You can’t kick it, see it or put it in a shop window but for some businesses Intellectual Property (“IP”) is the most valuable asset that it has. It can be sold, stolen, transferred, used as security for loans and used to pay creditors on insolvency, like any other asset. Yet how many businesses take the time to ensure that this asset is secure, being kept in the right place and its value maximised?
IP comes in many shapes and sizes – patents, trademarks, copyright, designs, database rights and know-how. Depending on the type of IP right, it may not be registered anywhere. IP rights can arise when developing new products or manufacturing processes, through creative activities of a literary, artistic, musical or dramatic nature, or simply as a result of the day to day running of a company. Therefore, IP may exist without being recognised as existing and it can belong to a person or a business without any formal agreement to that effect
Ownership can be determined by contract in order to avoid uncertainly and disputes. It is important to deal with this prior to the creation of such rights. Otherwise, ownership of IP rights usually lies with the inventor, the designer, the author or the brand owner. Where IP has been created or developed by an employee acting in the course of employment, ownership of the arising IP rights will typically vest in the employer under UK legislation. However, the situation may not be as clear as this in practice. Where a consultant has been commissioned to create a work, ownership of the IP (i.e. commissioner vs. consultant) depends on the type of IP right created.
With businesses having less tangible assets, many are looking to their intangibles to raise finance or to secure debts due to large creditors such as pensions schemes, to secure the future of the business. Whilst banks are used to having charges that cover “all assets” they do not recognise that they may have security over valuable IP, particularly where the business itself does not recognise the value of its assets. However, if IP is recognised as a valuable asset class and properly securitised, banks can be comfortable with existing or increased loan finance and find more opportunities for new lending to companies that it may not ordinarily lend to.
Before this can happen, banks and their customers need to understand who owns an organisation’s IP. They then need to understand its value.
It may be difficult for lenders to assess the value of IP before taking security over it given that it is an intangible asset. Industry specific IP may be highly valuable for the borrower, but may not be so valuable for a lender or charge holder. Most people would recognise the value in McDonald’s brand and Coke’s recipe, but it is harder to recognise let alone value IP in smaller business that may not be high street names. The IP may have indeterminate resale value, and a prudent lender should explore how it would exploit the IP if it was necessary to enforce its interest.
How separate or separable a company’s IP is from the business as a whole is an important factor in determining its value. Income generating IP (e.g. a music back catalogue) or registered IP rights that can be easily assigned or licensed (e.g. registered trademarks, patents or design rights) can be much more easily valued than integral rights.
A product may be protected by numerous types of IP rights operating simultaneously. For example, with a smartphone, the manufacturer name and logo and the smartphone name are likely to be trade mark protected, the shape of the phone may be protected by registered design rights, and the operating system source code may be protected by copyright. The value of the IP is likely to be in the bundle of rights as a whole and of much less value if separated. Ideally a charge holder would take security of the whole portfolio of rights, but problems arise if a particular right is also used for another product, or if some of the rights are licensed in from other companies.
Despite the various considerations, it is clear that IP rights are potentially very valuable and even a licence to use someone else’s IP, under the terms of a carefully drafted Licence Agreement can be of significant worth. When seeking to sell a company (as part of an asset or share sale), secure investment, release equity or obtain a loan, it is essential to have all IP used or owned by the company adequately documented. That way, by conducting due diligence on such of such information, the buyer, investor or lender has everything it needs in order to operate the company and/or value the company. The absence of such documentation may severely delay and possibly jeopardise even the process. Further, any attempt to effect any missing or inadequate documentation confirming IP ownership or valid licences may require significant additional cost to induce the relevant third party to review and execute the necessary documents after the event.
If a company goes into an insolvency process, any liquidator, administrator or other office holder will try to recover value for creditors from the trading or sale of the business. It is essential for the office holder to: identify any IP; establish who owns the IP; determine whether the company has granted security over its IP; protect the IP if necessary; and consider how to maximise the realisable value of the IP. It may be that IP is owned by a third party, for example a director or group company. In those circumstances it may not be possible for the office holder to continue to allow the company to use the IP in its ongoing trade without agreeing terms with the true owner.
