Protect your IP to attract investment – and be prickly to tangle with

“SMEs protect IP and file patent applications to show investors that what they are creating really is theirs,” explain Sam Giles and Alexander Pickles of Meissner Bolte. “Larger companies focus on protection to show they are ‘prickly’ and won’t roll over easily.”

RedCAT’s mission is to help Lancashire clean-tech innovators take post-prototype products with well-defined end-user customers in UK and global markets through the full rigours of commercialisation – focusing sharply on funding, technical development, and scaling manufacture to meet ambitious sales targets.

One of the main priorities is crossing the Valley of Death funding gap successfully. Another is for entrepreneurs to guard their unique and valuable but often vulnerable ideas and intellectual property from predatory copycats and opportunists in increasingly fierce international marketplaces.

Meissner Bolte has professional answers. As a prominent European intellectual property (IP) law firm with 118 years of experience it specialises in patents, trademarks, and design law. Since 2019 Meissner Bolte has operated a UK firm that is headquartered in Hebden Bridge in West Yorkshire. The UK firm specialises in UK-specific IP matters and principally serves local clients in the North of England. The German company also operates 11 German offices with the largest in Munich.

From Hebden Bridge, Sam Giles and Alexander Pickles work closely with businesses of all types and sizes in Lancashire and the North West and are also RedCAT commercialisation support partners

“IP protection attracts and reassures investors in the early stages when young companies are in a state of flux,” explains Sam who is Head of the Meissner Bolte Patent and Design Department in the UK. “Applying for patents, is one way to ensure that company value is maximised in the event of exit and at the same time it helps to shield you from predatory copycats.”

“IP protection is absolutely vital for our sector innovators,” explains RedCAT CEO Prof Miranda Barker OBE DL. We have enough trouble developing innovations to delivery as real profit without having their IP stolen as well. Meissner Bolte are the RedCAT partner there to help you.”

As an expert in this field, Sam is a Chartered UK Patent Attorney, an experienced UK IP litigator, European Patent Attorney, and European Patent Litigator, with a broad background in physics.

With complementary skills, Alexander Pickles is the company’s Head of Trade Mark Department in the UK. He is also a Chartered UK Trade Mark Attorney who was called to the Bar and has a background in law.

They draw on the resources and expertise of Meissner Bolte as a full-service Intellectual Property law firm that employs more than 60 patent attorneys and trade mark attorneys.

Because IP rights are territorial, UK firms often face counterfeiting and unauthorized technology transfer risks when expanding overseas. SMEs are especially vulnerable.

At a practical level, companies are almost always part of one or more significant sector supply chains. This can be extremely helpful in the early days when they may need specialist manufacturing assistance when, for example, not yet ready to fully tool-up.

But this has inherent risks.

It is common for a partner manufacturer in a foreign jurisdiction to end up as an infringer – and even in some cases to attempt to register your IP as their own.

Alexander says, “… partner companies often seek to register your trade mark in their jurisdiction. For some jurisdictions such as China that are first to file this can be very difficult and complex to untangle. Pro-active registrations save a great deal of time and cost later down the road”.

In some instances a partner could generate their own IP by developing a manufacturing method specifically for manufacturing your product. This could be problematic for yourself or other suppliers to work around. Therefore, engaging in IP agreements at the outset of partnerships is also crucial.

The permutations and combinations are complex.

• How does this work out in practice? Sam explains how one of Meissner Bolte’s typical clients visited China to explore manufacturing options and sent product details to several potential manufacturers.
• Shortly afterwards the client noticed a similar product on the market in the Far East. One of the potential manufacturers had released an ‘improved’ version themselves. Meissner Bolte sued this manufacturer in Germany and China to reach a global settlement. While mostly successful, it involved an element of compromise.

Reducing technical material that goes to multiple entities is a first step to reduce the prospect of this happening to you. However, in the event it does occur having the IP in place enables the effects to be mitigated.

In another scenario, a client wanted to change manufacturer after production costs were.

However, the manufacturer sent a threatening letter detailing patent rights they had for the specific manufacturing process.

This led to the relationship being maintained with increased costs. This shows the power that IP can have in manging commercial relationships.The first lesson learned was that it is important to watch partners for their IP filings.

The second lesson is that is important to protect processes and not just products.

Meissner Bolte represent a cosmetics manufacturer based abroad that entered the UK market a decade ago but did not register their trade mark in the UK.

They entered into a distribution agreement with a third-party based in the UK but found out that their former distributor had already registered their brand name and logo as UK trade marks. The distribution agreement ended.

However, the former distributor then started to issue take down notices against the newly appointed UK distribution partner.

Meissner Bolte launched a claim in the Intellectual Property Enterprise Court for ‘Unjustified Threats’ on behalf of their client. It also applied for an interim injunction so that the Christmas sales period was unaffected.

The court granted the interim injunction within three weeks of the claim being filed. A favourable settlement was then agreed shortly thereafter. This minimised the time and cost of enforcement.

The important message is to get the IP position locked in as soon possible. Alexander says “this would have been entirely avoided if the UK trade marks had been registered at the outset. Getting in first is much simpler”.

The UK Government legislation on the Patent Box tax incentive is extremely generous. The incentive is a reduced corporation tax rate of 10% on net profits attributed to patents. This is a 60% reduction on the main corporation tax rate of 25%.

“It’s a fantastic scheme,” says Sam, “but because have to apply for a patent before you release a product and therefore you need to plan at least two years ahead.” For most successful products, the benefit of the patent vastly outweighs the cost.