It’s impossible to start a New Year without some optimism about the potential for new opportunities and growth that it may bring to our own business and to that of our clients.
Our New Year Resolution this year is to make our clients businesses more valuable and to help them grow and prosper in the post Covid economy. Antcliffe Scott’s mission is to unlock business potential through protection and restoration of rights.
In this post-COVID business landscape, our economy continues to be propelled forward by small and medium enterprises (SMEs) as they constitute 99% of Australian businesses, employ 68% of Australian workers and produce 57% of our Gross Domestic Product (GDP).
Therefore it is essential that we unlock the value of SMEs as much as possible, and one of the ways we can help do this is through the registration of Trade Mark and Design rights.
A recent study conducted by IP Australia has looked at the link between the filing of intellectual property (IP) rights and high growth potential in SMEs.
While the current pandemic has presented its fair share of challenges for all business, there have been opportunities that many small and medium enterprises (SMEs) have quickly pivoted upon through their ability to adapt. In addition, many have continued to invest in securing and protecting both tangible and intangible business assets throughout this volatile period, ultimately adding value to their bottom line.
One of the most significant and easily identified intangible assets is the intellectual property (IP) of a business. Registered IP rights, such as Trade Marks and Designs are valuable tools used by business to gain a competitive advantage in a market. They are also important assets on any balance sheet looking to attract capital investments and commercialisation opportunities. Registering IP assets can allow a business to raise revenue through investment, licensing and selling intellectual property assets.
Recent research conducted by the Office of the Chief Economist (IP Australia) has shown that SMEs are more likely to experience higher growth than their competitors after filing for new IP rights.
In addition, IP Australia’s Intellectual property rights and enterprise growth report also found:
- The share of Australian SMEs that own IP rights has doubled from 2% to 4% from 2002 to 2017.
- SMEs that own IP rights on average are 3.5 times larger than their peers with no IP rights and pay a higher median wage.
- All else being equal, SMEs that file for IP rights employ more people. A firm with 100 employees have an additional 12 people after adding a trade mark, 4 extra people after adding a design right, and 3 extra people after adding a patent in the 12 months after filing.
- After filing for an IP right, SMEs are 16% more likely to experience high employment growth than their peers with no recent filings.
- SMEs that file for patents, trade marks and design rights are at least twice as likely to achieve high turnover growth than their peers with no recent filings.
The report defines SMEs with ‘high growth’ as those that achieve over 20% growth per annum in employment or (separately) turnover over 3 consecutive years, and concludes that after registering IP rights, SMEs are more likely to achieve high growth than their peers.
Trade Marks and Designs protect the brands used to commercialise business
It is well known that strong brand recognition is important to the growth of a loyal client and customer base, and increases long-term sales. The research conducted also indicates that the registration of Trade Marks and Designs encourage investment in innovation, drive productivity growth, and are important tools for commercialising new products, reflected in the finding that SMEs which file for Trade Marks and Designs are 40% more likely to achieve high growth relative to peers with no recent IP filings.
Having a registered and protected portfolio of IP rights promotes confidence in investment into that brand, both by its founders and by third party investment into product commercialisation. Securing IP registrations helps to prevent the risk that branding will need to be changed following significant investment (taking you back to square one) and allows continuity in the development of a brand’s identity over time.
Start-ups and business collaborations
“Start-ups that file for at least one IP right in their first year are twice as likely to achieve high growth than their peers that filed no rights in their first year. For policy markers and investors, IP activity is an important indicator of a start-up’s future growth potential.”
In the post Covid market, many SMEs have found opportunities in working together to develop highly creative and promising ideas that serve their customers to increase goodwill and profits. Such ventures show a society that is stronger together and can be ideal growth opportunities for SMEs.
However, such ventures require careful consideration of rights, especially the intangible IP rights, which if the venture is successful become very valuable. Start-ups also face many challenges in getting the new products off the ground with little track record for the product launch and with little opportunity for traditional methods of promotion of new products, such as trade shows. These factors make it more challenging for venture capital investors to value intangible rights underpinning a start-up’s value potential.
Setting in place registrations and clear parameters around the ownership of such rights will lessen the chance of expensive disputes in the future and increase a start up’s likelihood of obtaining venture capital and an investor’s confidence in estimates or projections of the start up’s value.
IP rights undoubtedly provide an important set of tools for gaining competitive advantage in a market. Not only do they serve as a form of protection, they are also an essential element of growth and profitability through the ability to attract finance, license and sell intellectual assets, as well as earn a return on intangible investment.
With the business landscape becoming increasingly aware of the value of intellectual property, and its importance to an SME’s success and value, it is imperative to ensure your IP rights are protecting your business and unlocking its true potential.
Whilst it is optimal to invest in intellectual property at the very beginning of any venture, if you are yet to file for a trade mark or design rights, it is better late than never, to ensure that you can reap the maximum rewards of all your hard work.
To find out how we can help you protect your business, solidify your competitive advantage and maximise the return on your business, contact the team at Antcliffe Scott. Our IP division can provide you with guidance you need to ensure that your trade mark and design rights are managed accordingly, protecting your business now and into the future.