Chris Laughton, Restructuring & Insolvency Partner at Mercer & Hole has first-hand experience of dealing with intellectual property in distressed situations. He said “our practical experience is that to maximise the realisable value of IP in a distressed business, swift action is necessary. Frequently, patent applications and trade mark registrations will not have been maintained as efforts have concentered on fire fighting. Focussed remedial work – often multi-jurisdictional – can however restore value to the IP rights portfolio. Failure to have an appreciation of the unique and complex issues involved could, on the other hand, result in a devastating impact on the prospects of rescuing the business.”
It may be that, on further enquiry, the office holder determines that the IP has been transferred away from the insolvent company ahead of its demise. This may well have been done with good intentions, perhaps the directors realised that ownership was vested in the wrong company. However, when assets are transferred away from a company , without market value being paid to the company, an office holder appointed at any time in the following two years (or longer in certain circumstances) will investigate the transaction and look to set it aside. Liability for directors may also flow from transactions such as this that were not I the interests of the company and its creditors.
An inter-group transfer can be set aside as a transfer to a third party can. The best interests of the group are not necessarily the same as the best interests of the transferor company and the finances of each group company have to be considered in isolation.
Where a company owns IP it may be possible to save a failing company through new lending, selling or licencing the IP to achieve value for creditors. This may make the business attractive for a share sale or new share issue to new investors, a sale of the business and assets through an administration, saving jobs and maximising returns to creditors or it may support a compromise arrangement with creditors to allow the business to continue to trade and pay creditors a proportion of sums owed and/or over an extended period of time, through a Company Voluntary Arrangement.
Chris said “a recent example is where we were able to secure additional funding for a period of 9 months to enable us to trade a business whilst in administration. This allowed us to implement a rescue plan, whilst protecting the company’s perpetual software licences, which ultimately allowed us to preserve the business with a return to the unsecured creditors in full. Through the constructive use of insolvency procedures, we were able to rescue a company that had run out of cash.”
The value of intellectual property should not be ignored. It should be treated as any other asset as if it were premises or plant & machinery and protected in the same way from loss, disputes over ownership and deterioration in value.
For more information contact Denise Fawcett, insolvency lawyer at Pitmans
Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector
‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools
A third (33%) of Banking & Finance decision-makers believe decisions made in silos, despite majority (63%) of decisions being implemented worldwide
More than half (57%) of Banking & Finance decision-makers rely on spreadsheets for decision-making despite modern planning tools now available
The #1 decision-making platform, has today released ‘The State Of Decision-Making’ report focussing on how UK organisations make their important business decisions.
Based on a survey of 500 senior decision-makers, across industries including, Banking & Financial Services, Consumer Goods, Manufacturing, Pharmaceutical, Professional Services, Retail, and Transport & Logistics, ‘The State Of Decision-Making’ report from Board shows that today’s business decision-making process is increasingly complex, with multiple departments and seniority levels all responsible for some form of decision-making, leading to a lack of cohesion between units and a waste of business resources.
‘The State Of Decision-Making’ research found that while a clear majority of respondents (63%) working within the banking and finance sector say the important decisions they are responsible for get implemented globally, the decision-making process itself is not joined-up across the business, with one third (33%) also saying that crucial business decisions are made in departmental silos.
The research, conducted on behalf of Board International by independent research organisation 3GEM, also asked respondents the tools they use to make decisions and, while almost every action within an organisation today will lead to the creation of new data, it seems many businesses are not using the crucial insights which data can provide to make important decisions.
More than half (55%) of respondents in the banking and finance industry said they were making business decisions based on data and insights, but ‘gut feeling’ decisions are still made by up to 44% of companies. What’s more over half (57%) of the sector’s companies still rely on spreadsheets to aid their decision-making, despite more modern and reliable tools now available.
“In today’s fast-paced, data rich and evolving business environment, making quick and effective decisions is critical to both compete and survive,” explains Gavin Fallon, Managing Director for UK, Nordics & South Africa at Board International. “Important decisions are being made at any one time across multiple business functions, but all too often, important decision-making is disconnected, modular or fragmented.”
