The UK is a great place to do businesses. It’s the fifth largest economy in the world. It’s also one of the most innovative countries in the world – ranking fourth in the Global Innovation Index and highest in the G7/G20. Before you launch your business in the UK, you’ll need to think about how to manage your intellectual property (IP). Here are three things to consider:
How will you protect your IP in the UK?
Intellectual property is something that you create with your mind, such as a brand, invention or design. It’s important to protect your IP to stop other people from stealing your ideas. The UK recognises and protects five main type of intellectual property: trademarks, patents, designs, copyright and trade secrets. The protection is territorial, meaning that just because you have protection in your home country doesn’t mean that you automatically have it in the UK.
To protect trademarks, patents and designs in the UK you’ll need to register them with the Intellectual Property Office (IPO). Allow up to four months to register a trademark and up to five years to register a patent. Patents are the most difficult form of protection to get and typically cost £4,000. You’ll need to show that your invention is new, something that can be made or used and not simply a modification of something that already exists (which means it can’t already be patented in another country). Trademarks must be renewed every 10 years. A patent lasts for 20 years.
In the UK you automatically get protection for copyright and trade secrets. There is no need to register or pay a fee. Copyright includes original non-literary written work, such as software, web content and databases. Protection generally lasts 70 years from the date of first publication, so you should mark your work with © followed by the name of the creator and the date of creation. For trade secrets, if you keep information secret and sign non-disclosure agreements with third parties, you can protect your trade secrets through the UK court system.
How will you commercialise your IP in the UK?
Commercialisation is the process of generating revenue from your IP. You can licence, assign or spin-out your IP (and if your IP is creative work you can also receive royalties).
Licencing is a way of allowing a third party to use your IP without them having any rights of ownership. You can exclusively licence your IP to a third party or you can have a non-exclusive licence. Examples might be a vaccine that you have developed is exclusively licenced to one manufacturer, or software that you have developed is non-exclusively licenced to several other businesses.
You can also assign your IP. In this case you are selling your IP for a fixed price. Unlike licencing, once you assign your IP you will lose your ownership rights and will not be able to use your IP in future.
Commercially, it might make sense to create a spin-out company to hold your IP. This means creating a separate company for the purpose of owning and commercialising your IP. The benefit of this is that your critical IP assets (and revenue derived from those IP assets) are separated from the risks of the rest of your business.
Once you derive income in the UK from your IP it is relatively straightforward to repatriate your earnings back to your home country. Profits derived in the UK from your IP will be taxed at the UK corporate tax rate of 19% (the lowest corporate tax rate in the G7/G20). After that, you can distribute dividends to overseas shareholders without having to pay any more tax, as the UK does not charge dividend withholding tax.
Are there incentives to develop more IP in the UK?
The UK offers generous support and incentives to innovative businesses. Support includes tax incentives for research and development (R&D) and the development of patents, as well as grant funding through UK Research and Innovation.
R&D tax relief supports companies that work on innovative projects in science and technology. SME R&D Relief is available to small and medium enterprises with less than 500 staff and a turnover of under €100 million (or a balance sheet under €86 million). It allows a profitable company to deduct an extra 130% of their qualifying costs from their yearly profit. This equates to 25 pence saved for every pound spent. Loss making companies can claim a tax credit worth up to 14.5% of the surrenderable loss. This equates to 33 pence saved for every pound spent. Larger companies can claim a Research and Development Expenditure Credit (RDEC) of 13%.
The UK also incentivises the commercialisation of patents through the Patent Box scheme. If you are eligible for Patent Box, the profits that you make from your patent are taxed at a reduced corporate tax rate of 10%. To benefit, your company must own or exclusively licence-in patents granted by the UK IPO or certain European countries. You must also have undertaken the qualifying development for the patent.
Finally, once you are established in the UK, you may be interested in applying for grant funding. You can do so through Innovate UK, part of UK Research and Innovation (UKRI). Each opportunity has its own eligibility criteria and is on a competitive basis. To search for open opportunities click here.
Commercialising and protecting your Intellectual Property in the UK can be relatively straightforward. However, no two companies are the same. We recommend that you talk to an IP specialist to ensure that you achieve the best outcome for your business.