IP refers to the creations of the mind such as inventions; literary and artistic works; designs; symbols used in commerce, as such it is an intangible asset and the World Intellectual Property Organization (WIPO) is the body that spearheads IP globally

IP is divided into two main facets: Industrial Property and Copyright. Industrial Property entails Patents, Utility Models, Industrial Designs, Trademarks, Traditional Knowledge (TK) and Geographical Indications (GIs).

To contextualize IP within the Kenyan standpoint; Kenya has embraced IP in its legal and institutional framework embodying it in Article 40(5) of the Constitution which states that: The State shall support, promote and protect the intellectual property rights of the people of Kenya. IP is further governed by statutes like the Industrial Property Act, Cap 509 and the Copyright Act, Cap 130.

In furtherance, the Movable Property Security Rights (MPSR) Act 2017 recognizes IP as one of the assets that a business can use to secure a facility which is both pragmatic and an invaluable addition to the world of financing.

The aim of this article is to appraise the reader of the ways in which they can leverage IP as a business asset and growth tool.

First and foremost, more often than not business owners overlook IP as an asset, which can be attributed to various reasons such as: lack of awareness of the IP regime, stereotype that the cost of registration is costly and few IP valuation experts.

However, with an appreciation of the current business landscape, investor behaviour and business canvass models, IP comes forth as an asset that can be leveraged for business growth and continuity, as such businesses need to embrace it in all of its (glory), we might say.

The advantages that accrue to a business that embraces and leverages on IP are insurmountable and some of these include:

  1. Facilitates access to financing and investors- lack or little financing is one of the major challenges that businesses face. However, in the current market dynamics, financiers, angel investors, fund agencies have shown more desire to fund business that have registered IP assets and as such they are able to more easily as compared to businesses with no registered IP assets to obtain financing.
  2. Easier channel to market- all businesses want to grow or at least maintain their clientele base both locally and internationally and IP goes a long way in ensuring this. Take for instance a Trademark, which helps distinguish one business entity/ product from its competitors’, acts as a guarantee of quality thereby creating customer loyalty and helps clients recognise a business entity/ product. However, these benefits cannot accrue to a business without registering their Trademarks.
  3. Protection of one’s business identity- through registering its IP, a business accrues right inherent in the IP and as such any other person who uses it without the owner’s consent does so unlawfully and the infringer is liable to compensate the IP holder.
  4. Protection of one’s artistic and literary creations- most creatives grapple menaces like infringement and piracy which lower revenues and impugns one’s creative ideas, however, through IP registration, creatives can focus more on their artistic essence as their rights will be fully protected.
  5. For Agro-businesses, Plant Varieties and GIs (like Champagne) as IPs help improve the quality of products that are channelled to the market thus ensuring customer loyalty and inward returns to the business.

As a business entity that wants to leverage on IP as a business asset growth tool, the following advisories if implemented will set your business on the right path:

  1. Seeking consultation services from lawyers and other IP Consultants so as to appraise oneself with the current IP regulations and market dynamics.
  2. Conducting valuation of the business’ IP assets – valuation  

There are three main methods of conducting IP valuation and they include:

  • Direct method- in this method, the value of an IP asset is directly derived from the IP rights that owners have over goods and services.
  • Cost method- in this method, the direct costs incurred in the creation of the IP asset is assessed and this method is more useful when the IP asset is prone to infringement for instance artistic and literary works.
  • Market method- in this method, similar IP assets are compared based on the transfer price paid for each and is often used for approximate values of royalty rates and taxes.
  • Developing an IP strategy- that aligns with the business’ assets value and the overall mission and vision.
  • Registration- Registration is very key as it is only through registration that one gets a legal right over an IP and it is important to register as early as possible as in the IP world, the first in time begets all the rights unless there are exceptional circumstances.

In conclusion, times have changed, the market dynamics, financier and investor desires are a testament to the opportunities and advantages that accrue to any business that appreciates and embraces its IP assets. You need not wait till to register and protect your rights as from the foregoing, IP is really a business’ intangible gold.