FINANCING YOUR INNOVATION!
Types Of Financing
- Traditional debt
You can access financing from various lenders including banks, micro finance institutions and even individuals. A debt may be secured or unsecured depending on the terms offered by the lender.
It entails getting into a written or oral agreement for a temporary transfer of cash from its owner (the lender) to a borrower who promises to return it according to the terms of the agreement, usually with interest for its use. A loan may be guaranteed by collateral, meaning that the lender either keeps an asset belonging to the borrower until the loan is repaid or has the right to seize such an asset in the event of default.
- New types of debt
In 2017, Kenya enacted the Move able Property Security Act which allows lenders to lend against move able property as security. Intellectual property certificates have been included in this Act. Therefore you can now take a loan against your intellectual property certificate as regulated by the Act. Some financial institutions offer this type of debt.
A form of financing where the innovator offers a stake ( shares) to an investor in exchange for receipt of capital. Equity financing takes many forms, one where the investor purchases some shares or two, where the investor and the innovator form a new entity known as a joint venture company. The most common form of joint venture company is where the investor contributes financing while the innovator contributes the innovation. The innovator and the investor jointly manage the company.
Equity is offered by various individuals, private equity funds, angel investors and venture capitalists. Most investors require a rate of return.
- Quasi- Equity Financing– A form of company debt that could also be considered to possess some traits of equity, as having flexible repayment options or being unsecured.
- Joint ventures
A joint venture can be described as a form of business association between two or more independent organizations (joint venturers) to undertake a common project or to achieve a certain goal. More specifically, the parties to a joint venture share risks and contribute with their intellectual capital towards technology research and development, production, marketing and commercialization. e.g a company can be established where the company is formed to hold the intellectual property and the industry partner has equity through a joint venture.
Because the role that IP plays in establishing such collaboration is a central one, it is fundamental that joint ventures clearly define at the onset the ownership of the IP to be created by the joint venture and the parties’ rights upon it. It is also necessary to agree on the initial contribution of each venturer as well as on the respective responsibilities and obligations.
This is a transfer of an owner’s rights, title and interest in certain intellectual property rights. The transferring party (“assignor”) transfers to the receiving party (“assignee”) its property in intellectual property rights, such as patents, trademarks, industrial designs and copyrights.
Section 25 of Trademarks Act– A registered trade mark is assignable and transmissible either in connection with the goodwill of a business or not. The person for the time being entered in the register as proprietor of a trade mark shall, subject to any rights appearing from the register to be vested in any other person, have power to assign the trade mark.
- Co-ownership/ Joint ownership
This refers to a situation in which two or more persons share interests in property rights. Such rights include all types of rights in movable and immovable property. In Intellectual property law, all types of protected subject matter can be owned jointly.
Where there are joint owners of a patent, each of the joint owners may separately assign or transfer by succession his share of the patent or institute court proceedings for an infringement of the patent against any person exploiting the patented invention in the country without the agreement of all the joint owners.
- Angel Investors
Angel investors are affluent individuals who inject capital for startups in exchange for ownership equity or convertible debt. Angel investors are focused on helping startups take their first steps, rather than the possible profit they may get from the business.
- Venture Capitalists
A form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth. Their business is to pool investment funds and find and invest in businesses that are going to provide their investors high rates of return.
ENFORCEMENT OF INTELLECTUAL PROPERTY
Once you have commercialized your innovation, there is a risk of encountering various disputes including disputes with co-owners, third party infringements, counterfeiters, theft of ideas and so on. It is therefore important to have a sound dispute resolution strategy to prevent or manage these disputes.
This entails taking steps to prevent disputes before they occur or manage the dispute as it is occurring to ensure the dispute mechanism is cost and time saving
- Contractual steps
The best way you can prevent any dispute arising is by having clear contractual terms with your partners. The contracts should be concise to simple to understand. Some of the advised contractual terms include non-disclosure and confidentiality terms, ownership, remuneration and parties’ obligations.
This entails an informal discussion when there is a misunderstanding. Negotiations are important to prevent the escalation of a dispute and furthermore, when properly done they build stronger relationships.
Mediation is an alternative dispute resolution (ADR) process where parties resolve their disputes with the assistance of a third party called a mediator. The mediator is a professional trained in assisting parties resolve their disputes in a conciliatory manner. The end result should be a settlement which is a win-win. Ideal for disputes with business partners as they save the relationship. It is less expensive compared to solving disputes through the court process. It is also a quicker way of solving disputes compared to court process.
- Adversarial Dispute Resolution
In adversarial dispute resolution occurs when the dispute escalates and entails either arbitration or judicial steps.
This is a non-judicial process for the settlement of disputes where an independent third party – an arbitrator, chosen and agreed to by the parties, makes a decision that is binding. Many agreements contain arbitration clauses which allow the parties to refer their dispute to a chosen tribunal. Arbitration is advantageous over the court process as it is faster and the parties can choose technical experts to hear the matter. It is also as enforceable as a court order and therefore more binding when compared to mediation.
- Court processes
Court processes refer to matters referred to the Government set authorities to adjudicate the matter. May include tribunal settlements, statutory enforcement’s and court actions.
The tribunals that can hear matters arising from disputes include the Competition Tribunal, Industrial Property Tribunal, Trademarks Tribunal, Copyright Tribunal and many other sector specific tribunals.
The court process may entail:
- Injunction- A court order requiring an entity to stop doing a certain act. For a company an injunction may mean an order to stop selling its product deemed to be infringing.
- Temporary Injunctions– One of the most important civil remedies for the breach of IP rights is a temporary injunction pending the trial. Apart from restoring the status quo and halting the allegedly infringing act, interim injunction proceedings usually provide parties with a preview of the opponent’s case. As a result, cases are often settled or concluded without a trial. They must be issued on notice or, in cases of urgency, on an ex parte basis.
- Anton Piller Orders– A court order allowing a party to litigation to enter the premises of another to search for and, if found, remove specified documents or items in order to preserve evidence.
- Damages– The main purpose of granting damages is to compensate the Plaintiff done by the patent infringer. Damages are typically based on lost profits or established royalties, from the infringers’ use of the patented invention.
- Delivery up– is when the infringer is ordered to deliver all the counterfeit or infringing material to the court and the court disposes the infringing material as it deems fit.
- Criminal sanctions:- These occur with counterfeit, piracy and other select breaches.