The research also asked respondents about the challenges banking and finance decision-makers face at their organisation, with nearly a third (29%) citing a lack of available data and insights and one quarter (25%) citing the fact there are too many people in the decision-making process as their biggest frustrations. However, industry decision-makers believe that the process can be improved with the introduction of new technology, with the majority (57%) of respondents saying this would make their decision-making better, while 41% also felt increased use of data and insights would help.
“Businesses have to plan every day for a far more uncertain future and set themselves up to prepare for change and keep changing against the backdrop of a more volatile and uncertain marketplace than ever,” continues Fallon. “A bad decision can have wide-ranging impact across the whole organisation and no business can afford to waste time and resources on bets that may or may not come off. As the business environment increases in complexity, the ability to not just react, but predict, in real-time, becomes more important than ever.”
Reinventing Your Digital Marketing Strategy Post-Covid
By Paige Arnof-Fenn, Founder & CEO Mavens & Moguls
I started a global branding and marketing firm 19 years ago. Marketing is a term that means different things to different people so it helps to clarify whether you are talking about market research, PR, social media, advertising, promotions, guerrilla marketing, strategy, analytics, SEO, SEM, B2B, B2C, content, etc. There are so many tools in the marketing toolkit today but I think it is redundant to say digital marketing because truly everything has a digital element since everyone is accessing and interacting with your brand online, through their phone or via the website at some point. In the old days there was print, TV, radio, direct mail and outdoor those were your only options but today technology runs our lives so everything is digital eventually. If digital is not part of your strategy then you would not be relevant so digital marketing is marketing in 2020.
As far as digital goes I am a big fan of SEO, social media especially LinkedIn and Content Marketing. Because we are always online now 24/7 it is easy to get sucked into it but you do not have to let it run your life! My advice is to pick a few things you enjoy doing and do them really well. You cannot be everywhere all the time so choose high impact activities that work for you and play to your strengths. It does not matter which platform you choose just pick one or 2 that are authentic to you. It should look and sound like you and the brand you have built. Whether yours is polished or more informal, chatty or academic, humorous or snarky, it is a way for your personality to come through. Everyone is not going to like you or hire you but for the ones who would be a great fit for you make sure they feel and keep a connection and give them a reason to remember you so that when they need your help they think of you first.
There have been a lot of changes in the past few months due to the virus crisis but one thing that has not changed is that smart technology still runs our lives today and it is hard to stay on top of the latest tools and platforms to take advantage of current trends so you may feel lost, confused or frustrated by all the options and noise in the market today. There will be new tools and technologies coming for sure but here are some digital strategies to include in your plans to grow your audience:
* Smart speakers and voice search are growing in importance so being able to optimize for voice search will be key to maximize the marketing and advertising opportunities on Siri, Alexa, Google Home, etc. I predict that the brands that perfect the “branded skill” with more customer-friendly, less invasive ads are going to win big. Are you prepared when customers ask your specific brand for help like “Alexa ask Nestle for an oatmeal cookie recipe” or “What is the best Mexican restaurant in Boston?” if not you are missing a big opportunity!
* Live video grabs attention – live streaming is available on every major social media platform and it is only getting bigger to hook in users with short attention spans, in a mobile first world, you have less time to grab people, attention spans are shorter than ever so video will be used even more, show don’t tell for maximum impact, rich content drives engagement.
* Interactive marketing makes it stickier — brands will drive engagement even more with polls, surveys, quizzes, contests, interactive videos, etc. to grab audience attention even quicker
* AI-powered chatbots cut costs and convert visitors into leads by encouraging themed content to answer FAQs with voice search-friendly semantic keyword phrases, is your content strategy ready?
* More confidence in trusted content, friends and influencers than advertising – the world has been moving this way for years with people seeking their friends’ and influencers’ opinions and advice online on what to buy, where to go, and what to do more than a paid ad or fancily packaged content. Customers are savvy today they are happy to buy what they want and need but they do not like to be sold things. Curated content and ideas from a trusted source beat paid content every time. Partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.
