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2. Commercial Success through IPFinancial reward from innovation in your businessAdrian Chettle C.Eng., F.I.Mech.E.Withers & Rogers LLPPatent and Trade Mark Attorneys United Kingdom 3. How do we create value from innovation? What is IP? Patents, Trade Marks & Designs Tax relief for IP Q&A 4. Intellectual Property - what is it?What it is nota bunch of paperssome legal nonsensean inventors egoIt ishighly valuablea real commercial tool 5. IP - The Headlines$3billion patent license revenue p.a.$6 million patentportfolio sold at auctionECJ boosts AdidasTexas jury tells Boston Scientific to in three stripe rowpay inventor $431.8million 6. Types of IP TRADE MARKSINVENTIONSRegisteredPatentsCommon Law Utility models Intellectualproperty CopyrightKnow How Database Registered Design Designsrights AESTHETICRight CREATIONS 7. Do you own IP rights? Are you the designer/originator? Is the designer/originator an employee? Generally speaking, employee creations automaticallybelong to the employer. Is the inventor/designer a contractor or consultant?Any rights arising from inventions created by consultantsshould be assigned as soon as possible. 8. IP - Strategy and Value 9. Standard Approach to IP Protection Reactive - Inventory approach Good Idea - Patent it! 10. Better approach to IP protection Strategic - Visionary Set the direction for you owninnovation based on yourcommercial goals 11. Decision making IP strategic review Are the innovations new? How does each fit with the business goals? Could you maintain the idea as a tradesecret? Should you publish and not file for IPprotection? 12. Tending to the seedlings IP review Periodically check for improvements Standard foreign filing strategy for certain categories of invention Good records system keep your patent attorney informed Thin out their crop periodically Realise its not about what youve spent, but what the innovation is worth to you now and in the future. 13. Gathering their harvest Passively Competitors prevented frompractising inventions Locking partner companyinto joint venture Increasing company value Actively Seeking licensees - risk freerevenue ? Acting against infringers 14. A culture of IP awareness Invention records system Internal IP policy confidentiality notices copyright notices Do you have a policy of respecting yourcompetitors IP? Inventor reward scheme 15. Maximising returns Exploiting IP Product sales Sale of business Sale of IP Licensing and franchising access to new markets territories 16. Defend your market Protect new products Make the fact of protection known Consider your export markets Use a mixture of business tools 17. Will I infringe other IP rights? Monitor competitors patent filings A very good source of technical information Check freedom to operate by makinginfringement searches Watch competitor activity 18. Enforcement Long term protection Significant deterrent effect Litigation is rare Alternative ways to assert yourrights:SettlementAlternative dispute resolutionMediationArbitrationLicensing 19. Where to now? Audit your IP today. Is there a suitable level of awareness of IP within yourbusiness? Do you have systems in place? Think long term - align your IP strategy with yourbusiness goals. 20. Tax and innovation R&D tax credits Patent Box (from April 2013) 21. R&D tax credits an established scheme for UK companies paying Corporation tax giving SMEs 225% relief against proven R&D expenditure claims for past years are permissible 22. Patent BoxAn opportunity for UK companies to pay less Corporation Tax 23. Strategy - reasons for patenting1. To protect your market.2. To gain licence income.3. To obtain a negotiating tool.4. To maximise asset value.5. TO OBTAIN TAX RELIEF. 24. Patent Box - objectives Enhance attractiveness of UK tax system(e.g. vs The Netherlands) Encourage location and retention of scienceand technology jobs in the UK Encourage investment and growth in theUK technology sector 25. How much tax? Corporation tax is currently 26% , reducing to24% Option to elect to HMRC for a reduction in UKcorporation tax to 10% with tapered implementation: Year2013/ 4 2014/ 5 2015/ 6 2016/ 7%60708090 effective %15.213.612.411.2 (Trade-off to include existing granted patents) 26. Which profits? Profits passing through a UK companywhich is paying Corporation tax. Profits relating to qualifying products orservices covered by a relevant patent Worldwide sales Patent owner and exclusive licensee Key message: the proposals are generous! 27. Which patent rights? UK patents EP patents Patents granted by some other countries Supplementary Protection Certificates(pharmaceuticals) Plant variety rights NOT US patents 28. Do all profits qualify? No - special calculation - less than 100% ofqualifying profits will be taxed at 10% rate HMRC fighting back! Deductions: "routine return figure" - the profit a business mightmake if it did not have access to patents "marketing assets return figure" - excludes profitsgenerated using established brands Key message: number crunching by accountants! 29. Which profits?Key message: 10% will notbe reached for a few years! 30. What types of income qualifies? Sales revenue Royalties and other licence revenue Court awards from infringementproceedings Patent owners & exclusive licensees i.e., if a patent is licensed then both thelicensors royalties and the licensees sales canbe taxed at the reduced rate 31. Other requirements Opt-in- forewarning to HMRC Active ownership only applies to group companies defined as performing a significantmanagement activity a renewal decision counts as managementactivity 32. Which products? 1 33. Which products? 2 Any product! "Complex products" including one patentedcomponent Any spares for the product, even if thespares themselves are not patented Key message: for single product SMEs, all profits will be relevant for only a single patent 34. What about processes? 35. What about services? Unlikely to apply to entire sales revenue Companies which use their patents toperform processes or provide services canbenefit up to the level of an arms lengthroyalty 36. Can I get tax relief whilst mypatent application is pending? Yes, but relief will be claimable only afterthe patent is granted (up to 6 years) Accelerate granting of the patent 37. Who will benefit? Start-ups - a target of the proposals! Research and manufacturing businesses Local subsidiaries of multinationals with "activemanagement" in the UK , and profits washingthrough a UK company Existing patent holders get a windfall! 38. Further information: Withers & Rogers website - click on "Patent Box Services"button on the home page for detailed Q&A.Legislation:http://www.publications.parliament.uk/pa/bills/cbill/2010-2012/0325/2012325.pdf "Technical Note":http://www.hmrc.gov.uk/budget-updates/march2012/patent-box-tech-note.pdf "Consultation on the Patent Box":http://www.hm-treasury.gov.uk/consult_patent_box_stage2.htm HMRC HM Revenue presentation:http://www.hm-treasury.gov.uk/d/patent_box_presentation120112.pdf 39. Conclusions This is a great opportunity Tax avoidance with official approval! Patenting should be cost negative This is already changing our clientspatenting strategy Act as soon as possible! (at least arrange anaudit) 40. Any questions? Adrian Chettleachettle@withersrogers.com 2013 Withers & Rogers 41.