I’m sure you’ve all heard of Sara Davies Founder of Crafters Companion and much-loved investor from Dragon’s Den – but I bet you didn’t know this great business lady is also an inventor!
I had the pleasure of hearing Sara speak about her entrepreneurial journey on Sunday and what a journey it has been! She really is as bubbly and engaging as she appears on TV and she is undoubtedly devoted to improving businesses everywhere. (I’m not ashamed to say that I spent about 90 minutes fangirling Sara as she spoke!)
Not only has Sara grown her company from a back bedroom to a multi-million-pound business in 13 years, but she now exports to over 40 counties and has even bought a US crafting company to add to her empire.
However, what you may not know about Sara is that an invention of hers (a multi-crafting tool that followed her famous Enveloper) was ripped off by a number of competitors including Helix stationers who had the audacity to copy Sara’s product around 6 months after she’d demonstrated on the proviso that they might become a serious distributor for them.
Luckily, Sara had some good advice and protected the product by way of patents and design rights. Since that first dispute – which saw her sinking £250,000 of company cash into Court as a security for the other side's costs in case she lost. Notably, at this point, having seen that she wasn't backing down it became clear that Helix themselves did not have the risk appetite to run the case to court resulting in a settlement.
Since this time, she has since successfully defended the patent a further 5 times and the product remains a cornerstone of Crafter's Companion's offering to the market.
At Virtuoso Legal, I see this happen so many times. It is deeply frustrating for clients and can in some circumstances remove significant value from the company.
And there are many more Saras out there who - having found themselves in a "David v. Goliath" situation - were unable to stand up to the big boys and bully tactics. This is the kind of thing that infuriates me and which Virtuoso Legal set out to help businesses avoid.
So here are 10 tips for innovators to help you avoid elephant traps that can lead you to those difficult situations.
Number 1: Register your IP Yes, it can be expensive to get but with the right guidance and strategic approach, it is vital that you do. When problems arise, having some form of protection over what makes your core product appeal to the market is key.
Number 2: Make sure the products and all the improvements are protected Sometimes it is not enough to just register the first version of something. See it as an investment in future-proofing your business. Patents last 20 years and registered designs last 25 years. If you’re planning to sell or raise finance in the company getting IP protection is very important indeed.
Number 3: Don’t forget to register your brands as trade marks Brands help the buying public recognise your product from the rest of your competitors. It can often be the case that strong innovators focus too much on protecting their invention or design, but are blown out of the water by a similar offering with a more compelling brand. It is important to stand out in the right way, and for no one else to get close to your look and feel. Trade marks are the key to that.
Number 4: Ensure you have IP cover in the overseas markets you sell or manufacture in Trade marks are renewed every 10 years and provided they are renewed there is no expiration date for the cover/protection you get. Number 5: Make sure you have an NDA in place with 3rd Parties Manufacturers, suppliers and third parties often have an eye to the main chance and will view new companies are easy targets as they know that they are cash-strapped and don’t often have access to specialist lawyers.
Number 6: Make sure you have proper contracts in place with internal stakeholders Shareholders, directors and others. Don’t assume all IP created by someone will vest in your company – often it does not and founders and third parties can and sometimes do make off with the IP crown jewels.
Number 7: Consider IP and legal costs insurance if your business relies on critical IP assets Key assets such as vans, equipment and key people are routinely insured by companies. Few know, however, that specialist IP legal expenses insurance is available and should be used where there is business critical IP. The cost of recouping the value of lost critical assets is not to be taken lightly. If you haven’t already obtained legal expenses insurance then look at after the event or ATE insurance. This can cover things such as adverse costs awards and even security for costs awards which would otherwise stifle cash flow in the business.
Number 8: If you become aware of potential infringements capture evidence ASAP This can be done by using screen captures or trap purchases. Remember also, that spotting one infringement is usually the canary in the coal mine for a web of nefarious activity that may be going on without your knowledge. Number 9: Actively monitor your space You may think you know your online business and your competitors. However, we’ve seen infringement cases where blatant rip-offs were going on for years underneath businesses' noses. We have a number of tricks and tools to help monitor potential infringement activity. The price of peace is eternal vigilance.
Number 10: Seek help sooner rather than later Problems tend to have a habit of escalating and damage can soon arise and be difficult to track. Proactivity always beats reactivity and stopping something before it becomes a much bigger problem is always the best course of action.
As ever, if you or someone you know is affected by this type of behaviour then do get in touch - I am always happy to spend time to help point people in the right direction. Now more than ever it is critical for businesses to not find themselves on the back foot - and I will do whatever I can to assist.