Investment pitches: three top tips on what to say about IP

Investment pitches: three top tips on what to say about IP

When preparing an investment pitch, intellectual property (IP) considerations are critical for demonstrating the value of your start-up. What is said about IP can make or break investor confidence, especially in technology-rich sectors such as the life sciences or software.

This article provides three key areas for founders and their teams to consider and gives tips on how to explain your IP position. The article covers what to say and – equally importantly – what to avoid saying.

1. Tell the story of your own IP portfolio.
Be ready with a cohesive explanation of what you have protection for; and of the jurisdictional coverage in your IP portfolio.

Give proper thought to whether the better approach – for your business, specifically – is to have statements on IP woven amongst other material; or whether a standalone slide (whether as part of the main pitch or as a spare slide for Q&A) is more appropriate. If you have opted for a standalone slide on IP, is it clear from that slide how the IP aligns with and protects the core business offering?

Do be prepared for IP to come up in Q&A. Know what you can – or cannot – say about your own IP. Ask your patent or trade mark attorney to advise on questions that are most likely to come up for your business, specifically, and ask them to review your answers for these. For example:

• If your company holds patents and/or other registered IP rights, include an accurate portfolio overview while making sure you disclose nothing that ought to be kept confidential. Have you recently audited your IP - are you aware of all the types of IP you hold? Are you making the most of being able to show off your patents, trade marks, registered (or unregistered) designs, copyright, and (obliquely, without giving away details or data) trade secrets?
• Are you showing how your IP supports the long-term growth of your company in key jurisdictions, leading to returns for investors? Think about the term of protection for your various rights. Patent term is (normally) 20 years at most; trade marks can last indefinitely. Do you have a pipeline for future filings – can you refer to this (again, obliquely, without giving away details)?
• IP is by nature territorial. Does your IP cover the key markets for your industry? Are you currently protected in international markets? Have you budgeted for this?
• Besides simply checking clerical portfolio details with your attorney, spend a bit of time with them considering substantive areas which are likely to impress, not only the breadth of your IP (in terms of product coverage, geographical scope and/or term) but also its defensibility.
• Avoid unrealistic claims and hyperbole that can undermine the credibility of your position. E.g., avoid making pending patent applications sound like granted patents – distinguish between the two; and avoid shorthand, e.g. a “worldwide” patent or trade mark – there is no such thing.

2. Consider freedom to operate.
Having an innovative product or a well-thought-through business plan is of little value if your route to market is blocked by IP held by competitors. If you can, assure investors you have assessed and continue to monitor freedom to operate (FTO). Investors may be reassured to hear you are keeping tabs on the industry landscape and have a strategy in place to handle competitors.

• Ask your patent attorney what you can/cannot say about FTO. Often, a simple statement on one of your slides, to the effect that you have assessed and will be continuing to monitor FTO, is best: don’t over-step the mark by disclosing non-confidentially any sensitive information, such as specific details of how competitor rights might relate to your products.
• If you haven’t assessed FTO at all yet, speak to your patent attorney about options to have it assessed and the best time to do so. There tend to be a range of options that can be tailored to your subject matter, jurisdictions of interest and budget.
• FTO should be reassessed regularly. If your FTO information is out of date, consider whether it needs to be updated.
• Importantly, if you haven’t carried out an FTO assessment yet, do not make unsupported claims about FTO. Even if you have considered FTO, never be reckless in dismissing competitor IP or downplaying potential infringement risks. Be accurate and realistic.

3. Check your obligations and agreements.
This is an area unlikely to feature in any of your slides. However, be ready to answer - or fend off – Q&A about licensing, the chain of ownership in rights, whether you have had any patent valuations conducted, whether you have obtained any funding in relation to your IP and, if so, whether any strings are attached; etc.

• Are you clear on the chain of ownership? Have you collaborated on any IP? Collaborations, e.g. with universities or research institutions, can make things tricky. Speak to your patent attorney if you are uncertain about a chain of ownership. Do not imply ownership of IP that belongs to another entity.
• What is your business model? Are you planning to manufacture products or run processes or services yourself? Are you planning to out-license, and do you have or expect to have any out-licensing agreements in place? Do you have the right advisors in place to draft such agreements as you negotiate them?
• Do you have (or need to have) any in-licensing agreements in place? This dovetails with the point about FTO: if you have identified third-party rights that put you at risk, have you taken steps to mitigate that risk? Make sure you know your own IP position well so that you can avoid making unrealistic claims or, worse, misleading statements; but it is almost certainly inappropriate to share full details non-confidentially with prospective investors. Speak to your patent and/or trade mark attorney, or your solicitor, about what you should or should not disclose.

This article does not constitute legal advice. Specialist legal advice should be sought in relation to specific circumstances. For advice, please get in touch with your usual contact at Abel + Imray or reach out to the author at anne-marie.conn@abelimray.com.