Impact and social entrepreneurship startups: Navigating IP protection goals for social good
Impact and social entrepreneurship startups aim to both build sustainable businesses and have a positive impact on society. Navigating intellectual property (IP) protection while promoting social good can be particularly difficult as IP rights can cause restricted access to positive, innovative solutions. However, by practicing a strategic approach early on, startups can manage IP protection and tackle social issues.
Use responsible licensing
Ownership of intellectual property rights can provide significant advantages, including control of how those IP rights can be used. The best position to be in is that you own the IP yourself as you are then in control.
Startups can balance goals of social good and commercialisation by adopting responsible licensing practices. Maximising profit may not be the main goal, instead, impact and social entrepreneurship startups can use IP licensing agreements that benefit the startup’s social objectives. As above, in order to implement responsible licencing practices, IP ownership is essential.
Examples of responsible licencing could include special licensing agreements with socially responsible organisations or offering licensing options for marginalised communities. Licensing gives businesses control over their innovations while allowing access to those who need it most. For example, businesses in the UK have licensed software using the GNU General Public License (GPL) or the Apache License, making their innovations more accessible, as well as encouraging collaboration and sharing ideas.
Monitor competitor IP strategies
It can also be helpful to monitor competitor IP strategies. For example, if a competitor is actively filing patent applications in related fields, this could pose a risk to a startup’s Freedom to Operate which in turn could limit their ability to make a positive impact. In the UK, patent ownership is determined on a “first to file” basis, and whoever owns the patent is able to dictate how it is enforced. As such, lack of ownership of IP rights results in a lack of control of how the IP rights are used or enforced.
This means filing patent applications can be a helpful strategy to promote open innovation by carving out areas of IP as IP safe harbours. These patents can then be licenced responsibly, as discussed above, but their existence can deter competitors from engaging in closed innovation and enforcing their own IP rights.
Foster a culture of collaboration
Adopting an open innovation mindset encourages sharing information, collaborating and using external expertise to aid with solving social issues. To amplify their social impact and protect their IP, startups can build strategic partnerships with like-minded organisations, non-profits, and communities. They can achieve this through co-creating solutions, joint projects and sharing resources. There are various accelerators and growth hubs that have been established across the UK to encourage information sharing. For example, Mathys & Squire are proud to have worked with Undaunted and BRITE Pioneers programmes, amongst others, which aim to support businesses to make a positive impact. Practicing open innovation will allow startups to address social challenges as part of a collective, using each other’s strengths to aid with mitigating IP concerns.
Partnerships between startups and corporates can also be an important strategy for accelerating the reach and impact of positive technologies. However, such partnerships can be challenged by the perceived risk of lack of technical competence, concerns over ownership of the technology, and the risk of wasted investment. However, IP rights, such as patents, can mitigate against these risks by demonstrating technical credibility and signalling a clear statement of IP ownership. Furthermore, IP rights can protect the startup from being copied, whilst also protecting the collaborator’s investment.
However, as a note of caution, we recommend having formal IP agreements in place with all relevant third parties to ensure the terms of ownership and use of all IP created in collaboration are agreed and understood by all parties.
It may be the case that some IP is co-owned as a result of collaboration between parties. However, co-ownership can be challenging to manage and should be avoided if there is an opportunity to negotiate better terms. For example, you may consider an agreement in which you own the IP and, in return, an indefinite non-exclusive licence is granted to the third party. Similarly, you could consider restricting ownership of the IP by use in different commercial fields, or regional territories. These terms should be agreed by way of an IP agreement.
Know when to use trade secrets, patents or trade marks
Whilst patents and trade marks are important forms of IP, trade secrets can also offer protection and may be more appropriate in certain circumstances. Indeed, trade secrets involve valuable information that is not disclosed to the public (as opposed with patentable matter which is entered onto the public domain upon the filing of the patent) and provides a competitive advantage. Well-known examples of trade secrets are the formula for making Coca Cola and KFC’s fried chicken recipe.
By implementing strict internal controls, confidentiality agreements, and employee training, startups can protect sensitive information without restricting access to their solutions. Mathys & Squire has patent attorneys that can advise you on whether you should use trade secrets or patents.
Monitor and enforce IP rights
It is still important for social and entrepreneurship startups to remain vigilant with protecting their IP. By monitoring their IP rights, startups can identify potential infringements and act when necessary to protect their innovations. That said, startups can choose to be commercially sensible and selective with when they enforce rights to align with their values.
Tesla Motors is an example of a corporation which famously applies an open-source philosophy to their patents. In 2014, Tesla announced that it will not initiate patent lawsuits against anyone who, in good faith, wants to use its technology. Despite this, Tesla currently has 361 granted patents, and many more pending patent applications which are continuing to be filed. This policy is intended to encourage the advancement of electric vehicles, and by maintaining its position as a holder of key IP, Tesla is able to control the access to this IP, promoting the development of technologies relating to electric vehicles.
It is possible for impact and social entrepreneurship startups to both protect their IP and pursue social good. Open innovation, collaboration, education, responsible licensing, and knowing whether to use trade secrets, patent, or trade marks, can all aid startups with striking a balance between IP protection and advancing their mission.
For more information, get in touch with a member of our team.
Written by: Adela Dinca, Jessie Harrison, and Andrew White