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IP Matters: Accessing Overseas Markets

10 April 2018

The low value of the pound is encouraging more businesses to increase their export activity or consider trading overseas for the first time. However, some could be making better use of their intellectual property assets when doing so.

The latest European Export Index shows that the UK exports are growing at a faster rate than those of other European countries and expansion in overseas sales has reached a nine-year high.

There are essentially two routes a business can take when going to market overseas. The first option is to set up its own sales and distribution arm in the territory and market its goods directly. This approach can, however, be difficult to establish and scale up quickly.

The second option, involves licensing patented technology to a third party on exclusive terms, which may mean it is possible to scale up activity more quickly, whilst allowing the IP owner to benefit from royalty payments. Patents give their owners exclusive rights for a 20-year period, and international patent applications, filed with the World Intellectual Property Organisation (WIPO), provide protection in some 152 countries worldwide.

IP assets can also help businesses to secure the finance necessary for a new export drive, particularly if a professional valuation is obtained. A recent report by the UK Intellectual Property Office (UKIPO) has shown that few businesses know the worth of their intangible assets, and they could be missing out on opportunities as a result.

There is no one-size-fits-all solution to IP protection however. For instance, the territories in which businesses would like to trade may dictate the approach it takes when pursuing IP protection. When targeting the Chinese marketplace for example, trade marks and registered designs can be especially useful, as they attribute powers to customs officials to seize counterfeit goods at the point of market entry. 

It is also important to take account of differences in the patent systems that apply in different parts of the world. To address this, businesses should aim to develop a bespoke portfolio of IP assets for each of its target markets; addressing its profit potential and overall significance. Those markets that offer greater commercial potential may require multi-layered IP protection; comprising patents, trade marks and registered designs. Secondary markets on the other hand, are more likely to require just one form of protection.

A well-managed IP portfolio can also help businesses to negotiate a joint venture overseas. When negotiating such deals, intangible assets should be included in the company’s overall valuation, which will help the business to secure the best possible terms.

It is important to remember that markets can evolve over time however, and IP portfolios need to be flexible enough to change with them. If a specific market is likely to become more or less significant over time, or if it is likely to become more or less patent-friendly, IP portfolios may need to be constructed in a way that allows them to adapt accordingly.

Of course, IP assets are not only useful in the run up to overseas trading. As with the UK’s Patent Box scheme, many overseas territories extend some form of tax relief to innovative companies. Such incentives help organisations to optimise profits upon entering these markets for the first time, whilst allowing them to reap the rewards of their investment for years to come.

Dr Joanna Thurston is a partner and patent attorney at intellectual property firm, Withers & Rogers LLP

Joanna Thurston
Withers and Rogers