Why Intellectual Property Matters for UK SMEs
Dragon’s Den is back on the BBC this month, showcasing innovations from entrepreneurs seeking to build profitable businesses.
Keen watchers of the show will notice that Dragons are always more interested when a candidate boasts about having registered intellectual property (IP) protection and often lose interest when the candidate confesses there is none, or that key IP related to the product is owned by someone else.
Why are the Dragons so interested in your registered IP? Why is a SME with registered IP assets so investable? Vikki Townsend Senior Managing Attorney at Pure Ideas, discusses more.
What are the Three Major Forms of Registered IP Rights?
• Patents for protecting technical concepts
• Designs for protecting aesthetic characteristics
• Trade Marks for protecting brands
Having registered IP rights gives the owner control over who can use their intellectual property in their business landscape. They can stop anyone from using it without permission, whether it was done intentionally or not. This helps a business dominate the market for the products and services protected by their registered IP.
Some businesses might struggle to keep up with the demand for their new products or services. However, by licensing their registered IP to reliable partners, they can satisfy customer demands, earn some extra cash from the licensees, and reinvest the profits into new innovative products. Licenses not only generate extra revenue through licensing fees, they allow an IP owner to get more bodies (the licensees) working on producing IP protected products. By getting more products into the market with the help of licensees, an IP owner can get costs of producing their protected products down, sell in greater volumes and boost their profits significantly.
Over time, business goals and strategies change, and the registered IP may become less relevant to the business’s operations, but it may still be of interest to a competitor. Registered IP can be sold by legally reassigning ownership, much as you might with tangible property. This extra revenue can be a great boost, helping to fund new high-priority projects.
Registered IP rights can bring a lot of value to an SME, making it an attractive investment prospect. But, obtaining them can be expensive, so how do you fund obtaining the protection you need to get further investment?
What IP Funding support do SME’s Have Access to?
The UK Intellectual Property Office (UKIPO) supports SMEs in building an IP portfolio through its IP Advance Scheme, which provides funding at various innovation stages.
You can read more about the scheme here: What is the IP Advance Scheme? – Pure Ideas
How Successful are SMEs Who Protect Their IP?
On 9th January 2025, the European Patent Office and European Union Intellectual Property Office published a study of the relationship between IP ownership and firm performance, with a particular focus on SMEs.
The full report can be accessed here: en-ipr-performance-study.pdf.
A detailed analysis showed there’s a strong link between owning registered IP and how well SMEs perform financially, as seen with:
• Businesses who own Intellectual Property Rights employing more workers than firms who do not register IP.
• The revenue per employee for registered IP owners is on average 24% higher than for SMEs who do not register their IP.
A previous 2021 study by the same bodies, High-growth firms and intellectual property rights, concluded that SMEs that have applied for at least one registered IP right are 21% more likely to experience a subsequent growth period and are 10% more likely to become High Growth Firms (HGF).
Does the UKIPO Offer Cost Reductions for SMEs?
Registered IP rights are territorial, and in an interconnected world, many UK businesses aspire to grow outside of the UK.
While the UKIPO has a single fee structure for all, other IPOs, like the European Patent Office and USPTO, offer SME discounts. If you’re considering overseas IP protection, speak to our team to see if your SME status can reduce your costs.
IP Owners Save Money on Their Corporation Tax Bill
The costs of obtaining registered IP protection can often deter SMEs from applying, but in the case of patents, having and commercially using the patent can entitle the owner to a reduced rate of Corporation Tax of 10%.
This benefit alone could help you quite quickly recover the costs of obtaining the protection. Your accountant should be able to advise you on what records to keep and evidence to provide to obtain Patent Box relief. You can learn more about it here: CIRD200000 – Patent Box: contents – HMRC internal manual – GOV.UK
IP Information Resources for SME’s
The UKIPO has a good source of educational materials around IP protection for SMEs. If you’re keen to understand the subject better, take a look at these offerings:
• IP for business: guidance, tools and case studies – GOV.UK
• Intellectual Property training course: IP Masterclass – GOV.UK
How can Pure Ideas Help?
Pure Ideas is dedicated to supporting SMEs in their intellectual property journey. With a team of experienced IP consultants, Pure Ideas offers comprehensive services to help businesses navigate the complexities of IP protection and maximize the value of their registered IP rights.
To learn how we can support your IP needs and help your business thrive in a competitive landscape, You can give us a call or email to organise an appointment.