New business start-ups are the lifeblood of any major economy. They have a high attrition rate, but some of these acorns turn into very solid oak trees in time, writes Anthony Harrington.
While it is always up to individuals, either in academic departments or in the quiet of their own private lives, to come up with the launch idea or product to base their start-up around, there is much that governments can do to expedite the process.
The UK and Scottish Governments have both been doing a good deal to stimulate this kind of entrepreneurship.
In addition to grants and funding, via the various regional development agencies one excellent method of stimulating innovation is via the tax system.
Graham McGlashan, a partner at the patent and trademark attorneys Marks & Clerk, points out that the UK’s Patent Box legislation is well worth companies looking at in detail.
Graham McGlashan of Marks & Clerk
“Patent Box holds out the opportunity of reducing your corporate tax rate to just 10 per cent for certain profits earned from any product you’ve developed that contains a functional part covered by a UK or European patent,” he explains. Moreover, McGlashan points out that a patent can have a very narrow scope of coverage and still qualify for Patent Box relief.
“There is a lot that can be done to ensure products will be within the scope of the relief, which makes it very interesting, and we are really able to add real value for clients in this area,” he says.
“In broad terms, giving companies relief for money spent developing inventions can stimulate innovation and generate very significant gains for both the UK and the Scottish economies.
The advantages conferred by Patent Box are often overlooked by companies who, when we look into their product development, really do have patentable technologies and processes coming through that they have not yet protected,” he comments.
Of course, the essence of a patentable element in a product is that it pushes the “art” involved in that product onwards sufficiently.
That sounds like a high hurdle, but normal competition in the market pushes companies to innovate and bring out better products all the time. Much of this is actually patentable, even if it is quite a small new tweak inside a long standing product.
“The standard for acquiring a patent is actually much lower than people think.
“It has to have some clever new feature and provide a non-obvious inventive step, but it is not like inventing the iPhone.
“We are talking about small incremental steps of invention, each of which can be patented and any one of them can save the company tax on the world-wide profits generated by that patented product,” McGlashan explains.
“If you could increase your profits in some other way, you would jump at it, so it does not make sense to ignore the potential impact of Patent Box on your bottom line,” he adds.
Although many companies have some concerns about just how Brexit will end up affecting their IP, McGlashan says that it is important to remember that there is not much change at present.
“The Europe-wide patent system covers a lot of non-EU countries, including Norway, and there is every likelihood that the UK will continue to be a signatory to the European Patent Convention. The European Patent Office is its own non-governmental body and is not actually part of the EU, so whether we are in or out of the EU does not really impact UK companies’ ability to obtain European patents,” he comments.
Whatever way the Brexit negotiations go, McGlashan reckons that his firm will continue to be well placed to serve its international client base. “We benefit from the fact that we are a global firm, with several offices in continental Europe and other offices around the world. We have the breadth and the expertise in many jurisdictions to make the most of any change. Whenever there is a major change it creates opportunities for some businesses and we are very well placed to capitalise on such opportunities,” he notes.
Precisely because companies often fail to recognise when they are actually doing something that constitutes valuable IP, having an IP audit can be very valuable.
“A lot of companies have very robust IP identification procedures, but there are a large number of businesses where there is plenty of scope for more to be done to recognise and protect IP. This is particularly true of mid-sized and smaller businesses,” he notes.
A common misconception, for example, is that all software cannot be patented. While it is true that software in general is covered by copyright legislation any software program that significantly aids any kind of mechanical process could potentially be patentable.
“We are seeing a big growth in small start-ups that do business through apps or web portals, and a lot of them could do with having a look at their IP and beefing up the protection that they have around these products,” McGlashan says.
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