Manufacturers risk £millions by not protecting IP

Posted on 31 Mar 2017 by Jonny Williamson

Manufacturing and engineering companies are being urged exploit the untapped value in their intellectual property to avoid losing money on lost designs, systems and patents, and create new revenues.

Lightbulb Innovation IP Intellectual Property - stock image
Global trade in IP licenses in 2014 was worth more than £220bn – 1.6% of global trade and rising.

Each year millions of pounds in IPR – intellectual property rights – are being neglected by the UK’s engineering sector, because companies don’t understand them and the IP within their designs and processes, according to the Manufacturing Technologies Association (MTA).

British companies including technology firms and sub-contractors, and UK subsidiaries of foreign-owned companies, are less knowledgeable about the value of their IP, such as patents, design rights and trade marks, compared with those in creative industries, such as gaming and entertainment, the latest MTA study shows.

As well as losing IP to competitors from not registering their marks and rights, manufacturers are losing out on new revenue streams from both licensing out their IP to third parties, and from licensing IP from other parties as an agent, to allow them to use IP owned by others.

UK investment in intangible assets protected by IPRs has risen from £47bn in 2000 to £70bn in 2014, according to the Intellectual Property Office (IPO), partly due to the growth of services like software programming and the knowledge economy. However, manufacturers are missing out and could boost this number significantly.

MTA CEO James Selka explained: “Manufacturing is a creative industry on par with the software and gaming industries – consider the drawings, machine optimisation, tooling, dies and moulds being constantly created. Companies must be more aware of the value that is integral in these creations, because it represents millions of pounds – and they own it.”

The findings come from an extensive survey of MTA members and manufacturers from all fields of manufacturing technology, conducted in 2016.

The survey was commissioned to align with the launch of the government’s five-year Intellectual Property Strategy, to recognise the global growth in IPR and educate UK businesses.

Global trade in IP licenses in 2014 was worth more than £220bn – 1.6% of global trade and rising. In 2014, firms in the UK invested an estimated £133bn in knowledge assets, compared to £121bn in tangible assets.

The survey showed that while nearly all those surveyed had registered basic IP such as a web domain name (94%), only 45% had registered a patent and just 22% owned registered designs.

Worryingly, just 65% of those surveyed had never licensed intellectual property from a third party, and 67% had not licensed out IP to other parties, a high proportion for both given the IP-intensiveness of engineering. Also, more than 65% had never made an application to protect their IP outside of the UK.

Over 8o% of those surveyed used non-disclosure agreements (NDAs) and almost a quarter (24%) had been involved in a legal dispute involving IPRs, with the UK and the US being the most popular locations for the dispute. China was a relatively low proportion.