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IP Series: I Got My IP. Now What?

Jared Sues

November 26, 2020

This article is the second in a 5-part series on Protecting Your Intellectual Property. Check out other parts in the series:

 

Intellectual property rights (IPRs) such as trademarks, copyrights, or patents, are rights to exclude others from leveraging your intellectual property (IP). IPRs, and even protecting trade secrets, can carry significant costs. Ensuring that an IPR is an asset rather than a liability requires foresight – typically in the form of an IP strategy. This is best formulated with the guidance of an IP professional who can tailor a strategy to your specific situation. As you prepare to pursue IPR, consider your objectives and specific needs. IPRs help to create a space for the rightful holder to operate, but don’t provide a license to use the IP. 

Objectives

The objective of obtaining an IPR generally falls into four categories: 

  1. Commercial opportunity
  2. Investment
  3. Collaboration
  4. Sale

Each of these requires different costs and approaches. While there is some overlap, it’s important to consider each independently to prevent conflating the different value propositions and the actions required to secure the value.

 

Commercial Opportunity

The traditional definition of an IPR is excluding others from practicing your IP. If this is the focus of obtaining an IPR, valuing it comes down to a pure cost-benefit analysis.

On the cost side, consider the dollars and cents in acquiring an IPR as well as the time and focus you will need to invest to secure the right. An IPR is only effective if the space is monitored and the right enforced, which is a significant and ongoing expense. 

You must also be realistic about the value of an IPR. In an open market, two considerations drive this value proposition. First, does the IP provide an added value to compel potential consumers to choose this IP over alternatives? For example, how much more is someone willing to pay to get what the IP provides? 

The other, arguably more important consideration is whether someone can innovate or create around the IPR. If so, what’s the cost of that work-around to a potential creator, and ultimately the consumer? A piece of IP, and therefore the IPR that protects it, is only as valuable as this cost (sometimes referred to as the cheapest next more expensive alternative that achieves a comparable result).

Be realistic about the value of an IPR. Does the IP provide an added value to compel potential consumers to choose this IP over alternatives? How much more is someone willing to pay to get what the IP provides? 

Investment

One of the most important roles an IPR can play is as an indicator of IP maturity. Even if an IPR itself does not justify the cost to acquire and enforce the IPR, it demonstrates that the owner has made the effort to define and protect their IP. This inspires confidence in investors who may not have another reference frame to evaluate the viability of the intellectual property. It also establishes clear boundaries of the intellectual property, letting investors know exactly what they are investing in. This helps to streamline an extensive IP portfolio or legitimize one that has not been demonstrably proven.

Collaboration

Collaboration, while not inherently commercial, can be crucial to developing commercial interests in IP. IPRs play a strong role in facilitating collaboration as the absence of strong protections can lead to extensive and costly disputes. Alternatively, strong confidentiality and IP agreements can mitigate or avoid these costs while allowing complementary creative entities to capitalize on their collective efforts.

IPR can establish clear boundaries of the intellectual property, letting investors know exactly what they are investing in.

Sale

To sell something, you need to own it. An IPR establishes a clear title to the IP in question. It’s important to note that an IPR is a negative right that prevents others from practicing your IP: it does not entitle anyone to practice your IP. Whether a sale is partial in the form of a license or an outright transfer in the form of an assignment, the IPR is a critical vehicle for any IP sale.

Cost Description Benefit Description
Commercial Opportunity Application or Contract Drafting Fees/Time Spent (by Jurisdiction)

Monitoring Fees

Enforcement Fees

Value of More Expensive Alternative Less Value of Alternative that Does Not Accomplish What the IP Does Contemplating Customer Base
Investment Application Fees/Time Spent (by Jurisdiction) Indication of IP Maturity Which Raises Valuation
Collaboration Application or Contract Drafting Fees/Time Spent (by Jurisdiction) Avoidance of Future Disputes
Sale (Partial or Total) Application or Contract Drafting Fees/Time Spent (by Jurisdiction) Clearly Defined Title to IP

 

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This article is the second in a 5-part series on Protecting Your Intellectual Property. Check out other parts in the series:

Intellectual property is a critical pillar for Canadian companies commercializing transformational solutions to have a truly sustainable competitive advantage in a global market. The ventureLAB IP Retention Program is a comprehensive program helping tech businesses develop a pipeline of investment opportunities and ultimately keep valuable IP in Canada. The program helps you navigate the right combination of timing, tools, and talent, to give you the speed and strategy to develop your IP and compete on a global scale. Join now.

 

About the Author

Jared Sues joins ventureLAB as a law student at Osgoode Hall Law School where he serves as an IP Osgoode Innovation Clinic Coordinator and focuses his studies in intellectual property. Prior to law school Jared practiced as an engineer for 9 years in Canada and the US. Most recently, he summered at OWN Innovation, an IP law firm, and looks forward to helping the next generation of innovators with their IP strategic needs.

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