Building IP and branding for growth
For many a startup, IP and brand sit at the core of its growth plans and ultimately for exit. In this current climate, our panellists shared how to go about getting your IP protected, how they have been involved in brand and strategy, and how to get management to buy into the need for IP investment.
Product-centred businesses might find it easier to understand the value of IP because that exclusive product is the business, said Christie McCluskey, General Counsel at Ooni -- a company which makes and sells portable pizza ovens -- but she recognises that this might be a challenge for other types of businesses.
“Not everybody sees that you need to spend money protecting IP. But there is value in the registering, whether it's designs or patents."
Setting out an IP strategy
“Whatever protection you can get, showing that you've got it helps with growth and helps you make you attractive to investors,” said Emilie Pounds, Head of Legal at Teya. She stressed the very important and small things that don’t come with a huge cost but will come with a huge impact: including the right confidentiality and IP clauses in employment contracts, or a good strategy on internet domains. Good steps for domains include making sure that a company buys all of the correct internet domain names, to protect them when others might “try and come up to pretend to be you in other other jurisdictions”, and making sure that the domains are in the name of the correct registrants.
Knowing what you have is essential: “Tidiness and clarity of what your assets are (particularly around IP) for a product company, is very important”, Christie says. This is followed by having the right clauses - particularly NDAs - in the right contracts, be they employment, marketing or manufacturing contracts. Investors will be drawn to an organised structure and considered choices around IP, Emilie says, while Christie adds that, even without investors, GCs can show everyone in the business some horror stories to get them to fall in line if need be.
Prioritising within IP
GCs at product-based companies also find themselves at the heart of a constant battle - and need for balance - between how much money can, or should, be spent protecting IP. This is where developing a strategy for what should or shouldn’t be protected becomes valuable, Christie says.
She recommends a phased approach, with a good place to start being freedom-to-operate searches or trademark searches, and aligning a company to the due diligence that would be required in Stage A funding, to make sure that it isn’t “inventing the unnecessary”. She also advises on a “gap-filling exercise” for trademarks, looking at all of the jurisdictions where a company sells its products and making sure that word mark is protected in all of those.
When making judgement calls on whether to apply for a patent, Christie has introduced criteria based on questions such as: is this innovation or piece of technology going to generate X millions of revenue in a couple of years, is it going to be a reason why consumers will purchase this product? Will we care if anybody copies it? She also recommends patents for accessory products of a company’s main seller, adding that conversations can be quite emotional when a similar product is developed.
Getting management behind IP, and IP into management
It is easier to have management buy-in for IP-related issues when it is the management -- particularly CFOs -- that is driving changes that require an IP-focused strategy, Emilie and Christie said. Nevertheless, they also advise getting expert external counsel to advise on projects, as well as having people within teams that have dealt with IP before so that a sphere of influence can be built.
Ultimately, it’s all about getting executives to recognise the value of IP: “It's worth remembering that this IP is an asset, and spending money on registrations is not an expense in the conventional sense, but we're converting it into an asset,” said Ruth Arkley, counsel at Morrison Foerster who moderated the panel.
Suggestions from lawyers may or may not be welcomed. Emilie suggests that the later an idea is brought to legal, the more likely it is that legal could have the upper hand: when Teya changed its name from SaltPay, the company brought another idea to her a couple of weeks before launch, to check that it would be okay from a trademark perspective. It wasn’t, but Emilie found a way forward: “Wanting to be a solutions-focused in-house lawyer, I told them that I would come up with another idea instead”. She set herself some parameters to come up with a new name: something short, something pronounceable in most other languages, something that was somehow connected to the merchant, the core of the company’s business; and crucially, something with the .com domain available. She took Teya to the CFO, the founder of the company, and they went for it. When Ooni was designing a new logo, Christie suggested that it remain in some sort of shape that is similar to an oven, so that the company remains recognisable. “The response was that the perspective is helpful but we don't take advice from lawyers”.