Cresco is a leading Belgian law firm working with entrepreneurs, start-ups, scale-ups, investors and corporates. As a long-standing partner of Scale-Ups.eu, Cresco's primary objective is to empower its clients to achieve their crucial business milestones and implement their strategies effectively. In this interview with Olivier Van Raemdonck (partner) and Ward Verwaeren (Senior Associate) from Cresco, we delve into the significance of corporate partnering for startups and scaleups, highlighting the integral role of IP in these affiliations.
Olivier: Corporate partnerships can be a game-changer for startups and scale-ups in terms of technology and intellectual property (IP) monetization. The financial investment from corporate partners often allows start-ups and scale-ups to focus more intensely on the development and acquisition of intellectual property. Procuring intellectual property rights often comes with a cost (R&D costs, costs for trademark applications, costs for copyright licenses, etc.), and having additional funding or getting IP licenses from larger corporate partners allows start-ups and scale-ups to get a jumpstart on competition.
Beyond these financial investments, partnerships often provide access to invaluable resources, expertise, and distribution channels.
This all leads to more intellectual property rights being developed and acquired by start-ups and scale-ups, which in turn leads to improved monetization of these rights.
Ward: We often see that these partnerships form an amazing accelerator for all parties involved. Where larger corporate companies bring money, established networks, distribution channels, and larger customer bases to the table, start-ups and scale-ups provide innovation and agility.
And lastly, we notice that corporate partnerships can provide startups with validation and credibility in the market. Being able to use well-known or established brand as a client or partner reference opens many doors.
Olivier: Intellectual property plays a pivotal role in the success of corporate partnerships, as it safeguards a startup's innovations and strengthens its position at the negotiation table. Simply put, it’s the IP developed by a smaller company and the team’s know-how that bring a larger corporate partner to the table.
To effectively protect and leverage IP assets in collaborations with other, often larger, companies, startups should establish a comprehensive IP strategy that aligns with their business objectives, prioritizing the safeguarding of critical IP elements. This is something we stress to our clients. It’s important to work on a policy (an IP strategy) on identifying, developing/acquiring and monetizing IP very early on. This leads to fewer issues with third party IP rights (are you “free to operate”?) and allows companies to build an IP portfolio from an early stage.
Ward: When dealing with more technical matters, confidentiality is often paramount, and startups should use well-drafted non-disclosure agreements (NDAs) to shield trade secrets and proprietary data during discussions.
Clarity on IP ownership in collaboration agreements is essential: outlining who owns IP generated before and during the partnership and specifying licensing terms if necessary. And we cannot stress it enough, but it’s so important not to give away core IP and that you safeguard the possibility to commercialize core IP in relation to future clients. We’ve seen it in the past that start-ups invest greatly in acquiring IP to then grant an exclusive, long-term license to their first big customer. This blocks future monetization, and we’ve even seen that this leads to potential funding not taking place.
Olivier: Monitoring and enforcement should be a routine practice and not the exception. Not enforcing IP rights can lead to undesirable consequences, whereby situations of co-existence or a loss of rights may arise.
Given the importance of IP, we really believe it’s important for start-ups and scale-ups to seek legal advice from an IP expert to guide the negotiation and drafting of key deals and to provide a template set of IP provisions to be used in agreements to ensure continued protection and alignment with evolving business objectives.
Olivier: Start by aligning your IP strategy with your business objectives, identifying valuable IP assets. At the start, the question will often be how to develop and acquire IP rights at a low(er) cost. Start-ups will often need to look towards copyrights (no registration required, “free”), trademarks (registration required, but relatively low cost) and trade-secrets (no registration required, “free”, important to keep it secret). Try to have a clear understanding of what “package” of rights you can offer when setting up first talks.
When considering technology licensing, determine the appropriate model that aligns with your business goals and ensure contractual clarity regarding IP ownership and usage rights. Will you transfer rights or license rights? What falls under a license? Can your client simply use the developed IP, or can it monetize this IP? Do you want to work with an “as-a-Service” model? This should be clearly defined in the negotiations, and subsequently, in the agreement.
Ward: Collaborative R&D efforts with larger corporations can allow for shared IP ownership and licensing rights, creating mutually beneficial relationships. Here, it will be important that the start-up can convince the larger corporation that they have something of value for them to bring to the table.
Open innovation models encourage external partners, including corporations, to access and license IP, fostering creativity and value creation. We see open-source software models with special enterprise packages, that allow companies to use, benefit from but also contribute to a basic service, to entice them to go for the enterprise package afterwards.
You can consider royalty-driven licensing, exclusive partnerships, or joint ventures for steady income and shared profits. And cross-licensing agreements strengthen partnerships, and advance “collective” innovation.
We also see that the strategic use of IP portfolios during negotiations can enhance a smaller party’s position significantly.
Olivier: It is essential to understand the basics of IP protection as a start-up or scale-up. However, in the context of formulating an IP policy and strategy, negotiating key agreements, and dealing with IP enforcement, a deep understanding of intellectual property and applicable legislation and case-law is essential.
The expertise of an IP expert in drafting precise, comprehensive agreements helps prevent disputes and ensures contractual clarity. Though it comes at a cost, by leveraging expert knowledge, startups can maximize the value of intellectual property through favorable terms and strategic guidance. Moreover, experts save time, improve efficiency, and allow startups to allocate resources to their core operations, accelerating growth and success in collaborations with other companies.