You've done all the development work, a competitor sees a good thing and just swoops in on your market share.
If you’re a business that stands behind a brand, the hard work has been in developing goodwill and reputation.
If you're a product-based business, the hard work might involve research and development, market-based trials, focus group testing, the lot. In any case, there has been considerable investment on your part.
And so what is the purpose of all that hard work and investment? Answer: To give your business market differentiation.
To give you the competitive edge, provide market penetration and stickiness that in turn generates revenue for the financial security and viability of your business.
It doesn't make a lot of sense to undertake all that work and then simply hold the door open to allow copycat competitors to take that advantage away.
As competitors piggyback off your reputation and use your innovations to imitate, the knock-on effect is the market gets flattened.
It takes away any relative advantage, and can place downward pressure on revenue as the main driver for competition becomes price point.
The best way to stop that from happening is to lock your investment down through registered intellectual property rights (IPRs) such as patents, trade marks and designs.
For many businesses that haven't engaged in IP protection before, and especially SMEs, the initial outlay associated with protecting your IP can seem high.
Sytli Pelekanos, general manager at Brio, found that in the early days of the company's development it seemed unlikely that someone would copy their products, but...
"As you get a little bit larger, you attract competitors. We've got examples where we've had to invent ourselves away from our own product in order to close the door behind us because we didn't have protection on the original product." Styli says.
And that experience is not uncommon – not protecting yourself ends up being the least cost-effective solution.
To secure your investment, you really need to secure your rights early. Ideally, IP rights should be part of your business plan and an integral component of your path to market.
Once you get to market, and the avaricious eyes of your competitors sweep across your business, it's generally be too late to try to back-capture rights.
IP rights, such as patents and trade marks, are non-trivial. They represent powerful business tools with potentially more on-book value than other business assets, so they are worth protecting properly.
While the cost of securing IP rights can seem like a large initial outlay, the cost of not protecting your rights may be significantly higher.
In the absence of at least some form of protection, your competitors are free to copy. If they're free to copy, the only way to maintain your market differentiation is to continue to innovate, which can be expensive and is clearly not ideal.
By ensuring you have the legal tools to stop imitations from coming to market in the first place, you can also generate higher margins for your business.
There are obviously some fundamentally good reasons to protect your business interests properly from the outset, and stay ahead of the copycats by marking your products to ensure competitors are on notice of the existence of IP rights.
It bears remembering that copycat businesses can be legitimate businesses, actively searching for products that are not subject to IP rights.
They conduct searches of IP databases before going to market to ensure they have the freedom to operate.
If you have registered IP rights and use appropriate marking, there is a good chance the imitators will be aware of your rights and will simply stay clear.
Developing a strategy for protecting your IP assets is an investment in the future growth and prosperity of your business.
With ongoing management and evaluation, the costs do not need to be excessive, and the security they provide will help ensure business viability.
Davies Collison Cave offers a broad range of services covering all aspects of protecting intellectual property.
If you have any questions or concerns relating to protecting the IP of your business, please contact us for a free initial consultation.
Damon Henshaw is lead partner of the Parramatta office of Davies Collison Cave. Email: dhenshaw@davies.com.au