* Authentic relationships beat marketing automation — technology runs our lives more than ever but it is relationships that drive business and commerce so people will find more ways to connect in-person to build trust and strengthen connections. Make sure you offer several ways to talk with them and get to know them. Algorithms can only tell you so much about a customer, transactions are driven by relationships. Use automation where you can but do not ignore the power of the personal touch.
* Big data is getting bigger but customer conversations are key to best insights for content. Talking directly to your customers to get first-hand in real-time their experience and knowledge will be a priority and competitive advantage to get the messages right.
* Content will match the buyer’s journey and understanding that journey will inform how to attract, engage and convert customers and which keywords and topics are used.
* Influencers will continue to rise in prominence so partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.
Banking beyond the office
By Tim Hood is the Associate Vice President for Hyland in EMEA.
Following months of unprecedented challenges, the global financial community is beginning to get a sense of COVID’s long-term legacy. And while the current situation still has some way to run, the prospect of a rapid bounce back to the old normality looks doubtful.
Over the last six months, a wholesale review and reinvention of a raft of working practices has taken place.
Fortunately, the financial sector was able to adapt relatively quickly to this altered reality because compared to some, it was well down the path to digital transformation.
And as the work-around solutions using technology that was never intended or designed for remote working have been refined or replaced, many firms are finding that these new ways of working are actually working well.
That’s evidenced by the fact that ‘return to office’ dates keep rolling back, with a number of institutions not expecting staff to return to the office until the beginning of 2021, at the earliest.
However, the social distancing measures that remain in place will undoubtedly continue to have a major impact on the traditional office space. With almost half of British workers now working from home according to the Office for National Statistics, how many will want to return to the office, having been free of their daily commute for the last six months? In a recent survey by the Centre for Economics and Business Research (CEBR), one-third said they wanted to continue working from home.
And as homeworking protocols become ever more embedded, that could see many functions where remote oversight is possible, never return permanently or totally to a central office.
So, with homeworking seemingly here to stay, for a large number of organisations the new norm is likely to be a blend of remote and office-based working.
In uncertain times, one of the most critical business skills is the ability to adapt. Just because we have always done things that way is no longer a valid line of thinking. So, when it comes to matters like remote working, it’s time for a more flexible mindset.
Some banking leaders are beginning to acknowledge the changing reality. Barclays CEO Jes Staley said that corporate offices “may be a thing of the past.” JPMorgan, Goldman Sachs and Morgan Stanley are also proving to be trend-setters in the reassessing the future shape of offices and flexible working.
Of course, effective remote working depends on people having access to accurate, up-to-date information.
That may require reprioritising investment to ensure more appropriate technology solutions are in place. Believe me when I say that accelerating digital transformation is no mere nicety, but a prerequisite for corporate survival over the coming months and years.
Of course, every organisation is different and will have to review its existing systems and procedures before implementing any major technological changes. But I would say that there are several core components required to help ensure future resilience.
As a minimum, there should be the establishment of a content services hub to centralise document storage and workflows in a single location, with a user interface that’s consistent – whether you are logging on from your dining table at home or at your office desk.
This will remove potential information silos where data gets stuck, and also prevent the creation of multiple document versions that inevitably follows.
Next, look to introduce intelligent automation where you can, to accelerate improvements in document storage and workflows.
Then, look at shutting down any redundant or unnecessary systems and applications. This is an opportunity to streamline operations by ensuring business-critical information, which may be spread over several dozen apps in some corporate organisations, is uniformly updated and easily accessible. When staff have to search for important documents across multiple locations, they end up frustrated and prone to making mistakes that result in delays and poor customer service.
Though the immediate response to COVID-19 may have had a short-term adverse effect on many in the financial sector, longer-term it can be the catalyst that enables the creation of a truly digital workplace that seamlessly melds together a flexible, distributed workforce with a much streamlined corporate space.
Achieving that will require organisations to carefully chose the correct technology solutions. If they can do that, then our brave new world may not be so scary after all.
Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector
‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools A third (33%)...
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Banking beyond the office
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