Are Creative Digital Agencies ignoring the value of IP ?

As a Creative Digital Agency you are growing your intellectual property (IP) portfolio on a daily basis – but at what stage should you value it as an asset rather than something which all clients should ultimately own ?

If you’re one of our Creative or Digital Agency clients, you are probably developing fresh ideas and innovative Apps every day. In many cases the IP in these new ideas simply gets transferred to the client under the terms of any contract, which is agreed at the start of the project.  In some cases, you may have negotiated a licence of the IP, but often there isn’t much time to assess the value of what is going to be created at the start of the project.  Often it seems like what you are doing is “business as usual”.  Too often hard working Creative and Digital Agency clients are so relieved to have won the pitch, that they concede early that all IP will be included in the price.  In many cases, that is the right commercial decision.  But increasingly we are seeing aspects of functionality, algorithyms and methodologies being overlooked in the rush to complete a deal, which could be “re-usable” to the Agency, or could have value in other projects.

Building up a bank of IP assets whether its libraries, methodologies, database schema’s or plug-in code, can reduce the timescales of a project, reduce bugs and standardise your teams development processes.   It can also add value to the agency, it’s a “hard” asset, something rare in the “services” sector.  In other development and engineering projects, IP can appear “ordinary” to developers and engineers.  But so often this ordinary IP, is actually the start of a valuable suite of stand alone IP, and can lead to a standalone product or the start of a “spin off business”.   In Bristol, we have seen the spin out of a new company, Graphcore from Bristol based XMOS.  Graphcore was born from a new processor technology. The new technology focuses on machine intelligence, which accelerates machine learning.  Fortunately the kernel of the idea for the new processor, which wasn’t part of XMOS’s business focus wasn’t ignored at XMOS, and the team successfully secured significant investment to spin out the IP into Graphcore.  Graphcore has subsequently secured significant investment from the likes of Dell, Samsung and Bosch.

Assessing the value of the IP in any deliverables or solution before you agree the IP terms with clients is crucial.  It may be the IP is “business as usual” IP and the value is only to the client, but as part of your contract negotiation gateway, we recommend this is objectively considered.   Often a quick call with a lawyer who understands the strands of potential IP is useful at this stage.

Remember, in order to be able to exploit, register, assign or licence any IP you will need to have the right to use it.  This means you need to ensure you have acquired sufficient IP from your freelancers and any suppliers to the project.  You must also ensure all your employment contracts provide that all IP is automatically assigned, without any restrictions. Be aware of any complexities such as joint collaborations and using third party applications and open source software.  You should also review any undertakings or clauses which restrict your behaviour going forward, such as restrictions on not providing similar services or products to competitors of your clients.

If you need help with any of the issues raised, including carrying out an IP audit or devising an IP strategy for your business, please get in touch with Rebecca Steer We can help you ensure you are able to value, acquire, protect, exploit and enhance IP which you create in the course of your business, ultimately helping you to boost the value of your business and to identify and leverage other business opportunities around it.

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