Don't be blind in your factories, take note of what you create, and be bold in your contracts. Marie McMorrow, Partner and National Head of Advanced Manufacturing and Engineering at DWF speaks with Callum Bentley about the best ways for SMEs to protect their intellectual property.
As a small to medium-sized manufacturer, keeping your customers and subcontractors happy is crucial to sustaining your business.
But how many manufacturers often overlook the valuable asset that is their intellectual property (IP) in order to tip-toe over potentially fragile contract agreements?
Furthermore, are these manufacturers even aware of the IP they’re giving away in the first place?
Marie McMorrow – partner at law firm, DWF, where she heads the national Advanced Manufacturing and Engineering group – says there are three key rules for SMEs when dealing with IP; identify, document, and be bold.
“In the manufacturing sphere the most obvious IP protection is patents, but IP rights go much broader than that,” McMorrow says.
“However, half the problem is a lot of manufacturers will say ‘we don’t do IP’ because their immediate default position is to think about patents. But not everything is patentable anyhow and you may not want to disclose in a patent your product or process blueprints.
“My concern is that a lot of UK businesses underestimate the value of their engineering and manufacturing output. I think we need to start valuing that more and appreciating our IP output.”
Besides patents, McMorrow states the other important IP areas to identify are design right, copyright, and confidential information.
Design right is, basically, a right that arises in features of novel design. It can be the design of a whole or part of a product (such as a component) or a new modification to an existing product design.
Copyright, on the other hand, protects written documents, design drawings, databases and software systems created either in-house or by a contracted supplier on your behalf. This software might be used to operate production equipment or internal computer programmes.
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Once manufacturers have identified their IP and what area it falls under, how can they make sure this is protected under common law?
“Manufacturers might not be looking at their terms and conditions of business closely enough,” McMorrow says. “Quite often they don’t appreciate they’ve produced something that can or is automatically protected as an IP right, and that it has intrinsic value that they can sell to a customer or give them a lead in the market place. As a result,
“Because of the terms and conditions of business they’ve used as a matter of course for years, they’ve often given it away anyhow. They should also be looking at the terms and conditions, particularly if they are subcontractors, they should be looking at what their customers seek to impose on them, either in the supply contract or in the terms and conditions which often get passed so glibly between companies.”
Reiterating her statement that a patent is not necessarily the end game for IP for SMEs, McMorrow enthuses the importance of confidentiality when sharing information with third parties.
Think Coca Cola’s secret recipe. The soft drink giant has kept its recipe confidential for more than 100 years and holds the market share largely in part to this.
“A patent is expired after 20 years,” she says. “Confidential information will protect your manufacturing processes, your recipes and your formulations, but it also covers your business processes, customer lists, business plans and new product development pipeline.
“If you’ve good systems in place and you can identify that you’ve got confidential information and you’ve kept it confidential, you’re in a good position against suppliers, ex-employees and customers who might want to abuse that and use it elsewhere.
“You’ve got to identify it from day one to be able to treat it as confidential. You’ve got to mark it as confidential before you disclose it to anybody and you have to get people outside of your business to sign a non-disclosure statement before you disclose any confidential information to them.
“Also check your employment contracts. That will save you money and heartache down the road, should third parties try and take advantage of your confidential information.
“At some point when you start to form a list of what IP you’ve got, you have to start being a bit bold with your subcontractors and customers and what you chose to share with them. And don’t be afraid to ask them to sign a confidentiality agreement and to agree that all of your IP rights remain yours. This is standard practice today, so you should not be afraid to put this forward.”