copyright protection. Territorial growth introduces complexities, with businesses needing to navigate a patchwork of IP laws and secure protections in multiple jurisdictions. Increased exposure to infringement is another risk, as greater visibility makes it more likely that competitors will copy innovations or misuse a brand.
The Role of an IP Audit
In “The Lean Startup” terms, the IP audit is your measure/learn step. Essentially, a skilled IP attorney will work with you to conduct a comprehensive review of a company’s intellectual property assets. An attorney can often assess what, if any, changes need to be addressed to ensure the assets are adequately protected and aligned with the business growth goals. For mid-sized businesses, an audit can:
- Identify gaps in protection: Are there trademarks or patents that should have been filed but weren’t? Are trade secrets adequately documented and safeguarded?
- Spot new opportunities: As your business grows, innovations, processes, or branding elements may emerge that are worth protecting.
- Evaluate international needs: If you’re expanding into global markets, an audit can determine where additional filings are needed to secure your IP rights abroad.
- Assess infringement risks: An audit can also uncover potential vulnerabilities where your IP might be at risk of infringement by competitors.
Building a Comprehensive IP Strategy
Once an audit identifies the current state of your IP, the next step is to develop a forward-looking strategy.
The first step is to strengthen existing protections. Businesses should ensure that all critical assets – from trademarks to patents – are up-to-date and enforceable. This includes renewing filings and addressing any gaps uncovered during the audit.
International IP Strategy
If your business operates in multiple countries, securing IP protection in those jurisdictions is crucial. Expanding your international coverage might involve filing trademarks and patents in new territories or navigating international treaties like the Madrid Protocol.
Furthermore, as your business grows, so does the likelihood of creating new products, services, or branding elements. Establish transparent processes to identify and file for IP protection as these innovations emerge. This should include a plan for monitoring and enforcing your IP rights so that infringements can be addressed proactively. This might involve setting up alerts for trademark misuse or engaging legal counsel to handle infringement cases.
Finally, make sure your employees understand the importance of IP and their role in protecting it. Particularly when it comes to trade secrets or handling proprietary information.
A Business Not on Top of Its IP Protection is Simply Not Exitable
There are obvious consequences of not protecting and/or clearing a company’s IP, including lost revenue, reputational damage, and legal costs.
But what we know in our practice is that IP protection is a sizable part of legal due diligence at the exit. A company is simply not “exitable” if it doesn’t take steps to protect its intellectual property often and assiduously. In summary, no sophisticated company (i.e., well-financed and can buy your company) is going to take a risk that your company has intellectual property exposure or that products can be easily pirated.
In contrast, a well-protected IP portfolio safeguards your business and enhances its value. For companies considering an exit strategy, strong IP protections are often a key factor in attracting buyers or investors.
Why work with an IP attorney?
Navigating the complexities of IP protection requires expertise. An experienced IP attorney can:
- Conduct thorough audits to identify gaps and opportunities.
- Handle the filing and prosecution of new trademarks, patents, or copyrights.
- Develop a tailored IP strategy that aligns with your business goals.
- Represent your interests in cases of infringement or disputes.
For mid-staged businesses, partnering with an IP attorney ensures that your intellectual property is not just protected but leveraged as a strategic asset for growth.
Take the Next Step
If your business is growing and you haven’t revisited your IP strategy recently, now is the time. An IP audit can uncover critical gaps, and a proactive strategy can position your company for long-term success. Don’t wait until an issue arises – start protecting your intellectual property today!
Contact us to schedule an IP audit and take the first step toward safeguarding your business’s future.