Get your house in order and get protected…

Addressing the CBI last month, David Cameron spoke about a “new economic dynamism” and promised a “forensic, relentless focus on growth” targeted primarily at the technology sector. While there are no doubt opportunities for technology businesses in this new programme drawn up by innovator James Dyson, organisations need to be aware of the demands that growth will place on their business. It takes not only commercial ideas but also the right infrastructure to grow successfully and take best advantage of the promised £200m investment in the sector expected over the next four years. Leon Deakin from Thomas Eggar LLP heads up a team of legal experts at the firm who specialise in the technology sector and looks at some of the issues businesses should consider.

Planning for growth One of the cornerstones of the development programme will be the creation of technology and innovation centres across the UK which seek to connect businesses and universities, make organisations aware of funding streams and potential partnerships and providing access to skills and equipment. These centres will no doubt be invaluable in helping smaller organisations develop and grow, but before working with partners, it is vital that they look to get all their paperwork up to date and as professional as possible. The recent film The Social Network highlighted some of the pitfalls of not setting up strong shareholder agreements from the start. Looking at issues such as the company books, shareholdings and shareholders agreements will ensure that neither the business nor the relationships within it self destruct as an organisation grows. Furthermore, keeping up to date on these issues delivers a strong professional impression to potential partners and investors. Many commentators feel that future innovation will be delivered by smaller organisations working with large corporations and universities, and so that professional impression will give all parties a greater measure of comfort for any collaboration. Protect IP Protection of intellectual property (IP) is vital for businesses who wish to thrive in the future. David Cameron has exhorted businesses to “develop and break boundaries” and whilst it may be that organisations need to find new ways to work together in order to succeed in the global market, there is no doubt that if IP isn’t protected from the start, the revenue for any new ideas could swiftly be lost from the organisation – and from the UK. Daniel Byrne, an IP lawyer in the firm’s commercial dispute resolution team, recommends that companies conduct an IP audit to ensure that all areas of IP are properly identified, protected and managed. A company’s IP will almost certainly extend beyond any patents for inventions and, for example, include copyright in internal documents, website content and trademarks. It is important that this IP is correctly dealt with and protected through appropriate agreements, employment contracts, licences and, where possible, registration. Contractual safeguards and restrictive covenants There is no doubt that the expected £200billion long term investment in the sector is going to lead to growth, and with that a greater mobility within the workforce as new opportunities arise. It is therefore important that it is made clear in contracts what ideas and elements of any work are the property of the company, and also that any employment contract explicitly prevents the disclosure of trade secrets both whilst in employment and on departure. Using measures such as restrictive covenants are also advised as they prevent an employee from joining a competitor and immediately soliciting customers or making use of contacts and relationships developed in their prior role. Of course, when looking at protection, it’s probably advisable that organisations check employment contracts and benefits and seek to positively manage the workforce so that they’re not actively seeking to leave. Although restrictive covenants and confidentiality clauses have a part to play, ultimately the goal for an organisation should be to take staff with them as they grow, and share in their success. The government investment represents just a fraction of the opportunities that are available for technology companies. Innovative organisations will be presented with a range of opportunities to trade all over the world and play a vital role in the growth of the UK economy, but to make sure that they profit from the opportunities in the market, they must first make sure that not just their ideas, but also their organisations as a whole are protected. ENDS 733 Words

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