Understanding the Value of Intellectual Property in Your Business

28 June, 2017 | Bret Gower

When you start up a new business you may not think that your business name or logo has any great value.

You may think that brand value is something for larger businesses to worry about.

But, if you take a long term view, when it comes time for you to sell the business and retire, if not perhaps to a villa in the South of France [it might be a bach on the Kaipara], the brand value that you have built up over the years – the value of your reputation, customer service ethos and recognition factor – contributes to the value of the intangible part of the business, that part of the business listed as intangible assets and which is often called ‘goodwill’.

Unlike in the past, intangible assets are now considered to contribute up to 80% of a business’ valuation at the time of sale.

By protecting the value in your brand from the outset, you can mitigate the risk of a competitor taking commercial advantage of the goodwill and reputation that you have built up on the back of your business name and logo.

The bottom line is that protecting the intellectual property rights in your brand can significantly increase the market value of your business.

Why does Intellectual Property need protecting?

When properly managed as part of an intellectual property strategy, your intellectual property rights reinforce and protect your marketing efforts – they prevent your competitors from riding on the coat-tails of your marketing.

An intellectual property strategy helps you: distinguish your product from your competitors – it strengthens and develops your brand; gain and retain customers; protects you against claims from your competitors that you are breaching their intellectual property rights.

Intellectual property rights are a valuable business asset which can be:

(a) sold;

(b) assigned;

(c) licensed; and

(d) when properly structured will increase the intangible value of your business.

Doesn’t your business or trading name and domain name automatically give you protection?

Choosing a name, and setting up a company and a website only provides you with very limited intellectual property protection under the common law and the Fair Trading Act 1986. That means that if somebody uses various aspects of your name to set up their own business and trade off your goodwill you will need to sue them in order to protect your brand value.

You must take active steps to protect your intellectual property. This can include formal registration such as registering your brands as trade marks, patenting the particular processes you use in your business, or applying for design registration for your product designs. It can also mean ensuring your intellectual property rights are clearly spelled out and protected in your contracts with customers, suppliers, and sub-contractors and employees.

Do you automatically own intellectual property in everything you create?

No, there is automatic protection for certain limited types of intellectual property (such as copyright) but not in most. Depending on the circumstances, copyright is not necessarily owned by the person who creates the work, so it is the determination of ownership and the enforcement of the rights associated with ownership that is crucial.

It is important you have a clear picture of the various type of intellectual property protection available, as part of your business’ overall intellectual property strategy.

What are the different types of intellectual property protection?

Trademarks protect brands, identity and logos (including your business name)
Design registrations protect product appearance.
Copyright protects original works
Patents protect product inventions
Confidentiality Agreements prevent your business partners/suppliers or staff sharing confidential information such as trade secrets or customer lists with competitors

Case Study: A new sports drink product

In this scenario, your business has developed a new sports drink product. The new sports drink comes in a plastic bottle with a valve on top, such a product would have numerous forms of intellectual property protection that might apply:

The valve may be subject to a patent application.

The contents of the bottle may be a patented formulation or a trade secret.

The design of the bottle might be subject to design registration.

Copyright will subsist in the design drawings of the bottle, and in the logo and perhaps other aspects of the branding.

The branding for the product may be the subject of one or more trade marks.

There may even be a trade mark protection available to cover the shape of the bottle.

Where Do I Start?

This can be the most confusing part in terms of considering what is it that you have that needs protecting and how can you protect it.

Start by considering what existing intellectual property you have that might be better protected by formal registration?

Is there any other intellectual property within the business that you need to secure?

There may be more than one type of legal protection available for the various forms of intellectual property you own.

We are happy to assist in assessing the intellectual property that exists in your business and to help you to develop a strategy to protect it. In the first instance please call Intellectual Property lawyer, Bret Gower on 09 837 6893 or email bret.gower@smithpartners.co.nz


In a 2015 study conducted by an international firm providing services centred on IP assets, Ocean Tomo, LLC, data showed that in a span of 20 years, more and more value has been attributable to intangible assets than to tangible assets – from a market value share of 17% in 1975, it grew to 87% in 2015. This increasing trend in the value of intangibles only supports that indeed, intangible assets fuel value, growth and development of an enterprise. [Source]

[Read More about IP valuation]




Do you need to protect the intellectual property in your business?

Protect your brand – contact specialist in Intellectual Property Law, Bret Gower today to set up an appointment.

email Bret
09 837 6893

About the author

Bret is a key member of the commercial team at Smith and Partners, having joined the firm after a successful career as a business owner. Bret’s clients have confidence in him because of his unique combination of down-to-earth communication skills,
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