The value of IP in a recession - act now!

Britain's economy is now in recession according to the Bank of England, with a reported 0.1% drop in domestic gross product in the three months to June. It predicts a further 0.1% decline in the third quarter too.

Whilst many businesses are already feeling the impact of higher energy costs and supply chain shortages, with a bleaker outlook for 2023 this presents a timely opportunity for them to review their Intellectual Property portfolio. Much research has shown that those who have continued to spend on IP during a downturn will fare better in the post-recession years than those who did not.Many businesses may still bear scars from the 2008 UK recession, which lasted for five quarters and was the deepest since the Second World War. Since then, they have also had to cope with the pressures brought about by the impact of COVID-19. It will therefore be very difficult for businesses to decide where to spend shrinking budgets to maximise future gains. The conundrum is typically whether there is an immediate need for something right now or in the near future and if not, then a spending cut follows. An example of this in a personal context is reducing the scope of life insurance cover to its basic elements, or simply not having it at all. However, when you want to be able to rely on it later on, you find that your circumstances aren't covered by a more restrictive policy or there's no cover in place at all. Spending decisions now can therefore be crucial.

Business consequences to be aware 

In the context of IP rights, a decision not to register a trade mark, a design, or apply for patent protection, could be very damaging to a business. Competitors could get there first and gain the advantage. Whilst it is true that there are a number of unregistered IP rights that can exist without the need for formal registration (for example, copyright protects an original work that is recorded in an acceptable format), these rights can be circumvented by sly (or clever) competitors and enforcement can be trickier.Take the examples of copyright and unregistered design right. These only protect against copying. This means that if a competitor decides to bring out a product made to your design, where that design has been created independently there is no right to bring a claim (and it is often a battleground trying to prove they must have copied your product because as your competitor they will know about your design in the marketplace). If you had decided to register your design, then whether or not your competitor had copied it becomes academic. For UK cover, the online application fee payable to the Intellectual Property Office (IPO) is as little as £50 for one design, excluding professional fees.Another form of IP right is where one business trades off the goodwill and reputation accrued by a competitor, suggesting that there is some formal link between the two when there isn't. The aggrieved party could think about bringing a claim for “passing off”, but this would mean having to demonstrate a sufficient level of “goodwill” supported by evidence. If they had the benefit of a registered trade mark, the level of goodwill also becomes academic. Registering a trade mark can be done for a fee of £200 at the IPO (excluding professional fees).

Taking control of your IP assets

If your competitors are looking to get ahead of you and are cutting corners by taking unfair advantage of your efforts, when it comes to enforcing your position against them you would not want to be faced with a reduced war chest of IP rights. It is therefore crucial that you look carefully at the IP that is owned by your business or licensed into it. If you carry out a detailed audit of your IP assets then you can decide whether to bolster them with appropriate registrations, whilst also ensuring that you have captured and recorded it for future use. Hopefully you will not need to enforce your position, but you must be ready to do so as this will tell the marketplace that you are not prepared to put up with third parties who tread on your toes. If you have made the investment in the first place, then it warrants protection.As mentioned above, studies have shown that investment (often for minimal cost) in IP rights in bleaker times can markedly increase your market share when other businesses slash their spending. Ensuring your business takes the proactive decisions now to protect your IP investments, will secure your goodwill and reputation in the future.Freeths' team of specialist solicitors and trade mark attorneys can provide a fully integrated service focussed on business objectives through proactive protection, defence and exploitation of your intellectual property rights.

If you'd like to discuss how best to protect your IP please get in touch with Martin Noble.


The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.