Intellectual Property – 12 points to consider

Fiona Sheil was responsible for co-ordinating NCVO’s programme of seminars, training and advice work on public service commissioning and procurement. Fiona left NCVO in October 2013 but we have retained her blog posts for reference.

Intellectual property (IP) is an asset. Under charity law, this means it should be managed like any other asset your organisation holds. You need to value it, protect it, and make it work to bring in additional social (and if possible) financial value.

Earlier this year NCVO co-hosted a discussion on with Baker Tilly (accountants) and Bates Wells and Braithwaites (solicitors). With funders and charities we discussed some of the common problems with IP.

Common problems with IP

1. What is IP?

Something of a major stumbling block, few organisations even know what qualifies as IP and fewer have taken steps to identifying the IP they hold. Briefly, IP is your intangible assets – your design, creativity and intellect. IP helps you recognise the value in these – which you can then trade, grow and develop income from.

Government’s Intellectual Property Office explains IP in full.

2. Organisations are failing to understand the value of IP

Working out the value of IP, organisations need ask:

• Who is it of value to?
• What is it of value for?
• Does it deliver social value?
• Does it deliver financial value?

• Donors?
• Users?
• Partners?

Remember, an asset only has value if you use it for something relevant to you.

4. Organisations don’t know what they own

Lots of organisations struggle to understand what constitutes ownership and therefore whether they can extract value. Examples include who has done the coding on your website – and whether you made sure you own that or not.

Key to this is keeping records of the development of all your IP. This means you can prove ownership and quantify the value of the time and resource spent creating the asset. Should you ever come into conflict over IP ownership this paper trail is the ultimate proof. When you’re working collaboratively this becomes even more important.

5. Organisations don’t know how to extract the value from their IP

IP can be managed in a number of ways. At the very least, you can protect it and retain its value. Or you can develop income from it by different licencing agreements that carry different terms of use. Licences can:

• Be awarded in exchange for money or an in-kind benefit
• Help you share risk by bringing in other parties to work on the area of work being licenced
• Help  spread your good practice through other parties – to areas of the country or areas of services you don’t operate in

Licences can both bring in money and enhance the social – and intellectual – impact of your work by spreading it wider.

6. How do you tell the world about your financial value?

IP can be written by solicitors or accountants on your balance sheet. And from this realisation of intangible value you can bring in value over the longer term. You do need to be able to prove time was spent developing the asset.

You can also put IP into your annual report and on the front of your accounts. This needs to be a reasonable assumption and could have great impact with stakeholders.

7. Protecting yourself in contracts and subcontracts

Lots of organisations don’t think about this. But you must retain your IP when you go into contracts. There is ‘background’ IP (which you own before the contract) and ‘foreground’ IP that is developed during the life of a contract. Make sure you have suitable control of both.

If you’re presented with IP terms you don’t like: negotiate. To do this you need to know what value the IP in question has to you. You also need to think how loss of ownership over IP affects other services or other assets (including other IP).

To use charitable funding to develop assets then taken by government under future IP contract clauses is a potential branch of charity law.

8. Peculiarities of IP in grants

Different grant-funders will have different approaches to foreground and background IP. Think about this in advance.

• Big Lottery Fund expect all the IP benefit generated in the course of work they fund to be shared by the wider community. It cannot be owned by the grantee.
• Grant-funders are nervous of the sector partnering with commercial organisations in with the commercial partner could potentially make a gain from IP, and therefore from public funds.
• Big Society Capital (social investor) try and be as open as possible in their approach to IP. They want to be flexible in a developing market and they also want to see where they can exploit and share IP value.
• As an investor Big Society Capital say they’re keen to work with organisations who have an active approach to valuing and using their IP assets.

9. Non-disclosure agreements

IP paranoia could stop you sharing ideas and expertise with partners or commissioners when co-designing or discussing tenders. There’s an intrinsic conflict with you wanting to promote yourself and yet not wanting to give away all your IP value upfront.

You can use ‘non-disclosure agreements’ (NDAs) to protect you in discussions. This enables you to share the good stuff you know – and help make sure commissioners develop better service specifications, and you can show partners how great your ideas / design is without fear of pilfering.

NDAs are standard practice in the private sector.

10. When does an idea become intellectual property?

An idea isn’t intellectual property until it’s recorded in permanent format. It also needs to be original.

So: get it on paper.

And make it better than everyone else so you can differentiate it from everyone else.

If someone owns what you thought was yours you can write and ask them to sign it over for a nominal fee.

11. What value does your IP have with your audience?

Try and understand what it is about your IP – your approach, your brand – that means people engage with you and support you. How can you build on this value?

12. How do you hold on to volunteer-developed IP?

Volunteers can make very valuable IP. When volunteers develop IP they own it because they don’t work for you. You can create an assignment contract for them to hand it over – but you have to be careful the terms don’t end up like an employment contract.

Comments?

Please add comments – or if you want further advice on IP or think there’s areas NCVO should be addressing contact us on psdnetwork AT ncvo-vol.org.uk.