The mid-market is expected to boost the economy by 18 per cent over the next five years and although this market segment represents just 1 per cent of UK firms, medium-sized businesses are increasing revenues by an average of 6.7 pre cent each year. Mid-market companies are companies too big to be considered SMEs, but smaller than big, exchange-listed businesses, with a revenue between £10 million to £300 million.
In the continuing environment of uncertainty, the outlook for mid-market companies seems to remain optimistic. Perhaps their relatively larger size (compared with small companies) provides them with deeper pockets for weathering difficulties, funding innovation and hiring key talent. And the relatively smaller size of mid-market firms compared with larger organisations makes them more agile and able to respond faster to economic pressures.
Last month I spoke at a conference, Growing Scotland’s mid-market business sector: How do we incubate success?
One of the themes was harnessing innovation and protecting intellectual property (IP), key areas for creating and supporting the development of a robust mid-market in Scotland. Launching new products or services and expanding on existing technologies will be key to the sustained growth of a mid-market company. Such new technologies should be adequately protected with appropriate IP rights.
IP is an integral part of any business, whether the business is based on commercialising products or providing services. By protecting and enforcing an IP, such IP can be used exclusively as a commercial asset and so the business can be an attractive prospect for investment or acquisition.
All businesses should consider what IP it uses, who has created that IP and if it is protected by robust written agreements when used as part of commercial transaction with third parties. Pseudo IP rights such as know-how can form the basis of a patent at a later stage, and company know-how should be protected by strict internal procedures by which employees document company know-how under an obligation of confidentiality. If a company has paid third parties to create IP on its behalf, the terms under which it was created should be checked carefully to ensure IP generated has been transferred to the company.
Enforcement of IP is very relevant to a business in the mid-market, where reputation and success can result in third parties producing similar products and/or services. Mid-market businesses, having a higher profile in the market place, are more likely to sue or be sued for IP infringement than SMEs. It is best practice to constantly monitor the market to make sure that third parties copying or imitating your IP are identified. It is easier to enforce IP rights if IP is well-documented internally and registered where appropriate.
Here are some practical tips with regard to intellectual property assets:
Avoid being infringed by constantly monitoring your market space to ensure competitors are not copying your IP;
By taking stock of all IP owned by and essential to your business, this can help ensure such IP has been adequately protected and documented;
Register IP rights in countries where you trade, and before launching a product or service in a different jurisdiction consider whether you are infringing the IP rights of a third party.
Secure confidential business information and know how internally by having appropriate processes in place for employees.
Always disclose confidential information under an NDA in pre-contractual discussions, and ensure that any contract with a third party has robust IP and confidentiality terms.
Mid-market companies need to innovate to stay on top, and in that respect they must retain the entrepreneurial spirit of a start-up combined with the knowledge that internal business processes and bureaucracy are also a vital part of sustaining future growth and innovation.
Julie Nixon is a Senior Solicitor, Morton Fraser