Why intellectual property is important for entrepreneurs
Understanding the fundamentals of intellectual property (IP) is essential for entrepreneurs. The reason is two-fold. Firstly, it is a matter of risk management. IP infringement can be costly, and is a real and common threat to many businesses. Secondly, IP is an intangible business asset. Not an asset you can see or touch, but something that can add significant value to your business.
As IP plays such an important role for entrepreneurs, this post will detail some of the main reasons why businesses should understand, implement and invest in IP. This knowledge will place you in a good position as we come to discuss specific types of IP in our future content, and will help you make informed decisions on how the different types of IP may be relevant to you and your business.
Protection of IP
Although IP can come in several different forms, for the purpose of this blog, we will consider IP generally as a method of protecting a solution to a problem. IP rights therefore provide protection for entrepreneurs by limiting the ability of others from copying something you have spent time designing or developing.
The core concept of IP
The IP framework is constantly evolving. National policy is driving international collaboration in order to ensure that entrepreneurs and businesses are rewarded for their efforts in innovation. This is one of the core concepts of IP – to protect and reward those who research, develop and innovate new solutions to solve common problems.
Most entrepreneurs and startups have experienced the occasional challenge or series of failures before achieving success. Sometimes, the drive to succeed alone isn’t sufficient to encourage and motivate entrepreneurs to keep on trying to solve the problem. This is more so the case where time is of the essence, and there is a risk that after overcoming these hurdles, someone else beats you to it. IP has therefore been developed to incentivise entrepreneurs to continue advancing their ideas to fruition in the face of adversity.
Ensuring continual innovation
Whilst IP is designed to promote innovation by motivating entrepreneurs to invest resources into their development, there is also a risk that it can hamper it. If every innovative solution is protected from being copied, how are we supposed to encourage continual improvement? IP has been designed to allow entrepreneurs to identify what already exists, and find ways to further improve them. This means that IP protection is rarely infinite or without limitations, which encourages the next stage of evolution.
Providing a competitive edge
Whilst IP promotes continual improvement, it also provides a competitive advantage to those who took the first steps. By seeking early protection, entrepreneurs can quickly recover their investments, and use any additional revenue to fund further improvement projects or find solutions to a completely different set of problems. Continuous revenue from IP ensures that businesses not only remain afloat, but grow successfully amongst their competition. As a business asset, IP increases the value and reputation, making the business an attractive choice for partners and investors who wish to capitalise on the business’s assets.
Customer perception is a vital aspect of any business. Positive perception promotes business stability and growth, and IP, whether directly or indirectly, supports these values. IP can demonstrate the standards and quality your business strives to achieve, encouraging initial customer buy-in and ongoing trust.
Growing your business off IP
The individual elements of IP your business possesses collectively forms an IP portfolio. Just like many other types of assets, all or part of this portfolio can be sold, licensed or franchised. Depending on your aims and ambitions for your business, an IP strategy which utilises your IP portfolio and maximises your investment in innovation will quickly support business expansion and growth.
Intellectual property business support
As explained in the introduction, this post was not intending to introduce you to the different forms of IP. Instead, it was targeted towards identifying how IP can become a valuable business asset. We hope that you’ve had the first opportunity to consider the core concepts of IP and why it is so important to entrepreneurs. This will place you in a good position to evaluate how the different types of IP are relevant to you and your business, the risks they can present, and the value they can provide towards your plans for business growth.