Simon Crossley, a partner at Eversheds LLP, said IP was often overlooked, even by major companies, and was frequently “filed in a cabinet and forgotten about”.
However, in a tough economic climate, he said it was imperative to have a well-managed IP portfolio working in a business’s favour.
“Most food and drink sector businesses are missing out on opportunities through IP,” he said at a food and drink seminar at Eversheds London office.
“This is especially important when a business is trying to defend its value. The amount of tangible assets that auditors can assess is diminishing, so businesses need to make sure they have patents, IP and trade secrets in order and have a value for them.
“Therefore, it is vital the businesses undertake a health check of their IP portfolio and costs. This can usually save 10-15% in fees. One company I worked with had rights and brands in six or seven companies, managed by 18 legal firms. Clearly savings could be made there.”
‘Savings could be made’
Once a company’s IP is in order, bosses should think long and hard about simply leaving it in the cabinet, Crossley said.
While a company will have to assess if it is in its long-term interest, he cited how IBM had licensed 10,000 of its patents to other businesses from its non-core portfolio, in exchange for 1% of the ensuing profits.
“This shows how IP can be used in a business’s favour. There is no need to leave it on the shelf.
“However, companies which licence brands and rights need to make sure they are getting full market value. All too often agreements are signed and never reassessed,” he added.
Crossley said there were also tax savings that could be made with regard to IP.
He said few smaller firms were aware of Research and Development (R&D) tax credits. “This little gem of an idea”, he told guests, allowed R&D work to be offset against tax.
HSBC
The biggest UK beneficiary last year was HSBC, so you don’t need to be experimenting with test tubes to qualify for this” he said. “Another option is to move the IP portfolio offshore. Obviously this may have public relations implications, but if you are generating an income from IP, this will lower your tax bill.”
An effectively organised and well managed IP portfolio can also be used to access to funding.
With businesses frequently failing to show they have enough tangible assets to lend against, Crossley said some banks were willing to lend against an IP portfolio.
Crossley added: “I am not saying IP is an easy fix to get cash because there are many interlocking issues. Effective monetisation depends on identifying and organising the IP, developing a strategic plan, and having strong management to implement it.
“However, you can make it work in your interests. It is like a chocolate box and there are many opportunities to pick at depending on the company.”
