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August 5, 2023

Top Intellectual Property mistakes SMEs, entrepreneurs should avoid

By Upfrontdigital News 0 351 Views

By Oluwajoba Oloba

STARTING and running a business can be one of the most daunting tasks anyone can take on in the world and especially in Nigeria. There are several things you focus on as an entrepreneur and want to get over the line. However, while racing to ship out products, get your team sorted, raise funds, and run the business, it is important to keep track of your intellectual property assets while staying afloat. Having been in the technology ecosystem advising start-ups and businesses for the last 15 years, below are some of the mistakes founders make and steps you can take to avoid them.

Disclosing your innovative ideas online before registering them: One major requirement for making sure an idea is innovative and original is that it is not in the public domain.  Between technological developments and the internet, it becomes difficult to balance the requirement of originality and novelty once a business owner has either made a presentation about an idea or published it online without first getting a patent on the same. This invariably can prevent a founder from enjoying the competitive advantage that would have been available through filing for proper Intellectual Property (IP) protection. To avoid transferring knowledge to competitors for free without any means of control, it is important to take necessary steps in filing to protect your IP before putting it in the public domain.

Failure to conduct research on an area before investing time and effort in it: Ideas are like waves hitting someone else around the same time you are getting the inspiration. The moment favours whoever takes steps to register, implement or work on the ideas first. To avoid “going Red Ocean” and “reinventing the wheel”, it is important to conduct patent mapping analysis before investing a substantial amount of time and effort into a project or product. A landscape analysis will show if the idea has been originally protected, if there is an area that can be improved on or if it would lead to an exercise in futility.

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Failure to conduct a Patent, Trademark or Design search: In most jurisdictions, governments keep registers of all patents, trademark or design applications made. In Nigeria, the Patent Registry has a robust database that can be accessed by anyone desirous of registering intellectual property in order to search if what is about to be registered is under protection of another person. So, whether it is an invention (patent), a product or service name (Trademark) or a creative design, it is advisable to get a detailed search done under necessary registers or databases. This will show if there is already a patent or idea registered or if there is a pending application which may require a change in approach for the IP protection.

Building a company on other people’s innovation: Several founders we have consulted for, have built their businesses on IP that are either registered in the name of one of the founders or a Third-party name and not in the company’s name. The business is invariably built on an asset that clearly does not belong to the company but a promoter. The promoters often register the invention in their own name and then license the invention to the entity for rental value. Inasmuch as this is a smart way for the promoters of the business to ring-fence their investment in the entity, it is not very beneficial for a business that is planning to raise funds from investors later. A company with licensed rights to inventions cannot list such inventions as part of its IP assets which may later have a negative impact on its valuation and worth.

Building Start-ups with employer or research organisations’ research: When this happens, it is often a case of Innovation without rights. Here, it’s possible a founder has built his product on an existing product he worked on when he was a student or a researcher in an academic institution. It is very possible to assume having rights on the innovation by virtue of being the inventor and in view of the time spent adding knowledge or building on the idea. However, it is important for the entrepreneur to ensure he is entitled to use the innovation either through a negotiated license with the University or co-filing of the application for joint ownership.

Uncertainty around IP ownership provisions in employment contracts: The common rule adopted is that works, research and inventions discovered while in gainful employment or under contract of an employer belongs to the company.  Lately however, employees have argued under certain jurisdictions that works or inventions discovered are as much of their right as the company’s. These uncertainties in employment contracts have presented situations where companies that financed research are not able to benefit from the fruits of the projects they financed. To clear this ambiguity, it is advisable for founders to introduce IP ownership provisions in contracts, either for employees, Co-founders or even works outsourced to external partners.

Lack of proper IP documentation and tracking: Building a product and not tracking or making proper documentations of the processes, the drawings, records of white board sessions, correspondence between lawyers and the registration agents is another fatal mistake founders make. A systematic capturing of the events and research conducted before an invention that can be subjected to patent is important. The whole process is essential in the event that there is any party contesting the authenticity of the application, ownership of the inventions or query as to the date. Proper documentation of these processes is crucial in forming an IP strategy for the start-up and maintaining a data room in the organisation.

Failure to maintain a budget for IP protection and neglecting to use experts: It is a known fact that it is costly to maintain an IP war chest or continuously spend to register all the IP assets a company may have in the early days of the start-up. As a start-up that is more bothered about maintaining the running of the company and operations, allocating enough resources to IP filing maintenance and keeping all registration up to date may be a daunting task. Due to the scarcity of resources, it is typical for entrepreneurs to cut back on IP funds, defer filing for IP or opt for cheaper service providers rather than use experts in registering IP assets. It is however important to note that a poorly drafted IP application can have a more fatal implication than not filing at all. It is important for founders to carefully budget for costs of securing IP and maintain a habit of cautiously securing registrations that are necessary for the growth and increasing asset base of the company.

Conclusion

The focus of founders in the early days of running a business is beyond checking if the IP assets of the company are up to date, or confirming if all the necessary documentation that require registration are in place prior to filing. Also, majority of the tasks we have highlighted above may be difficult for entrepreneurs to track when still trying to maintain a viable business. What we do at The Nest Innovation Park through our Foundry Product is to develop an electronic business checklist for entrepreneurs to track areas where there is an issue and recommend solutions through the Technology Innovation Support Centre (TISC) on best ways to solve such issues. The TISC is a partnership between World Intellectual Property Organisation (WIPO) and organisations such as The Nest designed to help Founders and entrepreneurs solve problems they may face around their intellectual property demands and overall protection of their assets.

 

About the Author

Oluwajoba Oloba is a seasoned lawyer with over 15 years of experience working with entrepreneurs and founders. He has worked in various sectors such as technology, education, legal migration, and research. Currently, he is the Co-founder of The Nest Innovation Tech Park, a renowned innovation center in Lagos, Nigeria, providing mentorship, business support, and funding access through The Foundry by The Nest. Oluwajoba also manages The WIPO & Patent and Designs Registry Technology and Innovation Support Centre (TISC) in Lagos. He holds a Bachelor’s degree in Law from Obafemi Awolowo University and a Master’s degree in Law, specializing in Project Finance, from the University of Dundee, Scotland.

He serves as a mentor on a number of projects and adviser to a couple of companies within the technology ecosystem. He is a member of the Nigeria Economic Summit Group within the Human Capital thematic group Commission.

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