Managing Risk in Early Stage Science and Tech

Daresbury Laboratory

Author Science and Technology Facilities Council (UK) Licence CC BY-SA 2.0 Source Wikimedia

 

Jane Lambert

Sci-Tech Daresbury is a science and innovation campus near Daresbury in Cheshire.  Most months, it holds a business breakfast networking event in the entrance hall of its main building between 08:15 and 10:15 on a Friday morning.  That is usually followed by a seminar from one of the sponsors of the breakfast meeting or some other guest speaker.  

I have attended as many of those meetings as possible, more or less, since they started nearly 20 years ago.   It is not always easy, as I live 60 miles from Daresbury and am likely to find congestion on the M60, however early I set off and regardless of whether I travel clockwise between Ashton and the M56 or anticlockwise between the two strands of the M62.  Lockdown forced the campus to hold meetings online.  Conveniently, the campus continued to offer the option to attend online even after the pandemic was over.  That has enabled me to take part in far more of those events than previously.  But networking in a screen breakout room or the chat box is not the same as physical presence.   When a particularly interesting post-breakfast seminar is announced, I will do my best to come in.  

One such occasion was last Friday when Vista Insurance offered a webinar entitled "Innovate with Confidence: Managing Risk in Early Stage Science and Tech."  The reason for my interest is that one of the risks of a new tech business is that its intellectual property rights may be infringed or their validity may be challenged in an invalidity or revocation action.   In Tips for Pitching to Business Angels, which I posted to NIPC Cymru on 28 Feb 2025, I wrote that one of the questions that angel investors are likely to ask is: “What are the main risks for your business, and how do you plan to mitigate them?  In answer to that question, I proposed a five-point plan that I had first suggested in Business Planning and IP: A Practical Example on 4 Apr 2018 in the NIPC Inventors' Club.

In that article, I suggested that most of the risks to a new business were likely to be commercial, which could be met by commercial countermeasures. However, there might always be some that are legal and require a legal response.  In para 4, I advised readers to choose the optimum legal protection.  I wrote:

"Put yourself in the position of your customer and consider why he or she is likely to find your product attractive. Is it its appearance, the way it works or the reputation of your business? If it is the appearance of your product, you should see whether you can register its design either for the UK alone or for the UK and other countries. If it's your reputation, you should think about registering your business name or logo as a trade mark. If it is the way the product works or is made, a patent may be the best option. If it cannot easily be reverse-engineered, you could keep it under wraps as a trade secret. Maybe an unregistered design right will be enough. Factors to take into account will include the shelf life of your product, the size and value of the market, whether you want to sell it abroad and all sorts of other matters."

Having identified the optimum legal protection, you have to consider how to enforce it. In para 5, I wrote:

"Although bootlegging, counterfeiting and piracy are crimes as well as torts, primary responsibility for enforcing your intellectual property rights rests with you. That means bringing infringement proceedings in the civil courts. In England and Wales, the costs of a High Court action can exceed £1 million. In simpler cases that can be brought in the Intellectual Property Enterprise Court, recoverable costs are capped at £50,000 for determining liability and £25,000 for assessing damages or other profits to be disgorged. There is a small claims track where costs are limited at a few hundred pounds for certain types of IP claims under £10,000. If you cannot afford such costs out of revenues, then you should consider intellectual property insurance or other kinds of funding."

Since writing that article, the recoverable costs cap in the Intellectual Property Enterprise Court has increased from £50,000 to £60,000 when determining liability and from £25,000 to £30,000 when assessing damages or accountable profits (see Jane Lambert, New Costs Rules for IPEC, 6 Nov 2022, NIPC Law).

One of the topics that Vista addressed at Daresbury on Friday was insurance for tech and life science businesses.  That included intellectual property insurance.  One of the speakers was Darci Edwards, who is Head of Technology and Life Sciences at Vista, with responsibility for new business development.  Another was Graeme Murray, a senior associate trade mark attorney at the Manchester office of Marks & Clerk, who spoke about intellectual property in general.   As IP insurance is a highly specialized market, I asked Graeme a question about brokers' expertise.

In Tips for Pitching to Business Angels, I observed that:

"Most legal indemnity policies exclude intellectual property disputes. For many years, it was very difficult to obtain cover against the costs of IP litigation. That has changed recently in that there are now several specialist brokers in this field. The Intellectual Property Office has produced some excellent Guidance on Intellectual Property Insurance, which was last updated on 21 Feb 2020. The Chartered Instititue of Partent Attorneys publishes a list of brokers and their contact detail, The Chartered Instititue of Trade Mark Attorneys has also compiled a downloadable list of IP Insurance Providers, I have written extensively on the topic over the last 20 years and links to my articles can be found at the foot of IPO Guidance: Intellectual Property Insurance which I posted to NIPC Inventors' Club on 25 Feb 2020."

It has to be stressed that IP insurance has to be in place before a claim is made.  After-the-event insurance is expensive and hard to find, and the premium is no longer recoverable from the other side.  The same is true of success fees, which make no win no-win-no-fee arrangements unattractive.  As IP Pro Bono is no longer accepting new instructions, there are limited opportunities for pro bono representation.

Anyone wishing to discuss this article should call me on 020 7404 5252 or send me a message through ny contact page at other times.