Getting Your Intellectual Property Investor ReadyA Presentation to TTI2001 – 27 September 2001

Malcolm McBratney, Partner – Technology Group

Outline

• Investor Readiness

• Introduction to IP

• IP Investor Readiness

The Business Growth Cycle

• Idea investor ready

• Once investor ready:

• Venture capital

refinement of idea

testing of idea, applications,

certification if necessary

• Public offering (and listing) - realisation

Are you investor Ready?

What is Investor Ready?

• Innovation secured - intellectual property

• Management competence and integrity

• Sound business plan

• Knowledge of market, good position

• Risk and returns accurately portrayed

• Ease of investor exit

Risks to Becoming Investor-Ready

Risks to innovation becoming “investor-ready”

• Alternative innovative developments

• Poor licensing arrangements

• Over-estimation of market

• Ineffective management

• Lack of investor confidence

Summary - The 8Ps

1. People

2. Perseverance

3. Product

4. Patents

5. Projections

6. Prospects (of commercialisation)7. (Risk) Profile

8. Passion

What is intellectual property?

What is intellectual property?

• Patents

• Designs

• Trade marks

• Copyright

• Trade secrets

• Databases

Patents

Patents:

• Protect inventions

• Standard – 20 years

• Innovation – 8 years

• Monopoly right

• Country by country

Designs

Designs:

• Protect features of shape and form

• 16 years

• Difficult to enforce

Trade marks

• Company names, brand names & logos

• A business name is not enough!

• Trade marks

• Look before you leap

• Domain name registration

Trade Marks (cont…)

• Two preconditions

• capacity to distinguish

• not deceptively similar

• Perpetual protection

• Renewal each 10 years

• ‘Use as a trade mark’

• Registration not mandatory

Trade Marks

• Trade Marks Act

• proprietary rights

• any sign:

• letter

• word

• name

• signature

• numeral

• device

• brand

• heading

• label

• ticket

• shape

• any aspect of packaging

• colour

• sound

• scent

Business Names

• Administrative

• No proprietary right

• Remove for non use

• Offence to not register

• Will look at similar names

Company Names

• Administrative

• No proprietary right

• No need to use

• Will not register exact company name but otherwise will

• No proprietary right

Domain Names

Copyright

Copyright

• Protects literary and artistic works, sound, TV, radio, film, photos etc

• Protects expression, not ideas

• Generally lasts for the life of the author plus 50 years

Trade Secrets

Trade Secrets:

• Must be kept confidential

• Have unlimited duration

• Are not property

• Can suffer from leakage

IP Due Diligence

Why do you need to do IP due diligence?

• Investor - venture capitalist

- private

• Float

• Commercialisation

• Trade sale

Key Issues

What are the key issues?

• ownership

• encumbrances

• validity

• claims

Process What is the process?

• Establish a chain of title

• Identify and fix gaps

• ongoing management

Ownership

• Employees

• Consultants & contractors

• Disclosures to outsiders

• Development records

• IP policies

Identification

• Each individual IP asset must be mapped

• Chain of title

• Creator/inventor

• Employer

• Assignees

• Licensees

• Encumbrances

Inventor Employer Purchaser

Licence 1 Licence 2

Chain of Title

Assignment

Charge

Inventor Employer Purchaser

Licence 1 Licence 2

Assignment

Charge

Inventor Employer Purchaser

Licence 1 Licence 2

Assignment

Charge

Inventor Employer Purchaser

Licence 1 Licence 2

Assignment

Charge

Management

• Database:

• Registrations

• Dealings

• Correspondence

• Physical / electronic compilation required

• The database must be easy to use & review

• Renewal reminder system

Conclusion

• Be prepared

• Identify and fix problems before 3rd party due diligence

• Maximise value

• Leave enough time

• IP is a valuable asset - it should be managed as such