There has never been a better time to be a creative with a brilliant idea. According to a recent study by London & Partners, the UK remains the leading European destination for tech investors. Venture capitalists have invested over £5 billion in UK tech companies since 2016 with £180 million invested in London-based start-ups in Q2 of 2018.
Rajesh Agrawal, Deputy Mayor of London for Business, told Forbes magazine this represents solid evidence that London continues to be the tech capital of Europe:
“London is the best place to start and grow a technology business, and we must continue to do all we can to attract investment and talent to our city”.
And investment is not only happening in the capital. Three of 2017 biggest investments in tech were made in Cambridge, Nottinghamshire, and Durham.
For tech start-ups and established companies, intellectual property (IP) is an asset which must be protected. Therefore, most dutifully protect their IP through patents, trademarks, and design rights – an exercise which is a serious investment in time and money. However, if an SME’s IP rights are infringed, they may find themselves caught between a rock and a hard place, especially if the infringer has deep pockets and plenty of litigation experience. On the one hand, they need to vigorously protect their IP assets to ensure they continue to attract the investment needed to grow. However, venture capitalists are also keen to see a healthy cash flow and may become skittish if they see the potential for a long-running lawsuit involving the company they plan to risk thousands, if not millions of pounds in.
Challenging IP infringements – easier said than done
The problem with IP rights is although they come attached with all sorts of wonderful legal protection in theory, in practice it takes some serious cash to a) prove an infringement has taken place, and b) enforce your IP rights.
Multi-national conglomerates have the finances and the legal expertise to pounce on an IP infringement which occurs even in the most remote corners of the world. For example, when Mary Briar set up her small sandwich shop in a remote part of England, she never dreamed she would attract the attention and wrath of McDonald’s. Her crime? She named her shop McMunchies. McDonald’s stated they owned the trademark on the letters ‘Mc’ as a prefix and demanded she change the name of her shop. The hullabaloo did attract a lot of negative press for McDonald’s; however, the company remains firm on the Mc prefix and will take legal action against anyone who they believe is infringing their trademark.
Unfortunately for SMEs and start-ups, the risk involved in pursuing a trademark dispute can be too great, meaning they have to allow the infringement to continue. This is where litigation funding can provide the answer to one of the most pressing problems faced by an SME or start-up – “how can I protect my legal interests without risking my precious capital?”
Here are three ways litigation funding can give you the power to protect your IP assets:
- It drastically mitigates your risk – by working with a litigation funder who caps your exposure to a certain amount (say £20,000), your exposure to the risk generated by pursuing an IP dispute is significantly reduced. Cashflow is an ongoing concern for SMEs and start-ups; partnering with a litigation funder allows you to protect your capital so it can be directed at growing your enterprise. Your risks will be further protected by the fact that After The Event insurance will insure you against an adverse costs order, should you lose your case.
- It provides confidence to business partners and investors that you have a strong case – like all businesses, litigation funders are ultimately looking to minimise risk and maximise return. Therefore, if one decides to back your claim, you can be confident it has a good chance of success, having had its merits examined by Counsel, insurers, and its own expert assessors. To convince a reputable funder to invest in your claim, your patent, trademark, design right, or copyright must be extremely robust.
- You will have the freedom to work with your own legal team – it is a myth that if you partner with a litigation funder, you will be required to work with a Solicitor from their panel. Funders are bound by a strict code of ethics which prevent them from influencing the outcome of a trial. The best interests of the client and the ongoing public trust in the legal system, in general, must be at the forefront of everything a litigation funder does.
Litigation funding is becoming an integral part of IP dispute litigation. As the commercial world comes to rely more heavily on creativity and brands, the ability for SMEs and start-ups to protect their interests will be imperative. Litigation funding provides the ability for them to do so.
To find out more about litigation funding, please contact us on 0333 222 5731 or talk to your solicitor.
BMS Funding works with the legal profession and businesses to provide funding solutions for all market sectors.