10/03/2022
I wrote many years ago about how IP is treated on Dragons’ Den, where in a matter of mere television moments the Den’s IP expert, Deborah Meaden, provides an opinion on the breadth and strength of a company’s patent portfolio.
I said back then that aspiring entrepreneurs watching are regularly being told “you need a patent, or we can’t invest… but it’s probably not worth the paper it’s written on”. The second half of that thought, “…it’s probably not worth the paper it’s written on”, was not true then and it’s not true now. Patents and other forms of intellectual property protection clearly add value to a business. They are an asset and a tool. They can also be an insurance policy, if the business fails, it will at least be left with its IP assets which may be sold off.
Moving to the present, on 3 March 2022 an episode aired where IP, or the lack thereof, played an important role in one entrepreneur’s time on the Den. We were told that the product, a simple product to reproduce, was not protected by way of patents. Perhaps not unexpectedly, the first half of my thought from all those years ago, “you need a patent, or we can’t invest…”, came to the forefront of the Dragons’ decision-making process, and was given as the main reason for many of those Dragons to say the immortal line, “it’s for that reason that I can’t invest, and so I’m out”.
I work a great deal with start-ups, and this reason for not investing resonated with the advice I give them – “protecting your IP is a vital part of showing investors that you have a defensible proposition”. Without that defensibility, investors will be wary of investing, and at best will significantly decrease the value of your company, and at worst will simply walk away.
As it happens, one Dragon, Touker Suleyman, was willing to take the risk, and a deal was made. Presumably Touker was confident his contacts and abilities would provide sufficient first mover advantage that the lack of patent protection could be mitigated. However, that deal was for a level of equity that significantly reduced the value of the company compared to the initial offer put to the Dragons.
A better message to those aspiring entrepreneurs watching, but perhaps a sobering one. It’s not just me as a patent attorney saying you really need to protect your IP, it’s some of the most successful business people in the country as well…
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.
