Protecting Intellectual Property

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Innovation in SMEsIntellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.

Intellectual property is funny stuff. Many folk think only those involved in R&D have it. And yet every company in land has such ‘creations of the mind’ in abundance. Intellectual property is all the stuff that a firm has that gives it the edge over its competitors. Legally it’s copyright claimed, patents applied for and granted, trade marks protected and designs registered. Practically it covers much more, spanning know-how, scientific discoveries, artistic works, broadcasts and ‘all other rights resulting from intellectual activity in the industrial, scientific or artistic fields’1.

So intellectual property covers information or knowledge that is incorporated in tangible artefacts that are of value to their owner and might be of value to others if only they could learn them and exploit them.

Protection? Simple!

The simplest way to protect intellectual property is to keep it private – so private that no one else will ever know about it. The problem with that is that customers will never learn of it and hence the firm will never sell products containing it and hence will never make any money.

As soon as a firm wants to play in its markets, it is at risk of theft of its intellectual property. This certainty is recognised worldwide by a series of laws in each country and a set of agreements between countries and these protect firms as they go about their legitimate business to exploit their intellectual property through commercial activity.

In their early days entrepreneurs can protect their creations of the mind. As their enterprises grow to buy from sub-contractors, those protections can continue and be strengthened.

Employing Staff

But it’s when entrepreneurs employ others that the firm is at its most vulnerable.

Whilst the law in the UK does give firms protection against intellectual property theft by employees, the primary protection instrument remains the employment contract. This should contain easily understood clauses covering assignment of invention to the employer, confidentiality of the employer’s knowledge and information and certain restrictive covenants in the event of the employee leaving the firm.

Despite the legality of an employment contract, all agreements are psychological in nature. No contract can ever be so well specified that all things are known and specified. The result is that much is left to the trust relationship between the firm and its employees – what psychologists refer to as the psychological contract. The psychological contract covers all the unwritten expectations of both employer and employee.

Real Protection

A good quality psychological contract supports the written employment contract. A defective psychological contract renders the employment contract near-useless, since there’s always a way round what’s written down.

Protection of intellectual property begins with recruiting the right people into the firm. It continues by providing them with work that motivates and it ends with building their careers so that when they elect to move on, it’s with high regard for the firm and its owners and managers.

Legal protection is essential but so too is social protection: humans are social animals first and foremost.

1 See accessed on 11th August 2014.


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